Occidental Petroleum

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u.s. firm active in libya.

Occidental Petroleum was a small, nearly bankrupt company when it was purchased in 1956 by Armand Hammer, a Russian-born American entrepreneur. Occidental won oil concessions in Libya during the 1965 bidding round and struck oil shortly afterward. Within two years, Occidental had become a major shipper of oil to Europe as a result of the abundance and quality of Libya's oil, and the closure of the Suez Canal during the Arab-Israel War of 1967.

Occidental's dependence on Libya made it a prime target for "the Libyan squeeze." The government of Muammar al-Qaddafi, who took over Libya in a bloodless coup in 1969, ordered Occidental to cut back production for refusing to agree to higher oil prices. Within three months, Hammer agreed to pay 30 cents more per barrel as well as a higher rate of taxes. Other companies followed his lead, touching off the oil price revolution of the early 1970s.

Although Occidental produced oil elsewhere, it kept its operations in Libya despite the nationalization in 1973 of 51 percent of its holdings. In 1985 Occidental sold 21 percent of its Libyan equity to the Austrian firm OMV.

In 1986 U.S. economic sanctions against Libya ordered all U.S. firms operating there to halt their activities. These sanctions were augmented in 1992 by U.N. sanctions imposed in retaliation for Libya's refusal to extradite two suspects in the December 1988 bombing of a Pan American flight over Lockerbie, Scotland. In 1999 U.N. sanctions were lifted, but two years later, the U.S. Congress voted to renew U.S. sanctions for five additional years. Despite Occidental's close ties with high-level members of the U.S. presidential administrations of Bill Clinton and George W. Bush, it was unable to have Libya removed from the State Department's list of countries supporting international terrorism. The Clinton administration did allow Occidental to survey its abandoned production facilities in 1999. Despite its success in getting the Bush administration to expand its support for the drug war in Colombia (which, incidentally, protects its operations there), Occidental has been unable to get permission to resume operating in Libya. As the prospects for the return of U.S. oil companies to Libya continue to dim, Occidental risks the loss of its Libyan holdings. Should the Libyan government ever implement its September 2001 ultimatum that Occidental and the other four U.S. companies with oil interests in Libya resume operations there, they would face the revocation of their concessions.

see also arabisrael war (1967); libya; petroleum, oil, and natural gas; petroleum reserves and production; qaddafi, muammar al-; suez canal.


Mobbs, Philip M. "The Mineral Industry of Libya2001." Available from <http://minerals.usgs.gov/minerals.>

Rand, Christopher T. Making Democracy Safe for Oil: Oilmen and the Islamic East. Boston: Little, Brown, 1975.

Sampson, Anthony. The Seven Sisters: The Great Oil Companies and the World They Shaped. New York: Viking, 1975.

Tétreault, Mary Ann. Revolution in the World Petroleum Market. Westport, CT: Greenwood Press, 1985.

mary ann tÉtreault