March 4, 2010 / 7:48 PM / 9 years ago

WRAPUP 1-Libya warns U.S. energy firms over diplomatic row

* U.S. oil executives summoned by Libyan energy chief

* Firms told that U.S. business interests could suffer

* Row started after U.S. criticized Gaddafi remarks

* Ambassador says jihad comment didn’t mean armed struggle

By Salah Sarrar

TRIPOLI, March 4 (Reuters) - Libya’s top oil official on Thursday summoned the local heads of top U.S. energy firms to tell them a diplomatic row with Washington could hurt U.S. businesses in Libya, the state oil company said.

Libya is demanding that Washington apologise after a U.S. official made caustic comments about Libyan leader Muammar Gaddafi, and the warning to oil firms was the clearest signal yet that Tripoli was prepared to escalate the dispute.

At stake are billions of dollars invested by U.S. firms that flocked to Libya — home to Africa’s largest proven oil reserves — after a U.S. trade embargo was lifted in 2004.

Shokri Ghanem, Libya’s most senior energy official and head of its state National Oil Corporation, summoned executives from Exxon Mobil (XOM.N), ConocoPhilips (COP.N), Occidental (OXY.N), Hess (HES.N) and Marathon (MRO.N).

“He informed these companies of the resentment at the irresponsible statements made by a State Department spokesman to the media,” NOC said in a statement.

The U.S. official who made the remarks about Gaddafi “does not know that such statements will have a negative impact on U.S. companies operating in Libya,” it said.

The statement said the executives at the meeting expressed regret over the U.S. spokesman’s remarks and said they would inform Washington “that such remarks would hurt oil interests for U.S. companies.”

Tripoli’s anger was provoked by a comment from State Department spokesman P.J. Crowley last week. He was talking to reporters about a speech by Gaddafi in which the Libyan leader called for a “jihad,” or Islamic holy struggle, against Switzerland.

The spokesman said the speech reminded him of an address Gaddafi made last year, which he said had involved “lots of words and lots of papers flying all over the place, not necessarily a lot of sense.”

After Tripoli complained about his remarks, Crowley said he had not meant them as a personal attack, but he stopped short of offering the apology demanded by Libya.

Libya’s ambassador to the United States, Ali Aujali, said Gaddafi did not mean armed struggle when he called for a jihad. [ID:nN04156429]

“It is a call for (an) economic and commercial boycott against Switzerland, this is true, but it doesn’t mean by any means that it is an armed struggle,” Aujali told Reuters.

“We are very serious about our relations with the United States based on respect and national interest but ... we will not permit (the) insulting of our citizens, our leader,” the ambassador added.

BUSINESS TIES GROW FAST

U.S. aircraft bombed Tripoli in 1986 after Washington blamed Libya for a bomb attack on a West Berlin discotheque, one of several low points in relations between Libya and the United States since Gaddafi came to power in 1969. [ID:nLDE62323I]

When Libya renounced banned weapons programs, Washington restored diplomatic ties and dropped a trade embargo.

Since then business ties have been growing fast. In 2003, the United States exported $200,000 worth of goods to Libya and imported nothing. By 2009, exports to Libya had surged to $666 million and imports to $1.9 billion. [ID:nLDE62323I]

“We are having good, serious relations, We are having American investments in our country and I don’t want that this relationship of the last five years to be hurt,” Aujali said.

But bullishness among Western investors has been tempered by a fierce diplomatic row that began as a quarrel with Switzerland but has since expanded to set Tripoli at odds with several European countries and now the United States.

The problem started in July 2008 when police in Geneva arrested Gaddafi’s son Hannibal at a luxury lakeside hotel on charges of mistreating two domestic employees. They were later dropped.

The row took on a Europe-wide dimension last month when Libya stopped issuing visas to citizens of the Schengen zone, a passport-free travel zone that includes Switzerland and most European Union countries.

Libya on Wednesday also imposed a trade embargo on Switzerland. That step was unlikely to have much practical impact as the two countries’ trade ties are minimal, but it signalled Tripoli had no intention of backing down. (Additional reporting by Hamid Ould Ahmed in Algiers, Arshad Mohammed in Washington, and Alex Lawler in London; Writing by Christian Lowe and Eric Beech; Editing by Xavier Briand)

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