TRIPOLI, Libya — Four major American oil companies operating here have stopped shipping Libyan crude, but in effect they have undercut President Reagan's embargo by "lending" or selling their production to other oil companies, diplomats and industry sources said Wednesday.
West German, Italian, Libyan and other oil companies have taken over the roughly 20% share of production involving American firms, according to the sources, who requested anonymity. They said this allows Libya to maintain its output of 1.2 million barrels per day.
The arrangements technically comply with the President's executive order to end all American transactions with Libya but violate its spirit, the sources said.
Approval Called Imminent
The deal on passing along production involves Occidental Petroleum, Amerada Hess, Conoco and Marathon and is now awaiting what the sources described as imminent State Department approval.