Benghazi aspires to become Libya's business capital

* Eastern city wants to restore status as business centre

* Residents say marginalised for decades under Gaddafi

* Benghazi wants return of oil body to city

By Marie-Louise Gumuchian

BENGHAZI, Libya, Jan 23 (Reuters) - At a construction site on Benghazi's waterfront, engineer Seraj Bushada proudly points to a giant hole in the ground that will make way for a 48-floor office tower that city officials hope will help transform part of this port city into a modern business district.

Unlike the capital Tripoli, Benghazi, Libya's second-biggest city, has few modern high-rise developments.

Construction of the $300 million Three Towers project, which will include two smaller blocks housing luxury apartments and a hotel, was delayed due to the uprising against former dictator Muammar Gaddafi, which began here nearly two years ago.

The project is now due for completion in 2015 and is being promoted in Benghazi's bid to regain its former status as the country's business capital and end what residents see as decades of marginalisation under Gaddafi.

"We have to work together to realise this dream," Bushada said.

Turning that dream into reality will be a challenge. Security is a major concern for foreign investors in the city, highlighted by the attack on the U.S. diplomatic mission in September in which the U.S. ambassador and three other Americans were killed.

Only last week a car bomb killed a Benghazi police officer, the second such attack in as many days and the government is considering imposing a night time curfew on the city.

Many Benghazans, however, are calling for the country's new constitution - due to be drafted in coming months - to give the city powers to manage its own affairs and a share of the eastern region's resources.

While the revolution succeeded in overthrowing Gaddafi, they argue, it has failed to spread wealth more evenly in Libya. Benghazi is the main city in eastern Libya, which provides around 80 percent of the country's oil wealth, yet the city is still dependent on the government in Tripoli for funding.

Some residents and officials are calling for the constitution to officially restore Benghazi as Libya's business capital, a status it held under King Idris until his overthrow by Gaddafi in a coup in 1969. With an estimated population of nearly 1 million, it is roughly half the size of Tripoli.

"Everything was here before, Benghazi is the best place to be the economic capital," said businessman Kais el-Bakshishi of the "Benghazi Economic Capital" campaign, which counts about 700 members including local businessmen, activists and academics.

"The main reasons are its strategic location - a gateway to Africa and Egypt and historically the people of Benghazi are traders. A lot of businessmen in Tripoli are from Benghazi."

STRIKING A BALANCE

Perched on the Mediterranean sea, Benghazi was the first city to revolt against Gaddafi and later became the rebels' main base before Tripoli, some 1,000 kilometres (620 miles) away, fell in August 2011.

City officials' first priority is to push the central government to move state companies such as the National Oil Corporation (NOC) and Libyan Airlines, which were based here under King Idris but later moved to Tripoli, back.

"If we can get these back to Benghazi, we can make it the economic capital," said Abdelhamid Elhadad, head of the industrial and oil committee of the Benghazi local council.

"We are trying to restore Benghazi to what it once was," he said, sitting in the council's new offices - where posters claiming "Together we will build our city" hang next to signs banning weapons.

The NOC was formerly the Libyan General Petroleum Company, which was founded in Benghazi in 1968. After the NOC was established in 1970 it relocated to Tripoli.

"The objection is that it is like before - everything is controlled by Tripoli; this is not why the revolution took place," said Tahani Mohammed Ben Ali, head of the Benghazi workers' union at Libya's biggest oil firm Arabian Gulf Oil Company (Agoco).

"There are infrastructure, health, education needs here."

With the country still volatile, Libya's new rulers - led by Prime Minister Ali Zeidan's cabinet and the general national congress - know they have to strike a careful balance to appease regional rivalries.

That plays in Benghazi's favour and the oil ministry has proposed splitting the NOC into an exploration and production company based in Tripoli and a refining and petrochemicals company in Benghazi. Residents in eastern Libya as well as activists and oil workers vehemently oppose the plan, however, and say the whole company should relocate to Benghazi.

"If someone steals something from you, you want it back," Ben Ali said.

Other plans for enhancing Benghazi as a business hub include improving its infrastructure.

Its port is outdated while the airport, which has just one cramped hall, had been slated for an upgrade when the war began.

"The plan before was for 5 million passengers a year, now we want 15 million passengers a year," Bakshishi said.

