Wednesday, March 23, 2011

Authorized Dealings with Non-Gadhafi Libyan Oil Entities

The goo thickens in Libya:

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today identified 14 companies owned by Libya’s National Oil Corporation, as subject to sanctions pursuant to Executive Order (E.O.) 13566.

The National Oil Corporation is the centerpiece of Libya’s state-owned oil apparatus, and controls a network of companies involved in oil exploration, production, and sale.  E.O. 13566 blocks all property and interests in property of the Government of Libya and its agencies, instrumentalities and controlled entities within U.S. jurisdiction, whether specifically identified by OFAC or not.  U.S. persons are prohibited from engaging in business with any Libyan state-owned entity. Today’s identifications are intended to aid financial institutions in meeting their obligations under E.O. 13566.

“The Libyan National Oil Corporation has been a primary funding source for the Qadhafi regime,” said OFAC Director Adam J. Szubin. “Consistent with UN Security Council Resolution 1973, all governments should block the National Oil Corporation's assets and ensure that Qadhafi cannot use this network of companies to support his activities.”

Treasury will continue monitoring the National Oil Corporation’s operations in Libya.  Should National Oil Corporation subsidiaries or facilities come under different ownership and control, Treasury may consider authorizing dealings with such entities.

Will any oil company armies head to Libya?  BP got the U.S. Coast Guard to do its bidding in the Gulf of Mexico last summer?  How will the Military-Industrial Complex take the bait on Libya?  That's assuming they aren't already directing strategy.

Might Col. Gadhafi sell his state owned companies to American-branded global oil giants?  Would the Tomahawk happy west let Gadhafi take his wampum and run?

Does the change of control provision apply to the other 16 Libyan state owned firms sanctioned by Treasury?  The Carlyle Group has Libya Investment Authority funds under management.  They haven't acknowledged LIA's stake, despite prior news articles to that effect.  Oddly, LIA owns another Libyan oil company, Tamoil.

Also strangely, money flow from Western oil companies to Libya remains intact, according to BP and Italian oil company Eni.  Reuters reported:
BP Plc said on Thursday it saw its contract with Libya's National Oil Corporation as still valid, a day after Italy's Eni became the first Western oil and gas firm to try to rebuild bridges with NOC.

Personally, I'm waiting for President Obama to say Libyan oil money will pay for the U.S. led intervention.

(Thanks to Economic Policy Journal)