The Libyan government threatened to nationalize Petro-Canada's assets and then cut the company's production in the desert nation over a diplomatic dispute in 2009, while Canadian companies with business interests there successfully pressured Ottawa to soften its stance toward Libya's President, secret diplomatic cables reveal.
The documents, sent by American diplomats in Tripoli and released by the WikiLeaks website Monday, offer a look behind the scenes at the spat between the Canadian and Libyan governments after Canada openly rebuked Libyan President Moammar Gadhafi for welcoming Lockerbie bomber Abdel Bassett al-Megrahi.
The incident began when, on his way home from giving a speech at the United Nations, the Libyan leader decided to stop in St. John's for to refuel his aircraft. The Canadian government announced Foreign Minister Lawrence Cannon would travel to Newfoundland to personally chastise him.
Mr. Gadhafi cancelled the trip.
The U.S. ambassador to Libya, Gene A. Cretz, explains that Canada's ambassador, Sandra McCardell, told the Libyans in mid-September that their President wasn't welcome in the country, as Canada's minority government feared the impression a reception of the Libyan leader would leave on voters. He writes she further said Mr. Gadhafi's last-minute trip would be difficult to accommodate, as it would require issuing visas quickly without extensive security checks for his entourage.
The day before the Libyans decided the President wouldn't visit, the National Oil Company called in Petro-Canada's chairman for a dressing down, and said it would seize the company's assets if the Canadian government didn't issue an apology. It set a deadline of the following day.
"The Libyans set a deadline of September 28, which [Ms. McCardell]told the Ambassador would be difficult to meet given that offices in Ottawa would open near close of business Tripoli time and after the Canadian weekend," the cable reads.
Ms. McCardell, for her part, argued that Canada ought to issue a message that would indicate the country would welcome the Libyans.
A later cable indicates Libya eventually dropped its threat to nationalize Canadian oil assets, but instead demanded Petro-Canada cut its production in half. In a bizarre detail, a Libyan engineer who works for a partner company of Petro-Canada's is quoted as saying the diplomatic row may have been exacerbated by Canada's issuing the Libyan President a tourist, rather than a diplomatic visa.
An unnamed Petro-Canada official is said to have told diplomatic staff that he was receiving frequent phone calls from the National Oil Company with ever-changing instructions, and was ready to tell the government to "do whatever you want with us."
"[The official]confirmed that Petro-Canada had prepared contingency plans for repatriating its Canadian staff following reports that the Libyan authorities were planning to "raid" Petro-Canada's offices," the cable says.
Despite the dispute, the Canadian company planned to go ahead with a plan to drill 49 new wells at the start of 2010.
"Libya's moves against Petro-Canada, set against the backdrop of an escalating conflict with Switzerland, have left the expatriate business community on edge. Libya's willingness to explicitly link commercial contracts to political disputes has only added to the international energy companies' growing frustration with the Libyan business climate," it says.
In October, Mr. Cannon visited Tripoli and met with the Mr. Gadhafi in hopes of smoothing over the quarrel. The cable says a solution appears to be in sight, but notes speculation the Libya's President may have simply been using the spat to gain personal political points.
Suncor, the company with which Petro-Canada merged, could not immediately provide a comment on the dispute.