South Korean company Nemo Partners is building a temporary passenger terminal at the airport. But progress on expanding the airport has been slow as the central government is reviewing previous foreign investment deals in the country before it approves new ones.

Benghazi officials are also considering building a free trade zone and have proposed public works projects to provide jobs, namely for the former rebel fighters who have yet to lay down their weapons.

"We want to look after the factories around Benghazi, we need to boost manufacturing," Elhadad said. "We have an industrial area of around 1,000 hectares, we want to have a real industry here, we want to build more hotels."

Elhadad wants Benghazi to be twinned with cities like Istanbul or Marseille to promote ties and plans to write to the mayor of New York, seeking to attract U.S. interest.

Industry in the area focuses on cement, and cable and steel pipe factories, as well as oil services, but badly needed foreign investment is only trickling in.

The International Monetary Fund forecast Libya's economy shrank 60 percent in 2011 due to the conflict but expected it to expand by 122 percent in 2012 and 17 percent this year.

TRADE PICKS UP

Benghazi still faces many of the same problems as the rest of Libya. Rubbish is piled up on its streets and beaches; jobs are in short supply; and weapons are everywhere as the government has failed to control rival armed factions since the end of the uprising.

However, it has seen more commercial activity in the past year and dozens of new clothing, food and consumer goods shops have sprung up.

"Things are getting better, lots of new businesses were established after the revolution," an Egyptian worker at a supermarket in the city, said. "And people are spending."

One local businessman said retail business in Benghazi had tripled since before the war, but did not cite a source for the figure: "The former fighters have money so they are spending."

At a conference this week, businessmen and campaigners laid out plans for Benghazi's economic revival, but many acknowledged security remained a priority.

Last week Italy - the former colonial power - suspended activity at its consulate in Benghazi and withdrew staff for security reasons after unidentified gunmen opened fire on its consul's armoured car.

The consul was unhurt but the incident recalled the attack on the U.S. mission, in which American intelligence officials say Islamist militants with ties to al Qaeda affiliates were most likely involved. Last week's hostage crisis in Algeria has added to security concerns in North Africa.

"How can you turn Benghazi into an economic capital when there isn't even any security?" Khaled Al-Nomi, a shop assistant, said. "Things are getting worse here, not better."

Many Western businessmen are adopting a wait and see approach towards Libya, keen to see whether the interim government can get a grip on security. Arab and Turkish businessmen are more prominent.

Local Benghazans stress that the violence is more against security officials than civilians, but the attack on the U.S. mission has been a setback.

"Some companies up until last year visited Benghazi," Tarek Alwan, managing director of London-based consulting firm SOC Libya, said.

"Some were actually progressing towards establishing local agents, but since the security is not fully stable in the city, I think many pulled out." (Additional reporting by Ghaith Shennib; Editing by Andrew Torchia and Susan Fenton)

Oil Ministry plans to split NOC in two; “unlikely” to placate Benghazi

Oil refinery in Brega. The NOC’s refining activities would be headquartered from Benghazi under the proposal.

The Ministry of Oil is proposing to separate the National Oil Corporation’s exploration and production activities from refining, establishing two separate bodies to be respectively headquartered in Tripoli and Benghazi.

The initiative comes a little under two months after a plan to give Benghazi effective responsibility for exploration, production and refining services in eastern Libya was put on hold following protests in Tripoli.

It is believed that the revised proposal is designed to placate oil workers and activists in eastern Libya who want Benghazi to have a greater say in the running of the country’s oil industry.

“In the oil and gas ministry, we have a near-term plan with respect to the [eastern] region,” new Oil Minister Abdelbari Al-Arusi said in a statement on the NOC’s website.

“[The body] will be called the ‘National Corporation for Oil Refining and Petrochemicals Industry’ and will oversee all companies operating in this area. It will launch projects and secure funding for them.”

In Tripoli would be headquartered the ‘National Corporation for the Exploration and Production of Oil and Gas’. The two departments would also have branches in Tripoli and Benghazi respectively, and would be under the Ministry of Oil.

According to the head of the NOC’s oilfield services arm, however, the proposal is unlikely to placate eastern discontent as currently conceived.

“I don’t think Benghazi will accept it”, Mohammed Albadaly, CEO of Jowfe, told the Libya Herald. “They want exploration and production, not refining. There are far fewer commercial activities in downstream, whereas upstream you have drilling, exploration, production, pipelines and so on”.

