Gadhafi to Kick Out Western Oil Firms, Turning to Russia and China

Libyan leader Moammar Gadhafi has vowed to expel Western energy companies from the country and replace them with oil firms from China, India, and Russia.

Gadhafi made the comments on the heels of recent successes against rebel forces.

“We are ready to bring in India and Chinese companies to replace Western companies,” he said in a speech.

And in an interview published Wednesday by RT — a global multilingual television news network based in Russia — Gadhafi said: “We don’t trust the West anymore, so Russia, China and India will be our allies in the oil sector, construction and investments.”

An Italian company in Libya

Gadhafi meton Sunday with the ambassadors from China, India, and Russia and offered them an opportunity to take over oil installations vacated by Western companies, after they were sent packing once the rebellion reached a fervor, according to the government news agency JANA.

“If Gadhafi wins, Libya will look to the east for support,” Shadi Hamid, director of research at the Brookings Institution’s Doha Center in Qatar, told Bloomberg.

“Western companies won’t get back in any time soon and won’t be able to invest.”

Bloomberg observed that Gadhafi’s “threat to bring China into the energy business that Italy has enjoyed for five decades may reshape the economic map of the country holding Africa’s biggest oil reserves.”

In 2004, Libya received a reprieve from two decades of trade restrictions and allowed firms, including Royal Dutch Shell and BP, to invest in Libyan oil fields, boosting output to about 1.6 million barrels a day.

Most Libyan oil has been sold to Europe, and Libya is Italy’s main oil supplier.

Italian Foreign Minister Franco Frattini told a parliamentary committee on Wednesday that “China’s reasoning is an economic one.

“China is far less interested in the strategic argument and much more concerned with its economic interests in Africa. Out of this situation, great doors open for China.”

Chinese and Russian companies would likely step in to replace Western companies in Libya, said Ian Bremmer, president of political risk consultancy at Eurasia Group. And “earthquake-hit Japan would also likely have few qualms about buying Libyan oil,” CNBC reported.

Gadhafi has expelled foreign oil companies before. Three years after he seized power in 1969, he gave the state-owned National Oil Corp. at least 51 percent of all concessions, Bloomberg observed.

“The West are likely the losers here, particularly the countries that have taken the toughest line,” Anthony Skinner, a political risk consultant, told Reuters.

“There is the risk that they will end up looking ridiculous. Outside military intervention could still change things, but that might only make things worse, particularly if it was not enough to oust Gadhafi.”