The US State Department on Wednesday said it was contemplating sanctions against German utility giant RWE Dea for having signed a contract to explore oil and natural gas in Libya.

“Reports such as those about a recent agreement by the firm RWE to explore for oil and gas in Libya are of concern to us,” US State Department’s deputy spokesman, Philip Reeker said.

“United States policy has long been opposed to investment in the petroleum section of Libya,” Reeker added.

The US is considering sanctions against the RWE under the 1996 Iran-Libya Sanctions Act (ILSA).

“We normally raise our concerns with appropriate parties, including companies and governments, and we have done so in this case with the company and with the German government,” the spokesman said.

“We will evaluate the facts, determine whether sanctionable activity has taken place, and, if it has, then decide in light of our national interests what action under the law we would take,” he added.

ILSA allows United States to punish foreign firms that invest more than 20 million dollars per year in either Iran or Libya’s energy sectors.

'United States policy has long been opposed to investment in the petroleum section of Libya'

-US spokesman

But in a statement released from Hamburg in Germany, RWE Dea insisted its value of contract signed with the Libyan National Oil Corporation last May did not meet the ILSA limitations.

“The agreed work program, extending to include seismic prospection and exploration wells, will call for a total of approximately 56 million dollars in capital spending over a five-year period, i.e. significantly less than 20 million dollars per anum,” it said.

“In the course of our exploration project, all national and international agreements will be strictly observed,” the company said.

If sanctions against RWE is imposed, it would be for the first time that provisions of the ILSA would be invoked.