U.S. oil companies have decided to ignore State Department advice to pull their personnel out of the oil fields here following the latest turn for the worse in American-Libyan relations.
Instead, they are maintaining a business-as-usual attitude after assurances from the Libyan government that it plans no retaliation against them for the Reagan administration's decision five weeks ago to close the Libyan diplomatic mission in Washington.
Officials interviewed from four of the six American oil firms operating here expressed disapproval of Washington's action and said the administration is exaggerating the threat to American interests from the quixotic Libyan leader, Muammar Qaddafi.
Western European diplomats here seem to concur, perhaps fearing Europe has more to lose from a possible crippling of the Libyan oil fields by an American pullout than the United States itself. Italy in particular is reported here to have urged the Reagan administration to exercise restraint toward Qaddafi.
In addition, there is a feeling among American oil companies here that the State Department is seeking to use them as an instrument to punish Qaddafi without overtly saying so. American oil companies fear they may pay the heaviest price for the deterioration in relations between Washington and Tripoli.
"They [State Department officials] are asking us to carry out the administration's political decision and politics toward Qaddafi at our expense," remarked one American oilman.
"We want to know whether we're going to become hostages of this Libyan-American [cold] war," said another.
None of the officials wanted to be identified by name or company because of the delicate circumstances in which they find themselves with respect to the Libyan government and the Reagan administration.
The six American companies account for about two-thirds of Libya's 1.6 million barrels of daily production, although only about 40 percent of this finds its way to American markets. Still, Libya is the third-largest source of imported oil for the United States, after Saudi Arabia and Nigeria, and accounts for about 10 percent of total U.S. imports.
About 2,000 American oilmen and their dependents work and live here. Company officials say that if the followed the State Department's advice and withdrew their personnel, the oil-fields would probably be crippled because of their high dependence on American experts and technology.
"The oil fields here would stop a lot faster than those in Iran did," remarked one, explaining that the Libyan fields are more difficult to run than most in the Middle East because the oil has to be pumped out of the ground rather than coming out under its own pressure.
One report circulating among Western European diplomats here is that the Libyan oil industry is 70 percent dependent on American firms and experts, who also work for many of the non-American companies like the Italian state-run Agip.
This helps explain, perhaps, why the Libyan minister of petroleum. Abdessalam Zaqaar, held an informal dinner for top American oil officials here shortly after the expulsion of the Libyan diplomats from Washington last month. The gist of his message, according to several oilmen present, was the Libya wants to continue business as usual with the American companies and that they should have no fears for the safety of their personnel here.
"They told us not to worry," said one.
Aware of the daily shortcomings of Libya, particularly its problems with basic maintenance and an acute manpower shortage, American oilmen assert the Reagan administration is also vastly exaggerating this heavily Soviet-armed nation's potential as a North African military power. Qaddafi is reported to have bought $12 billion worth of Soviet arms in the last few years.
"I don't believe the Libyans pose as much of a danger as the administration says," remarked one oilman.
A Western diplomat agreed, saying, "You Americans are overrating his strength.He is much weaker and less dangerous than you see him."
The diplomat said most Western European nations, except Britain, disagree with the administration's hardline attitude toward Qaddafi, fearing it will serve to push him further into the arms of the Soviet Union and make him less independent.
This same message was delivered by Qaddafi himself in an unusual half-hour appearance on American public television a week after the expulsion order, although he added that further action by the Reagan administration against Libya might indeed affect the American oil companies.
American oilmen here seem to be in sharp disagreement with the administration over its handling of Qaddafi as well as its assessment of the threat he poses to U.S. allies in the region.
"The American attitude is very short-sighted," said one. "It needs a long-term view toward Libya. If our government would relax a little and learn to live with Third World leaders like Qaddafi, it would aid the political process and moderate his attitude toward the United States."
He drew an analogy to Algeria, another North African Arab nation long at odds with Washington over most international issues but now more moderate and a major economic partner. "We could do the same thing here," he said.
Despite the massive buildup of Soviet arms here and the presence of about 5,000 Eastern Bloc military experts, Qaddafi so far has not allowed the Soviet Union to have bases or facilities here. Even Soviet warships are not welcome to make calls at Libyan ports, according to top Libyan officials. n
The American-Libyan partnership has long been a peculiar and seemingly tenuous one because of Qaddafi's radical opposition to most American policy in the Middle East and his often voiced threat to use the "oil weapon" against Washington in retaliation for its support of Israel.
Yet, Qaddafi had continued to allow the American companies to have concessions in Libyan oil fields and a 49 percent interst in joint enterprises with the Libyan government -- which even conservative Saudi Arabia regards as anachronistic and no longer allows.
Life has not been easy for them, however, despite the top quality of Libya's low-sulphur crude. American company officials say heavy Libyan taxes and royalty payments leave them with only a 57-cent profit on a barrel of oil selling for $41, the highest fixed price on the world market today.
In additon, they have had to cope since last year with three-man "people's committees" running their joint ventures with the Libyan government, part of Qaddafi's revolutionary system of government of elected people's congresses. Since the companies have only a 49 percent interest, they are allowed only one representative on the committees, which make all decisions.
Discord between the American and Libyan members is common and tedious negotiations over minor expense items are a regular occurrence, according to company officials. Because of the uncertainty over their fate in Libya, the American companies here have not been putting much time, money or effort into exploring for new oil deposits. Only 35 drilling rigs are at work in the country.
This has lead the Libyan government to sign a whole series of exploration and the production accords with new companies, most of them European and Latin American.