Occidental Oil to Sell 25 Percent of Libya Oil Holdings
LOS ANGELES (AP) _ Ending months of rumors, Occidental Petroleum Corp. announced that it will sell 25 percent of its Libyan oil properties to OMV AG, the Austrian state oil company.
Libya accounts for the largest share of Occidental’s world-wide oil operations but the agreement Thursday to sell to OMV for an undisclosed price did not come as a surprise to some industry analysts.
Rumors that the company was planning to sell at least part of its Libyan holdings began early last year.
Controversy has surrounded Occidental’s operations in the North African nation since it began doing business there in 1966.
Approximately 31 percent of the company’s total 1.01 billion barrels of oil are accounted for in proved reserves of 312 million barrels in Libya.
Just two weeks ago Occidental agreed to sell half its rich Colombian oil properties to Royal Dutch-Shell Group for $1 billion.
″There seems to be a pattern here that Occidental is trying to reduce its international risks across the board,″ said Craig Schwerdt, industry analyst with the Los Angeles brokerage of Morgan Olmstead Kennedy & Gardner.
Schwerdt said Occidental’s agreements to sell portions of its Colombian and Libyan assets were not isolated moves.
He suggested that it may have been necessary for the company to reduce its price on the Libyan property in order to attract a buyer due to declining crude oil prices and the unsteady political situation in that country.
Occidental has operated primarily in foreign countries, however. Latin America is its second largest oil producing region with proved reserves of 285 million barrels of oil, not including its rich Cano Limon find in Colombia, which is estimated to hold 1 billion barrels. The region has 78 billion cubic feet of natural gas.
The company’s domestic operations began in 1982, when it acquired Cities Service Co. of Tulsa, Okla., for $4 billion. Presently its domestic operations account for 263 million barrels of oil and more than 90 percent of the company’s 2.6 billion cubic feet of natural gas.
Libyan holdings had been highly profitable for the company, providing about half its net income in 1979 and 1980, but slipped to less than 20 percent of the company’s total last year.
The sale to OMV is expected to be completed by the end of the month, Occidental said.