US Treasury lifts sanctions on Libyan oil subsidiaries

OFAC removes ban on transactions with several Libyan oil company subsidiaries

US Treasury allows trade with Libyan oil producers

The US Treasury has lifted sanctions on several Libyan oil subsidiaries, following international efforts to aid the National Transitional Council in rebuilding the country.

On Friday, the Office of Foreign Asset Control (OFAC) issued a licence reversing sanctions imposed in February when unrest first broke out in Libya. This new regulation allows US nationals to engage in any transactions involving entities owned or controlled by the Libyan National Oil Corporation, with the exception of Zueitina Oil Company, provided such transactions do not involve the Libyan National Oil Corporation itself or any other persons still affected by sanctions.

"The Libyan National Oil Corporation has been a primary funding source for the Gaddafi regime," said OFAC director Adam Szubin in March, but he added that sanctions might be lifted if it comes under new ownership and control. The new Libyan oil chief and head of the corporation, Nuri Berruien, has already dismissed the chair of Zueitina Oil Company, Mohammed Abuhajar, for being a suspected loyalist of Colonel Muammar Gaddafi's regime.

OFAC's decision is part of a wider international effort to support the National Transitional Council (NTC), which has been in control of Libya since it seized Tripoli from Gaddafi loyalists in late August. The NTC has pleaded for assets held internationally to be released to allow the rebuilding of the country's economy.

On August 30, UN secretary-general Ban Ki-moon encouraged member states to respond to the NTC's requests. "It was vitally important that the Security Council Sanctions Committee acted to release $1.5 billion in frozen Libyan assets for humanitarian assistance," he said, following the unfreezing of assets held by the US. "I appeal to the council to be responsive to the requests of the transitional authorities for funding."

The next day, UK foreign secretary William Hague announced that 280 million dinars ($232 million) had been delivered to the Central Bank of Libya in Benghazi. This money was part of a stock of 1.86 billion dinars printed in the UK and frozen  at the start of the unrest in Libya to prevent it falling into the hands of the Gaddafi regime. Hague stated that returning the money to the Libyan people formed "part of our commitment to help the National Transitional Council rebuild Libya".

Talks held in Paris on September 1 by French president Nicolas Sarkozy and UK prime minister David Cameron saw around 60 countries and international organisations follow suit and pledge to "free the money of the Libya of yesterday to finance the development of the Libya of today".