01/26/2004, 00.00
libya - indonesia
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Gaddafi's crude oil and his rehabilitation

by Maurizio d'Orlando

On Feb. 10 the Libyan leader, Muammar Gaddafi, will pay an official state visit to Jakarta. Indonesia's president, Megawati Sukarnoputr, met with Gaddafi last September in Tripoli.   

During the September meeting Gaddafi expressed his support for Indonesia in its campaign to suppress separatists in the Indonesian province of Aceh, reversing his previous political stance: separatists from the "Free Aceh Movement", including military commander Muzakkir Manaf, were trained in Libya in the past.      

Gaddafi's Aceh position is his umpteenth change in policy, leading to an official improvement in Libya's image among the international community, coming after compensating victims of the PanAm Lockerbie flight attack in 1988 (of which a Libyan secret service agent was accused) and its commitment to destroy "weapons of mass destruction".

All this is leading to a warming up of relations between the United States and Libya. In recent days American republican and democrat representatives went to Tripoli  as part of two separate delegations wanting to work toward ending the U.S. embargo and restoring diplomatic relations with Libya.   

According to oil experts interviewed by AsiaNews, Gaddafi's "rehabilitation" is due to the fact that Libyan crude oil has become desirable in the world market.

Libya has proven oil reserves capable of filling 30 billion barrels. Yet only 30% of its sedimentary rock basins (with characteristics suitable for finding oil fields) have been explored. Libyan crude is very light and has low levels of sulfur, reasons why it can be converted easily into gasoline for combustion engines and especially virgin diesel fuel, the basis for numerous subsequent petrochemical and chemical processes. It is extremely high quality crude, whose characteristics are not easily found elsewhere.    

Such a reasons would give Gaddafi a political role in the Far East. Indonesia has always supplied Asia with a variety of crude similar to that of Libya. During World War II Japan attacked the United States, because Roosevelt had placed an embargo on Indonesian oil supplies.

This recent news would make Indonesia, in the near future, a major exporter of crude oil despite president Megawati's efforts to persuade foreign oil companies to invest in the country. According to AsiaNews sources, the increasing need for light crude pushed China National Petroleum Company to sign an agreement in 2002 with Libya and recently to gain further contracts.  

Until now China, on one hand, has bought high grade Indonesian light crude (Minas and Cinta): yet on the other, thanks to an inter-government agreement aimed at facilitating the acquisition of Japanese products, it resold the medium heavy grade Daying crude to Japanese companies for electrical thermal-production at an advantageous price for the Chinese.    

According to experts consulted by Asianews, Gaddafi's visit to Jakarta will lead to an agreement allowing Indonesia to keep its Asian customers, offering the light Libyan crude in substitution for limited volumes of their own crude.  

All this confirms the energy crisis emerging in Asia. The crisis has various causes: India and China's economic growth, the dismantling of nuclear plants in Japan and the end of project to supply gas from Australia to China.

Gaddafi's valued crude has an influence on the United States as well. Current U.S. vice-president, Dick Cheeney, when he was the chief executive officer of Halliburton (the world's leader in the oil plant engineering and drilling), began promoting an initiative to end sanctions on Libya.

On account of such sanctions, certain large American oil companies, (e.g. Occidental, Amerada Hess, Conoco and Marathon) were unable to develop their real potential, despite having concessions for quite some time. In 2001 Gaddafi threatened to revoke their concessions, which expired in 2005, if the American companies didn't producing oil fields having proven reserves. The revoking of sanctions against Libya would allow American companies to make necessary investments and permit Halliburton to be sure of gaining production orders from them.        

Libya's prime minister spoke very candidly about the intentions of the two American delegations: "They said they want to collaborate to end the embargo against Libya and allow American oil companies to invest in Libya again."
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