Albadaly said that the proposal would more likely be accepted by Benghazi if reversed, to give exploration and production responsibility to the east and leave refining in Tripoli, but that fierce resistance is likely to be encountered in the capital either way.

“A lot of the NOC’s employees are older; they have families and they have roots. They don’t want to move and they don’t want to lose their jobs. That’s why there was so much resistance to Decree 100”.

Under Decree 100, the proposal that was previously shelved, the NOC’s hitherto inconsequential Benghazi branch would have been given de factocontrol over the oil industry in eastern Libya, home to some 80 per cent of the country’s oil fields.

Five departments were to have been established, in the fields of petro-chemicals and refining, exploration and production, human resources, administration and finance. Having only been signed off on 4 October, NOC Resolution 100 was in force for less than a week before being suspended in the face of fierce opposition from staff in Tripoli.

Speaking to the Reuters news agency, Deputy Oil Minister Omar Shakmak described the latest plan as “a matter of reorganisation. We will receive feedback from experts within the oil sector and civil organisations … and upon that, a proposal will be submitted to the government,” he said.

Source: Libya Herald

Canoel Announces Expansion Into Libya

Canoel International Energy Ltd. ("Canoel" or the "Company") (TSX VENTURE:CIL) is pleased to announce that it is opening a representative office in Libya and is processing the opening of a local company registered under local Libyan laws.

Canoel has identified Libya as a country in which it will in the future seek to identify opportunities to conduct business and purchase exploration or production assets.

In Africa, Canoel already owns a small stake in Mafula Energy Ltd., a Zambia registered company, which has been awarded an exploration permit.

Andrea Cattaneo, the company's CEO, states "We are excited to start a settlement into Libya. We trust that this fast developing country will be a promising area where to deploy our exploration and & production skills."

Canoel's business plan is to grow through international acquisitions and exploration and to increase the production and reserves from its international inventory of oil and gas projects.

Libya's 2012 total oil and gas revenues are expected to be $54.9 Billion US Dollars.

(source: Libyan National Oil Corporation, NOC)

Earnings from oil exports account for more than 90% of Libya's National Income.

IMF generally positive on Libya, with caveats

The International Monetary Fund has expressed generally positive views about the direction of the Libyan economy.

Though working from June figures, which made the Washington-based economists think that Libya would not return to its pre-revolution hydrocarbon output until next year, when in fact the country hit that 1.6 million barrels daily this September, the report is generally upbeat.

As part of its biannual regional economic outlook, the IMF predicts a record-breaking 2012 GDP growth of 120 percent for Libya, coming after last year’s radical 60 percent contraction. If the security situation improves as predicted, the IMF believes that economy will remain robust, with growth for next year of 17 percent, easing thereafter to seven percent from 2014-2017.

Given no radical change in oil prices,  it says, Libya can expect a fiscal surplus this year, equivalent to 19 percent of GDP, while the current account surplus rises to 22 percent of GDP.  Inflation, which the IMF estimates was running at 16 percent last year, will, it expects, ease back to ten percent this year and drop to just one percent next year.  This sharp decline willF come about, “ despite upward pressure on domestic prices arising from supply bottleneck in housing and transportation.”

It warns however that if the global economy continues to struggle with recovery, oil and gas prices could fall, which would present the hydrocarbon-dependent Lbyan economy with challenges.

The IMF speaks of concern over security and political stability, but majors on the government’s need  to  exercise fiscal discipline, while maintain macroeconomic stability.

“As a short-term response to the aspirations of the revolution, the interim government raised wages and subsidies. “notes the report, “Although Libya can afford elevated levels of current expenditure during a transitional period, the increase in wages and subsidies is eroding the country’s fiscal buffers and undermining prospects for fiscal sustainability”.

The IMF also warns that Libya must tackle a whole range of pressing issues from improved education, rebuilding infrastructure, developing a financial market, cutting economic dependence on oil and gas production and putting in place an efficient social security net.

To this end, it says: “The country will need to establish a governance framework to improve transparency and accountability, to better manage its resource wealth, and help promote private sector-led economic development.”

