U.S. Sets Deadline for Oil, Gas Firms to Pull Out of Libya

The Reagan Administration, seeking to heighten the economic pressure on the Libyan regime of Col. Moammar Kadafi, said Monday that it has set a deadline for the dozen U.S. oil and gas companies still operating in Libya to pull out of that nation.

Top Administration officials conceded that the continued presence of U.S. companies in Libya has undermined White House efforts to persuade other countries to impose sanctions against Libya in response to what Washington calls Libyan-sponsored terrorist attacks.

Secretary of State George P. Shultz disclosed the deadline during the seven-nation economic summit meeting in Tokyo. The session produced a pledge Monday to take concerted action against terrorist nations.

‘One Way or Another’

Shultz said of the U.S. oil companies, “They will be out one way or another.” Treasury Secretary James A. Baker III added that it is “appropriate at some point to say to U.S. companies that are still there, ‘You have had sufficient time.’ We’ve tried to be as lenient as possible.”

Shultz refused to pinpoint the deadline, saying the United States does not want Libya to know the date. However, White House officials traveling with the presidential party confirmed earlier reports that the deadline is June 30. Spokesmen for several of the affected oil companies said Monday that they have not been told anything, but Administration officials left the impression that the deadline has been in place for some time.

When the deadline comes, Shultz said, the companies might have to abandon their assets to the Libyans. Several of the companies said they have tried without luck to sell their Libyan holdings since January, when President Reagan barred Americans from doing business with Libya.

Time to Sell Holdings

Since then, the oil firms have been operating under special licenses that require them to place their Libyan revenues in escrow and to take steps to dismantle operations in the North African country. The Administration had said it hoped to give the companies time to sell their holdings rather than allow the Libyans to seize them.

“It’s very difficult to do it just right and not hand over an asset,” Shultz said Monday in Tokyo. “It may not be possible to bring it off in a proper way, in which case they’ll have to abandon their assets.”

In addition to seven American oil-service companies, the five U.S. oil producers still active in Libya are Occidental Petroleum of Los Angeles; Conoco, a unit of Du Pont; Marathon Oil, now part of U.S. Steel; Amerada Hess, and W.R. Grace. The value of their collective Libyan holdings has been estimated at $1 billion.

Libya was the world’s 13th-largest oil producer last year, with about 1 million barrels a day, most of which was sold to Western Europe.

Held as Security

Baker noted Monday that the United States has seized “a substantial amount of Libyan assets, and if he (Kadafi) expropriates our oil companies’ interests over there, we’d hold his assets as security.”

Baker said that since the U.S. bombing raid on Libya last month, several of the oil companies “contacted us and suggested themselves it was time to walk.” In addition, critics said European allies found it hypocritical that the White House wanted them to stop buying Libyan oil but was letting U.S. companies continue to operate in Libyan oil fields.

“I think the United States has to be able to make the point to its allies, if we’re asking them to take action, that there are no longer United States companies operating in Libya with the consent of the U.S. government,” Baker said.

June 30, the reported deadline, is also the date when the special licenses permitting the U.S. firms to operate there ostensibly expire. But one of the firms, Conoco, said later that its license has no expiration date and that it is simply understood to be temporary.

Nationalized in 1973

The U.S. oil firms are operating as minority partners in various ventures controlled by the Libyan government. Libya nationalized its oil industry in 1973, and several large oil firms--including Texaco, Shell, British Petroleum, Chevron and Atlantic Richfield--abandoned their holdings rather than agree to 51% government ownership. Exxon and Mobil subsequently withdrew from Libya in the early 1980s.

Although the five remaining oil companies stress that their Libyan operations are minor, industry analysts say they were nicely profitable until about two years ago. Libyan production has declined steadily in recent years, and the recent collapse in world oil prices has cut sharply into the nation’s revenues.

Investment analysts estimate that Occidental, which owns minority shares of three oil operations in Libya, would have to take a one-time charge of about $25 million against earnings if its entire holdings in that country were seized outright. The company itself has said that its Libya operation represents about 1% of its total assets of $12 billion.

Making Little Comment

Occidental and the other firms made little comment Monday except to say they will continue to abide by the wishes of the U.S. government.

Some critics said the final withdrawal of U.S. firms is long overdue. One former Libyan-based oil executive said the withdrawal will not damage the American firms and that the Administration’s concerns that Kadafi will realize a “windfall” of assets “doesn’t stand analysis” because the Libyan government already has virtually total control of the industry.

“What is it Kadafi would take over if he already owns the oil in the ground and controls at least 51% of the ventures and if 95% (of the value of the oil) goes to Kadafi in taxes and royalties?” asked Henry M. Schuler, a former National Security Council aide who once headed the Libyan operations of W.R. Grace and of Texas oilman Nelson Bunker Hunt.

Schuler also said the firms’ continued legal presence in Libya provides an aura of respectability for the American citizens who remain in Libya illegally to work on a contract basis for various other Libyan-controlled oil entities.

Jack Nelson, The Times’ Washington Bureau chief, contributed to this story from Tokyo.