Oil Firms Seen Obeying U.S. Rules on Libya
WASHINGTON — The Reagan Administration said Thursday that it has no evidence that U.S. oil companies in Libya are circumventing President Reagan’s economic sanctions against the North African nation but that new guidance will be drafted to prevent the U.S. firms from “lending†their production to foreign companies.
The Treasury Department regulations issued after Reagan’s decrees earlier this month against business dealings with Libya were designed to assure compliance, White House spokesman Larry Speakes said. But State Department officials noted that a loophole exists because the embargo order specifically exempts foreign subsidiaries of U.S. corporations.
At first, Speakes said no regulations covering U.S. firms in Libya had been issued. However, he later corrected that to say that guidance has been given and that an interagency group is weighing what further steps can be taken to assure compliance.
The Washington Post reported Thursday that U.S. oil firms in Libya are evading the Administration’s sanctions by shifting, or “lending,†production to foreign companies or their own foreign-based subsidiaries.
Conoco, named along with Occidental, Amerada Hess and Marathon in the Post’s story, issued a statement Thursday denying that the company has evaded the embargo, saying it has complied with both “the letter and the spirit†of the presidential decrees.
“We are not now, and have not since the executive orders were issued, lifted any Libyan crude, made any payment to Libya or profited in any way from any Libyan activity, contract or arrangement,†a statement issued by Conoco said.
Denial From Occidental
“There are no back-door or behind-the-scenes deals. Since the executive orders, if there have been any transactions involving Conoco’s share of Libyan crude oil, such transactions would have been made by the Libyan National Oil Co. We have received no benefit directly or indirectly from any sale of that crude oil,†the statement concluded.
After declining comment on original reports that some American oil companies were circumventing the U.S. sanctions by “selling†their production to non-U.S. oil producers, Occidental Petroleum of Los Angeles flatly denied the practice Thursday.
“Occidental has not exported nor transferred a single barrel of oil from Libya since the sanctions were put into effect,†said Frank Ashley, an Occidental vice president.
“We are in full compliance with the sanctions. . . . We will do whatever our government permits us to do. We hope the decision will be reasonable and will not sacrifice our property and the property of our allies, but whatever the U.S. laws regarding Libya are, we will comply with them.â€
At the State Department, spokesman Bernard Kalb said: “We have no evidence that indicates that the oil companies have shifted assets or operations to third countries or foreign subsidiaries, and we have no reason to believe that they will take any action inconsistent†with the sanctions.
Kalb pointed out, however, that the presidential orders made no attempt to affect the actions of U.S. subsidiaries incorporated in other nations besides Libya.
At a House Foreign Affairs subcommittee hearing Thursday, Rep. Tom Lantos (D-San Mateo) cited the Post’s report and declared that U.S. credibility had been “shattered†by the American oil companies’ actions.
Referring to Deputy Secretary of State John Whitehead’s recent European tour, Lantos said the diplomat’s largely unsuccessful appeal for allied support for the embargo becomes “meaningless†if Washington cannot restrain U.S. businesses from undercutting the boycott.
Similarly, several State Department officials, speaking on condition that they not be identified by name, said the exemption of foreign subsidiaries will greatly weaken the boycott, no matter what other regulations eventually may be drafted by the interagency committee.
When asked why the exemption had been allowed in the first place, one official responded: “We didn’t want another pipeline crisis.â€
He recalled that the 1981 attempt by Reagan to prohibit American firms’ subsidiaries in Western Europe from helping to build a gas pipeline from the Soviet Union to West Germany drew outraged protest from the European allies.
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