By Hadi Fornaji " Libya Herald" 

IMF sees Libya growth skyrocketing 116.6% this year

Economic activity in Libya is likely to rebound this year as the country rebuilds from civil war and oil production increases to levels last seen during Muammar Gaddafi's rule, the International Monetary Fund said on Tuesday.

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conomic activity in Libya is likely to rebound this year as the country rebuilds from civil war and oil production increases to levels last seen during Gaddafi's rule, the International Monetary Fund said on Tuesday.

In a report on Libya's economy conducted by an IMF mission in May but published only now, the Fund forecast growth will skyrocket 116.6% this year, following a contraction of 60% in 2011. Growth next year is expected to ease to 16.5% and 13.2% in 2014, the IMF added.

Such impressive rebounds in growth are not unusual in countries emerging from conflict, as the government pours money into rebuilding projects and pent-up private demand boosts spending.

While Libya's government can afford the current high rates of spending, over the longer term it is not sustainable and will push the budget into deficit from 2015, the IMF estimated.

"A more thorough analysis of sustainability based on the present value of financial assets and future oil extraction indicates that, from 2012, public spending will exceed the sustainable, long-term level by over 10% of GDP," the IMF added.

The IMF warned that continued political uncertainty, insecurity and the possibility of a drop in global oil and gas prices were risks to Libya's outlook.

The oil price at which Libya's budget is balanced has increased to USD 91 per barrel in 2012 from USD 58 a barrel in 2010, and is set to exceed USD 100 a barrel from 2013, the IMF said.

A deeper crisis in the euro zone and sharper slowdown in the world economy could push global oil prices lower, which would be pose challenges for Libya's oil dependent economy, the IMF added.

As Libya's imports return to normal, consumer price inflation should be contained at 10% despite pressure on prices from supply bottlenecks in housing and transportation, the IMF added.

The fund said, however, that a drop in the country's high level of unemployment is not likely without reforms.

Meet Mahmoud Jibril: The Man Who May Be Libya’s First Elected Leader

Following landmark elections this past weekend in Libya, results point to a coalition of moderates and secularists winning the majority of votes. The head of that camp is Mahmoud Jibril, a man once at the heart of the Gaddafi regime who defected to the rebellion last year

JAMES LAWLER DUGGAN / MCT / ZUMA PRESS

Mahmoud Jibril, who heads the centrist National Forces Alliance, holds a press conference in Tripoli, the Libyan capital, on July 8, 2012, one day after the Saturday elections

Back in 2010, TIME paid a visit to Mahmoud Jibril, a U.S.-educated policy wonk in Libya’s capital Tripoli who’d been drafted by Muammar Gaddafi’s government to overhaul the country’s state-run economy after decades of one-man rule. Sitting in his large office in the National Economic Development Board, Jibril laid out a vision for a Western-style government that would transform Libya from a stifling dictatorship into a thriving 21st century country. “There must be a legal frame with division of powers, and the right of free expression,” he told TIME then. “We are very late. We have to shorten the time span of things.”

As it happened, it took a bloody revolution and thousands of deaths, including Gaddafi’s, to shorten the time span for Jibril’s plan — something that seemed unimaginable in 2010. Now, Jibril might finally get his chance to put his vision into practice, thanks to last Saturday’s elections in Libya. Although it could take days for officials to confirm the election results, Jibril’s centrist National Forces Alliance appears certain to have won the vote for a 200-member General National Congress, and while Jibril hasn’t said he intends to be the new leader, the coalition’s victory puts him in place to head Libya’s first elected government in 60 years — and the first to emerge from the Arab Spring that is not dominated by a religious Islamic party.

(PHOTOS: Libyans Turn Out for a Landmark Election)

For the 60-year-old economist with a Ph.D. in political science from the University of Pittsburgh, that is a most surprising career trajectory indeed. Having left to study in the U.S. in 1975, Jibril later consulted several Arab governments in economic management and had little thought of returning to Libya. Then in 2007, he was lured home by the one man who appeared capable enough of pushing through drastic reforms — Gaddafi’s hugely powerful son Saif al-Islam. In his new job, Jibril told the U.S. ambassador to Libya, Gene Cretz, that Libya was “opening widely and very fast,” according to a diplomatic cable written by Cretz in 2009, published by WikiLeaks. In a markedly optimistic report, Cretz said Jibril had convinced him that there were lucrative business opportunities for American companies in Libya. “Jibril is a serious interlocutor who ‘gets’ the U.S. perspective,” he wrote.

