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Oil Firm in Talks With Libya

Occidental Petroleum proposes resuming operations after an 18-year absence.

March 16, 2004|From Bloomberg News

Occidental Petroleum Corp., the fourth-largest U.S. oil company, said Chief Executive Ray R. Irani met last weekend with Libyan leader Moammar Kadafi to discuss resuming oil production in the North African country after an 18-year absence.

"We presented specific project proposals involving the application of modern oil-reservoir management practices and technology," Irani said in a statement. "We plan to open an office in Tripoli as soon as possible."

President Bush last month lifted a ban on travel to Libya, permitting companies with holdings there, such as Occidental and Marathon Oil Corp., to enter talks on resuming operations. Economic sanctions remain in place for now, preventing companies from resuming work.

Libya holds at least 36 billion barrels of proven oil reserves worth more than $1 trillion at current world prices, according to the Energy Department.

Los Angeles-based Occidental produced as much as 100,000 barrels a day in Libya before leaving in 1986, when then-President Reagan ordered it and three other U.S. oil companies to halt activities there.

Irani and other Occidental executives held three days of meetings with Kadafi, according to spokesman Larry Meriage, who said it was premature to speculate on how long it would take Occidental to resume production if the firm was allowed to go back to work in Libya.

"We've had some technical visits, but there are a lot of unanswered questions," Meriage said. "But we think Libya is going to be a very good place for us. It was a good place in the past."

The other U.S. companies that left in 1986 -- Houston-based ConocoPhillips, New York-based Amerada Hess Corp. and Houston-based Marathon -- make up the Oasis Group, which has a 41% stake in Libya's Waha oil field. The group produced about 850,000 barrels of oil a day. Libya's National Oil Co. owns the remaining 59%.

Marathon executives have been traveling to Libya since 2002 with the permission of the State Department to discuss the company's operations there.

"The scope of those meetings had been limited and clearly defined," Marathon spokesman Paul Weeditz said. "Now they've been expanded to include negotiating terms of our return."

Any further talks between the Libyan government and the Oasis Group could include senior executives, including Marathon Chief Executive Clarence Cazalot Jr., Weeditz said.

Shares of Occidental fell 20 cents to $44.95. Marathon rose 1 cent to $34.53. Both trade on the New York Stock Exchange.

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