Exit the Colonel by Ethan Chorin Read Free Book Online

submitted proposals in the first round. Of those, sixty-eight qualified (NOC accepted bid qualifications), and
fifty-seven submitted formal bids, in various combinations. When the results were announced on January 29, 2005, fifteen exploration blocks went to the US firms Occidental (Oxy), Amerada Hess, and Chevron Texaco and their partners. The remainder went to Indian, Canadian, Indonesian, and Australian firms. None of the major European firms won blocks.
    Despite the show of transparency, many foreign analysts were absolutely certain the Libyans were favoring the Americans, alleging privately that political factors were at work in the allocation of real estate. 22 The Libyans pointed to the public, sealed-bid auction as proof that there couldn’t have been any funny business, but extremely low revenue-factor bids combined with sky-high signing bonuses accentuated suspicion that undue influence had been brought to bear. 23 Transparency aside, it was very much in the Americans’ and Libyans’ interest for the Americans to be seen to be profiting handsomely from the opening. In 2005, the industry as a whole was anticipating peak oil, a sustained rise in crude prices to above $100 per barrel. The Libyans needed US technology both to discover new reserves and to extract maximum production from aging drilling infrastructure.
    The argument can be made that conditions in Libya permitted US companies to bid far higher than their competitors. It would have been an entirely reasonable strategy for a US company with the appropriate know-how (particularly one with past experience in Libya and access to some of the old seismic data) to offer an “unreasonably” good price for Libyan real estate, in full expectation of the “unreasonably” good returns that only it or one of its sister firms could realize. Russian and Chinese oil and gas concerns, while aggressive in Libya at this time, could not match the technology of Occidental or ConocoPhillips. When deciding how to bid, they had to weigh the value they could extract against the prospects of future business and a foothold in Libya. Further, the information advantage with respect to new fields was arguably in the US corner: US firms had done most of the surveying of Libyan oil real estate in the 1970s and 1980s.
    As always, personal touches were not lost on Gaddafi. Despite the fact that Gaddafi’s squeeze of Occidental in the early 1970s resulted in billions upon billions of lost revenues to American oil, Ray Irani, Occidental’s then CEO, took charge of negotiating the company’s reentry into Libya, visiting Libya in 2005 to negotiate with Gaddafi face to face. While perhaps not a quid pro quo, the company heavily lobbied Congress and the Commerce Department for an exemption to the 2008 Libyan Claims Resolution Act. The strategy delivered what was expected: of the fifteen ESPA IV exploration
blocks, Occidental took nine—far more than its competitors. For his pains, Irani earned a record $460 million in total compensation from Occidental in 2006, much of which was assumed to be compensation for his role in securing the company’s wins in Libya and associated booked reserves. 24
    Questions remain as to what it took to secure some of these potential windfall deals. In June 2011, four months after the uprising, the US Securities and Exchange Commission (SEC) began an inquiry into possible violations of the Foreign Corrupt Practices Act (FCPA) by a series of US oil companies, including ExxonMobil, ConocoPhillips, and Occidental, and a number of US investment banks, including Goldman Sachs. The SEC conducted the inquiry in parallel with an investigation by the Libyan general prosecutor’s office into “possible irregularities” during the Gaddafi era, many of which allegedly involved influence peddling by entities controlled by Saif Al Islam. The SEC inquiry was soon expanded to cover the activities of France’s Total and