By Will Dunham

WASHINGTON (Reuters) - The Pentagon sent experts to study Libya's chemical weapons and determined it would cost $100 million (57 million pounds) to destroy them, but the United States still must decide whether or how much to help, a senior Pentagon official said on Thursday.

James Tegnelia, director of the Pentagon's Defence Threat Reduction Agency, said a team from his agency assessed how to deal with the north African country's "tens of tons of mustard gas" and supplies of "precursor chemicals" that could be used in making chemical weapons.

The 13-member team was in Libya from January 19-28, the Pentagon said, but officials declined to identify the site of the material for fear it would end up in the hands of terrorists. Tegnelia said it was mainly stored at a single remote, desert location.

"In round numbers, the destruction of the Libyan chemical weapons capabilities is going to be $100 million," Tegnelia told a small group of reporters.

Mustard gas is a potentially deadly chemical agent that attacks the skin and eyes, causes severe blisters and, if inhaled, can damage the lungs and other organs. Libya has declared a mustard gas stockpile of 23 tons.

Tegnelia said the United States must decide what to do -- if anything at all -- to help destroy these Libyan weapons. He also said the United States must decide whether a sum like $100 million could better be used to help secure Russian tactical nuclear weapons that some experts fear could fall into the hands of terrorists.

The United States has taken steps towards restoring commercial relations with OPEC member Libya since the former pariah state announced its intention in December 2003 to abandon its weapons of mass destruction -- chemical, biological and nuclear arms -- programs and allow in international arms inspectors. Libya remains one of half a dozen countries on a U.S. list of state sponsors of terrorism.

TERRORISM CONCERN

The Libya trip comes as the United States moves to try to prevent terrorists from acquiring weapons of mass destruction that could be used against America or its allies. Some experts have decried the slow pace of U.S.-assisted nuclear security efforts in Russia.

Tegnelia said ultimately it was the responsibility of the Libyan government to come into compliance with the Chemical Weapons Convention, an arms control agreement that went into effect in 1997 prohibiting the production, stockpiling and use of chemical weapons.

"In today's world, it's not like they don't have resources to be able to do that," Tegnelia said.

"And the question is: do you want to do everything, do you want to do just the mustard gas, what kind of things do you want to take on? If we were to help them comply with the Chemical Weapons Convention, we've have to destroy the mustard gas and the precursor chemicals," Tegnelia said.

Tegnelia said his agency was creating a proposal for the State Department and Pentagon policymakers on what the United States could do "to help do away with the Libyan chemical weapons capability."

Tegnelia said the United States must consider: "What are the Libyans prepared to do to help? What is the condition of their weapons systems. I mean, if they aren't a terrorist threat, that would have a bearing on how important it is to try to secure it."

The Pentagon team was invited by Libya, Tegnelia said.

Tegnelia, who earlier incorrectly told reporters the trip was in February, said the chemical agents at the desert site likely "will degrade over time," but the Pentagon had figured out two ways of disposing of them without having to move them from their present site.