Jibril believed that change was possible within the Gaddafi regime, something that has haunted him since. Many Libyans still question Jibril’s role as an insider in the dictatorship, as well as the fact that he hails from Libya’s most populous tribe, al-Warfalla, who claimed long allegiance to Gaddafi rule.

But by early 2011, Jibril had concluded that Saif’s ideas of reform — real or not — were doomed, so long as his father and the conservative henchmen surrounding him remained in power. Jibril slipped out of Tripoli in Feb. 2011 and joined the revolution in Benghazi, where he had been raised. Then, he quickly began pushing world leaders to back the rebels. Equally at home in Western capitals (as Cretz had suggested), Jibril clinched formal recognition for the rebels from President Nicolas Sarkozy in a crucial meeting at the Élysée Palace in March 2011, which presaged NATO’s bombing campaign weeks later. In Tripoli, Saif fumed to TIME that his closest associates — chief among them was Jibril — had betrayed him “big time.” But by then, Jibril’s diplomatic footwork had succeeded, and it was the Gaddafi regime, rather than Saif’s reform plan, that was doomed.

Jibril went on to head the rebel leaders’ National Transitional Council, but many of his colleagues criticized him for failing to delegate responsibilities properly. He quit the job after Gaddafi was killed last October, and began plotting his political future — one rooted in part on his huge success in turning last year’s rebellion into a full-scale revolution. “He was instrumental in getting international approval for the rebels, and everyone gives him credit for that,” says Sami Zaptia, managing editor of the Libya Herald, a new English-language online newspaper. Zaptia believes that Jibril’s tribal background makes him ideally suited to drawing Gaddafi’s old loyalists — including many Warfalla — into supporting the new Libya. “I don’t think you will find many people who will dispute Jibril’s skills as a planner, a strategist and a visionary.”

Even with those skills, Jibril’s new job, either as the leader or as a key strategist, will be no cakewalk. With massive oil reserves and only about 6.3 million people, Libya has the cash with which to implement economic reforms — a far different situation from, say, Egypt, which depends heavily on U.S. aid. Yet countless weapons remain in the hands of potentially hostile militia groups. And youth unemployment remains rampant, according to the African Development Bank.

Jibril will begin with one big advantage, however: a ready-made plan for the future, which he drafted as head of Libya’s Economic Development Board, using consultants from Monitor Group in Cambridge, Mass.; Ernst & Young; and the Oxford Group. At the time those groups were heavily criticized by some Libya watchers for believing that it was possible to reform Libya under Gaddafi — a criticism that proved correct. In an interview on the night Gaddafi was killed last October, Jibril told TIME in Tripoli that Gaddafi’s regime had blocked his reform proposals at every turn. “They took everything they received from us and just threw it in the garbage,” he said. He listed among other plans massive tourism development, solar-power and wind-energy projects along Libya’s long Mediterranean coastline, a drastic overhaul of the outdated education system and a program to mobilize millions of underemployed women. “This is a real road map,” he said. “We have the plan ready.” Now it’s time to dust it off.

Source: World Time 

Read more: http://world.time.com/2012/07/11/meet-mahmoud-jibril-the-man-who-may-be-libyas-first-elected-leader/#ixzz20JenJoEa

Elections to mark new start for Libya economy

For Tripoli businessman Salem Mohammed, Libya's first elections in a generation on Saturday will pave the way for what he believes the North African country should become - a new Dubai.

"We have oil, we have money, Libya can easily be just like Dubai," the 47 year old, who works in manufacturing, said.

"We just need foreign investors and hopefully they will now start coming and business will boom."

Nine months after the end of Libya's uprising, Mohammed hopes Saturday's election of a national assembly will mark a new start for an economy that stagnated under Muammar Gaddafi's 42-year autocratic rule.

Investors will be closely watching the outcome of the vote - with no indication of a leading contender - to see what it will mean for projects that were frozen during the fighting and for the vast opportunities likely to emerge in an oil-producing nation with the wealth to pay for construction and healthcare.

Libya's new rulers have said no major new concessions would be awarded until after the polls and are reviewing past deals.

