Counterattack in Libya

First came the artillery barrage: a series of ads In U.S. and European newspapers warning petroleum buyers that Texaco Inc. would "pursue all legal remedies to recover crude oil illegally taken from it in Libya." Almost Immediately, the attack began. Texaco and Standard Oil of California sued in Italy to recover from a Sardinian refinery a total of 640,800 bbl. of crude. The companies contend that the oil was pumped from their concessions in Libya and sold by the government of Colonel Muammar Gaddafi in violation of their contract rights.

The move marks the spread of a new strategy by which multinational companies hope to counter the threat of expropriation: the international legal blockade. Kennecott Copper Corp. had some success with the approach last fall, after the Chilean government of Marxist President Salvador Allende Gossens had expropriated its huge El Teniente mine without compensation. Kennecott got courts in France, Italy, Germany and Sweden to hold up payments by European purchasers for four separate shipments of copper from El Teniente, contending that the copper was in effect stolen property. The shutoff of European markets for the copper probably helped to build economic pressure on Allende, who lost his life last month in a violent military coup.

Legal skirmishing over Libyan oil started in late 1971, when British Petroleum filed the first of several suits against Italian and Greek purchasers of oil from a field that Gaddafi had nationalized. American companies were not then involved, but on Sept. 1 this year, the militant Gaddafi decreed that Libya would take over a 51% interest in all foreign-owned oil operations and pay the companies what they had actually invested, less depreciation. The companies were given until the end of September to agree, or risk 100% nationalization. Such big firms as Exxon and Mobil refused, and are seeking much larger compensation. Texaco and California Standard, which operate a joint venture called American Overseas Petroleum Ltd. (Amoseas), went further and stopped exporting crude from Libya for a time when port authorities insisted that invoices declare that the oil is 51% owned by the government.

In their Sardinian suits, the companies assert that, acting over their protests, the crude was twice loaded from Amoseas storage tanks in Ras Lanuf terminal aboard a ship that was to deliver it to the Saras refinery near Cagliari, Sardinia. The oil firms are suing Saras for return of the crude or payment of an estimated $2,000,000 cash for the cargo, on the ground that the oil still legally belongs to Amoseas.

The oil companies can hardly put as much pressure on Gaddafi as Kennecott did on Allende. Allende was isolated, strapped for foreign currency and desperately dependent upon copper sales; Gaddafi has strong backing from other Arab oil states, commands huge reserves of foreign money and can find plenty of eager markets for Libya's oil.

But Texaco and California Standard hope to press Gaddafi into making a deal that they feel they can live with.

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