The only people more terrified of the foreign mercenaries or anti-aircraft missiles or the fighter jets deployed to shell protesters than Libyans are the businessmen working for oil and gas companies in Libya. In fact, this whole democracy thing is a nightmare for companies in Libya that fought just over two years ago to ensure the market in Libya would not be restricted by an amendment that aimed to prevent companies from doing business with rogue states designated as state sponsors of terrorism.
Financial Times reports escalating violence in Libya has kept oil prices at two and a half year highs. Many of the oil ports and refineries are now shut down. International oil companies are evacuating their staff from the "world's 12th largest oil exporter."
All the violence, protest and political tension in Libya and the wider Middle East and North Africa seems to have led the US-Libya Business Association to make a cold calculated decision to disappear from the Internet for the time being until calm returns to Libya. RAW STORY reported on February 21 that the website of the US-Libya Business Association (USLBA) went down.
The group, which incorporated in 2005, describes itself as "the only US trade association" focused on the US and Libya.
Most recently, US-Libya Business Association Honorary Chairman Ambassador David Mack and Executive Director Charles Dittrich participated in a Middle East Institute-sponsored discussion in Washington, DC, titled, "US-Libya Relations: Surviving the WikiLeaks Controversy?" The two, who visited Libya for five days and met Libyan government officials in mid-December were scheduled to discuss their "impressions regarding the political and economic climate in Libya and the implications for both overall US-Libyan relations and the prospects for American business interests."
A cache of the USLBA website reveals the companies affiliated with the association. Founding members include Chevron, ConocoPhillips, Hess Corporation, Marathon Oil Corporation, and Occidental Petroleum. General members include Dow Chemical, Fluor, Halliburton, Midrex Technologies, Motorola, Raytheon, Shell, United Gulf Construction, Valmont, and White & Case LLP.
Cables released by WikiLeaks on Libya so far do not explicitly name the USLBA. The cables do specifically deal with some of the member companies. They reveal that one of the chief objectives of diplomats in Libya over the past years have been to improve and ensure that the energy sector is able to have maximum commercial opportunities. This led the USLBA, the National Foreign Trade Council, the National Association of Manufacturers and the US Chamber of Commerce to urge Secretary of State Condoleezza Rice to "pursue waiver authority for Section 1083 for countries that have been removed from the list of state sponsors of terrorism" on February 28, 2008.
Section 1083 of the 2008 National Defense Authorization Act (also known as the "Lautenberg Amendment") made it easier for "plaintiffs in terrorism-related lawsuits to seize foreign government-owned assets to satisfy US court judgments." It caused concern among US firms, especially those in the oil & gas sector, because the Libyan National Oil Corporation (NOC) informed American oil companies that this was "their problem" to be solved.
Big Oil Companies Face Possibility of Seized Assets
Libya, which had terror claims lawsuits pending, worried this could impact business. The NOC wanted to cut business altogether to avoid any problems.
A little over two weeks before the USLBA and other organizations launched their pursuit of a waiver in February, a cable was filed explicitly dealing with Section 1083 on behalf of US businesses that were to be impacted. The author of 08TRIPOLI113 explicitly addresses the risks to oil & energy companies as a result of Section 1083:
OIL PRODUCING & OIL SERVICES COMPANIES AT GREATEST RISK
-2. (SBU) U.S. companies participating in joint venture partnerships with Libyan national oil companies assess themselves as being at greatest risk under section 1083 of the National Defense Authorization Act. This list includes Occidental, ConocoPhillips, Marathon and Amerada Hess. These companies are involved in jointly developing Libyan oilfields and in extracting and lifting crude oil. The three U.S. partners in the Oasis Group (Marathon, ConocoPhillips and Amerada Hess, who are partnered with Libyan state firm Waha) pay $2 million/month to the GOL in operating fees, and $100 million/month in taxes and royalties. Company reps assess that these payments -- as well as jointly-held facilities and equipment -- would be exposed to court-ordered attachment and seizure under section 1083. U.S. oil service companies, such as Halliburton, may also be exposed, according to local company reps, and most service companies have frozen further expansion until the risks are clarified. Company reps have expressed concern to us that their GOL partner companies would view any U.S. court-ordered attachments of payments or equipment as a breach of contract, potentially leading to termination of their work in Libya.- Advertisement -
3.(SBU) U.S. companies engaged exclusively in the exploration (as distinct from production), such as Chevron and ExxonMobil, assess themselves to be subject to less risk for the moment, since they make no regular payments to the GOL that would be subject to attachment (the signing bonuses agreed in connection with winning their Exploration and Production Sharing (EPSA) agreements have already been paid to the GOL, and day-to-day exploration work is contracted out to largely non-GOL entities). Nevertheless, company reps say that they are concerned about the longer-term impact of this legislation on their future plans in Libya.
Shukri Ghanem, Libya's NOC Chairman, reacts swiftly to the recent legislation and instructs "all international partner companies to cease conducting transactions in U.S. dollars." Through contacts with US oil companies, US officials find out that NOC would like to "reduce its exposure to U.S. courts, since dollar transactions are routed through the U.S. financial system." Furthermore, the cable shows that US companies believe the legislation could "find" the companies "in breach of their contractual obligations if US courts disrupt their montly payment of operational fees to the NOC."
Leader and Guide of the Revolution Threatens Retaliation