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UPDATE: Tripoli Halts All Energy Cooperation With Italy - Libya's PM

Thursday, Jul 14, 2011

(Adds detail, background from the third paragraph.)

TRIPOLI (AFP)--Libya's premier announced a "total halt" on Thursday to cooperation with Italy, saying no future deals would be signed with energy group ENI because of Italy's participation in a NATO bombing campaign.

" ENI is finished and that is for good," Baghdadi Mahmudi told journalists, denouncing Italy for having "violated" a non-aggression pact with Libya signed three years ago.

"We will no longer work with ENI and Italy will have no future petrol contracts in Libya," Mahmudi said.

He estimated that ENI had invested around $30 million (21 million euros) in the Libyan petroleum sector.

"Under the agreement signed and adopted by the parliaments of the two countries, Italy agreed not to attack Libya," Mahmudi said.

"Unfortunately, since the start of the aggression, Italian warplanes have been killing our children, destroying our houses and our country's infrastructure," he added.

However, the premier did not write off ties with France and the United States, saying Tripoli was reaching out to these two countries and is "ready" to negotiate oil contracts with them because they "are beginning to reconsider their position on Atlantic aggression" against Libya.

"If they take a step in our direction, we will follow suit," Mahmudi said.

He said his country, shaken for five months by rebellion, would renegotiate oil contracts with priority given to Russia, China and Latin America.

Russia abstained from the U.N. Security Council vote on the resolution that opened the way for international intervention in Libya, and Moscow has since remained critical of the objectives and intensity of NATO's air strikes.

China has held its line of non-interference in the conflict, although several rounds of contacts have taken place of late between Chinese officials and representatives of the Libyan opposition.

Prior to the conflict, Libya, which is a member of the Organization of Petroleum Exporting Countries, had been exporting 1.49 million barrels of oil per day, 85 percent of which was sold to Europe.

Various foreign companies, including ENI and Norway's Statoil, had been extracting Libya's oil deposits.

However, combat around the Gulf of Sirte, in which most of Libya's oil terminals are situated, has caused oil output to plummet, causing International Energy Agency members to tap into their strategic reserves to head off the threat of shortages at the start of summer in the northern hemisphere.

Libya's National Oil Co is subject to international sanctions targeting Gadhafi's ability to repress his own people.

"Oil has been used against us like a weapon," Mahmudi said, denouncing "European oil companies that profited from Libya contracts" for being "the first to apply the sanctions against NOC and to stop dealing with it."

(END) Dow Jones Newswires

14-07-11 1532GMT