Bush's decision allows the resumption of most bilateral commercial activities with Libya (AFP)

WASHINGTON, April 24 (IslamOnline.net & News Agencies) – Libya praised U.S. President George Bush’s decision to ease the 18-year U.S. economic sanctions on the country, a move seen as largely serving America’s oil giant.

"The change is also a major victory for American oil companies — among them some of Mr. Bush's most enthusiastic donors and supporters — who have been banned from operating in Libya since the sanctions were imposed 18 years ago," the New York Times said Saturday, April 24.

Bush, gearing up for a make-or-break presidential elections in November, announced Friday, April 23, easing economic sanctions to reward Tripoli for giving up its attempt to obtain weapons of mass destruction, Agence France-Presse (AFP) reported.

The decision allows the resumption of most bilateral commercial activities, financial transactions and investments and enables U.S. firms to buy or invest in Libyan oil.

It will also enable the U.S. State Department to set up a liaison office in Tripoli, a step toward normalizing diplomatic relations that were broken off in 1981.

But the dramatic move does not affect sanctions tied to Washington's designation of Tripoli a state sponsoring terrorism, including a ban on weapons sales or exports of items with potential military uses.

Moreover, direct air service is still not authorized and frozen Libyan government assets in the United States will remain so.

Oil Gains

Bush’s decision will allow U.S. companies to invest in Libya’s lucrative oil sector, dominated by non-American foreign companies at the time of sanctions.

In the absence of U.S. companies, Italian, French and German firms have come to dominate Libyan oil sector.

Libya said earlier this week that its potential oil reserves of 100 billion barrels could be three times higher than those already proven and that many American firms have expressed interest in developing them once Washington's sanctions are lifted.

If the 100-billion-barrel figure is confirmed, Libya would be sitting on nearly 10 percent of the world's total reserves, with a hydrocarbon wealth similar to Kuwait's.

The Washington Post quoted Saturday experts as saying "the administration moved with unusual speed to restore ties with Libya, given its long estrangement from the United States".

Bourima Belgesem, general manager of the Tripoli-based Petroleum Research Centre, said the new state of relations will allow cooperation to proceed fast in the oil sector.

"There will be more companies coming, more technology available at more competitive prices," he said.

'Pleased'

The chiefs of influential American oil companies hailed Bush's statements, expecting to make big gains exploiting Libya’s substantial oil wealth.

Marathon Oil Co, Amerada Hess Corp, Conoco Inc - which operated jointly in Libya as the Oasis Group - and Occidental Petroleum Corp welcomed the Bush decision.

"We're very pleased that the government has taken this action," Marathon spokesman, Paul Weeditz, was quoted as saying by the BBC News Online.

Oasis production peaked in 1969 at one million barrels a day, and was estimated at just over three quarters of that in 1986, when they exited the country with the American sanctions.

A visiting U.S. oil executive said discussions are going on between Libya and U.S. companies that were present in the country before 1986 and that contacts have been established between Tripoli and potential newcomers.

Oil experts say Libyan production is now only half of what it was in its peak year of 1970 when it reached 3.3 million barrels a day.

Libyan Energy Minister Fathi Omar Bin-Shatwan said Libya was seeking to increase its maximum oil production capacity from 1.7 million barrels per day to three million bpd over a period of seven to ten years.

He estimated at approximately 30 billion dollars the total investment needed to develop the oil sector upstream (exploration, production) and downstream (refining, export terminals and marketing) over this period.