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Last Updated: Friday, 4 June, 2004, 16:39 GMT 17:39 UK
Libya supplies US with oil again
Zawia oil refinery, Libya
Oil is Libya's economic trump card
Libya has cemented its return to the international mainstream by resuming its former role as a supplier of oil to the US.

US Assistant Secretary for Commerce William Lash, speaking during a trade visit to the Libyan capital, Tripoli, said oil shipments had already begun.

He added that Libya was also in talks to buy Boeing passenger aircraft.

Libya, accused of sponsoring terrorism, was for 20 years frozen out of the world economy by US and UN embargos.

In from the cold

But the North African nation was dramatically rehabilitated late last year after it publicly ditched its weapons of mass destruction programme, and declared a stockpile of chemical weapons to UN inspectors.

British prime minister Tony Blair set the seal on Libya's re-integration into the mainstream by visiting Tripoli for talks with the country's leader, Colonel Muammar Gaddafi, in March.

The US responded by easing its embargo in April, clearing the way for US oil firms and banks to resume commercial activities in Libya.

Libya's economic trump card is its relatively undeveloped oil and gas industry, which sits on proven reserves of about 36 billion barrels.

The country, a member of oil exporters' cartel Opec, is currently negotiating deals with Western oil firms aimed at boosting production capacity from its current level of about 1.7 million barrels a day.

News of Libya's oil exports to the US comes as oil prices are at their highest level in years because of soaring demand, bottlenecks at US refineries, and fears that unrest in the Middle East could disrupt supplies.

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