Desert Oil & Political Quicksands

Four years ago, after French consortiums began pumping a treasure of oil from under the desert sands, Charles de Gaulle proudly prophesied: "France may have found a new destiny in the Sahara." Last week that destiny seemed to be taking a turn scarcely envisioned by De Gaulle. To his sequestered Elysee Palace in Paris, he summoned a coterie of advisers to help him figure out the next move in the sticky negotiations that France has been holding for a year with her former foe, Algeria. Subject of the negotiations: the perilous future of French oil concessions in the Sahara.

The best-known image of desert oil is that of such places as Saudi Arabia and Kuwait; the Middle East does, in fact, account for a quarter of the world's petroleum output. But as the sheiks grab bigger and bigger slices of oil revenues, producers have been busy developing alternative resources closer to the oil-hungry European market. The big gest of these now lie in the Algerian and Libyan Sahara, where drilling rigs, tank farms and smoke-plumed refiner ies give a modern industrial look to the ancient face of the desert.

Courting Both Sides. French companies, mostly government-owned, have invested $1.8 billion in Algerian oil, and France takes two-thirds of Algeria's 184-million-barrel-a-year output. Last year this not only met 37% of France's oil needs in dollar-saving francs but poured $60 million into the treasury of Algerian President Ahmed ben Bella.

Not content with that (plus some $221 million of outright French aid), Ben Bella is demanding half ownership of the oil industry, which now gives him 50% of the profits, so that he can industrialize poverty-stricken Algeria. French negotiators seem willing to give in to demands for joint management of new oil ventures, but want to hold out for the profitable status quo on existing operations. So far, Ben Bella has shied away from talk of outright nationalization, but Algerian oil workers are ominously pressuring producers for control over hiring, firing and promotions.

Meanwhile, Ben Bella has been courting both Western and Communist oilmen to reduce his dependence on France. Soviet experts are training 650 Algerians as oil technicians at a school near Algiers, and a U.S.-British-French combine has just opened a $64 million plant at coastal Arzew to freeze natural gas and ship it to fuel-shy Britain in insulated tankers. Italy's giant ENI plans to build a refinery at Arzew on a fifty-fifty basis with Ben Bella.

Plenty for King Idris. No such political quicksand threatens oilmen in Libya, where relations with the government have been stable and happy (with fifty-fifty profit-sharing) ever since Standard of New Jersey brought in the first big field in 1959. Since then, output has shot up so fast that Libya now ranks eighth among the world's oil-producing nations, and this year's $250 million oil income will account for 80% of King Idris' revenues. Of 20 companies active in Libya, 13 are American.

Oilmen have invested $1.3 billion in

Libya. A consortium headed by Socony Mobil, which recently snaked a third pipeline across a desert still infested with World War II mines, this week will begin pumping oil to a terminal on the Gulf of Sirte. From there, tankers can haul it to European markets for 40-c- a barrel cheaper than oil from the Persian Gulf. If oilmen are resigned to Ben Bella's muscling into their business in Algeria, the danger of similar moves in Libya seems remote. And Libya, oilmen predict, will soon produce three times as much oil as Algeria.

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