Chevron Sees Little Problem in Defense Bill : Can Sell Pentagon Any Oil Not From Angola

A watered-down item in the defense spending bill that bans Pentagon purchases of crude oil from Angola will create only a few technical problems for Chevron, the biggest producer in that Marxist-led nation, the company says.

The provision in the $290-billion bill prohibits the Pentagon from buying Angola-derived petroleum products from a company that produces products there. That leaves Chevron free to sell any other oil to the Defense Department, a spokesman said.

Angola accounts for about 6% of Chevron’s worldwide crude oil production of 1.6 million barrels per day, the San Francisco-based oil giant said. A spokesman said the company will probably have to certify that no products sold to the Pentagon came from Angola.

Sought Tougher Curbs

Earlier, critics of the activities of U.S. oil producers in Angola had sought to bar the purchase of any oil products from companies that produce oil in that nation. But protests from the Pentagon headed off the more sweeping restriction.

The Defense Department said such a provision would effectively cut it off from five major fuel suppliers--Chevron, Texaco, Conoco, Shell and Caltex, a joint venture of Chevron and Texaco--that directly provide 17% of the Pentagon’s worldwide fuel needs.

That, in turn, would raise the Pentagon’s fuel bill by $72 million a year and increase the prospect of fuel shortages for the U.S. military in parts of the Middle East, the Defense Department told the House-Senate conference committee that enacted the final measure.

Chevron said it supplies about 40,000 barrels of oil per day to the Pentagon, most of it jet fuel processed on the West Coast. Angolan oil normally isn’t processed here, a spokesman said.