U.S.: Libyan rebel oil sales must avoid Gaddafi firms

Anti-Gaddafi rebels sit on the ground near an oil facility in Ras Lanuf, March 10, 2011.

WASHINGTON (Reuters) - Crude oil sales by Libyan rebels would not be subject to U.S. sanctions if they are completed outside of the National Oil Corp or any other entity connected to Muammar Gaddafi's regime, a Treasury Department official said on Monday.

The rebels, who regained control of a number of oil fields and terminals in eastern Libya over the weekend, would have to establish payment systems that do not utilize Libya's central bank or involve any other government entity, the official told Reuters.

"The rebels are not part of the government of Libya. They are not subject to the sanctions," the official said.

The Treasury on February 25 banned U.S. transactions with Libya's state oil producer, the central bank and other state entities in an effort to cut off revenues to Gaddafi's regime.

It later put another 14 NOC subsidiaries on its blacklist, which also seeks to freeze any Gaddafi regime assets under U.S. jurisdiction.

With the backing of Western air strikes, Libyan rebels trying to overthrow Gaddafi have retaken the main oil terminal cities in eastern Libya, including Es Sider, Ras Lanuf, Brega, Zueitina and Tobruk. They were advancing toward Gaddafi's hometown of Sirte on Monday.

Essentially, the rebels would have to establish separate, clear control of oil fields and terminal facilities and demonstrate that no revenues are flowing to the Gaddafi regime, the Treasury official said.

The official declined to comment on a Libyan plan announced on Sunday that would have Gulf oil producer Qatar market crude produced from eastern Libyan fields that are no longer under Gaddafi's control.

Ali Tarhouni, who is in charge of economic, financial and oil matters for the rebels, said output from the east Libya oil fields under rebel control was running at about 100,000 to 130,000 barrels per day. Prior to the political unrest, Libya was producing about 1.6 million barrels per day, or almost 2 percent of world output.

The official emphasized that the Treasury has not altered any of the sanctions on Gaddafi's regime, which involve freezes on some $32 billion in assets. But the sanctions do not apply to Libyan entities that are outside of the government and outside of Gaddafi's control.

(Reporting by David Lawder; Editing by Leslie Adler)