Once elected, the new 200-member assembly will appoint a government to replace an interim administration that lacked the mandate to make major decisions, and expectations are for old projects to restart and for new contracts to be signed.

"There are a lot of projects (on standby), everyone wants to settle their projects from before," said Klaus Fodinger, head of the cement division at Austria's Asamer Holding, which resumed operations in Libya in October.

"If there are no institutions, no one to talk to, how do you settle deals from the past? The elections are a crucial event."

Many international businesses came to Libya in recent years, attracted by its huge energy reserves and a population, which although numbering just 6 million, has median incomes much higher than elsewhere in the region.

But the eight-month NATO-backed uprising sent foreigners fleeing.

While oil companies were the first to return and have helped Libya climb back close to pre-war output levels of 1.6 million barrels per day, others have not been as fast.

Government trade delegations from around the world have visited, vying for future contracts. As commercial flights have resumed, businessmen have also jetted in for short stretches. Most companies which had a foot in Libya before have mainly wanted to get their ventures back up and running as they await a clearer political and legal landscape.

Tarek Alwan, managing director of London-based consulting firm SOC Libya, said he had been approached by numerous companies seeking guidance on how to enter the Libyan market.

"Major ones are seriously interested but they have not committed yet because the situation is not fully stable, economically and politically," he said.

"They have been waiting for the elections so this will give them some sort of assurances that there will be proper elected (authority) to represent the country."

WAITING FOR THE GREEN LIGHT

Major construction, such as residential property and hotels, as well as transport projects are untouched since last year, awaiting the green light from the authorities to restart.

"Despite the fact that most major public-sector projects are on hold, there is nonetheless a great deal of planning going on across many ministries and government agencies, and this is a positive sign," said Alex Warren, of research and advisory firm Frontier, which runs The Libya Report business site.

"It suggests that once an elected government is in place, then many projects look set to start or be resumed."

The question is how quickly they will resume. The fasting month of Ramadan, when daily life usually slows, begins shortly after the elections.

The assembly is expected to be named at least two weeks from July 7 after ballot counting is finalised and an appeals process. Within 30 days of its first meeting, it will appoint a new prime minister who will form a government.

"For major projects and contracts, I don't see it really picking up, in terms of new tenders or companies returning, until the last quarter at the earliest," Warren said.

The election is expected to lead to reforms and investors want to know what those policies will be. In May, the economy ministry issued a decree enabling foreign companies to set up joint ventures, branches and representative offices in most sectors, more easily.

"Businesses are looking with great hopes towards the elections," David Bachmann, head of the commercial section at the Austrian embassy in Tripoli, said.

"However, they are aware that probabilities are high that even after the elections it might take some months - hopefully not years - before decisions are taken."

While public sector entities await, the private sector is flourishing, especially trade. Tripoli's port is heaving with activity and foreign produce is stocked on supermarket shelves. A cash crisis has eased and shops and cafes have re-opened.

Monoprix Tunisia, an affiliate of the French supermarket chain, wants to start opening 10 stores in Libya from late 2012, after uprisings in both countries delayed earlier plans.

On the construction side, small-scale private projects have taken off - homes are being built, businesses being refurbished.

HUGE POTENTIAL; SECURITY RISKS

Austria's Asamer, which operates cement factories in Libya through a joint venture, has gradually increased production since January.

"We see a huge potential - there are the needs of young population and a lot of infrastructure to be reconstructed. We expect a boom in construction activity," Fodinger said.

Gaddafi isolated Libya's economy from much foreign competition, reserving licences and contracts for his own circle, so the prospect of a more open market is attractive to new entrants.

Dependent on oil, Libya needs basic infrastructure development as well as investment in property, consumer industries and telecoms after a fifth of transmitter stations were destroyed in the war. It will also need foreign investment and expertise to increase oil and gas production.

Its tourism industry is largely unexplored, despite stretches of beaches and well-preserved Roman ruins.

Various fairs drawing international businesses have allowed companies to cultivate relations. Industry Minister Mahmoud Al-Ftise said there were plans to increase privatisations, and Libya was interested in more foreign investment.

"We would like to have a participation from foreign and local private business so we can see results because we would like to have competition among the business," he told Reuters.

However security remains a concern. Bouts of violence are deterring foreign firms from bringing back all their expatriates on the ground for now. For those who were once used to living in villas or flats in Tripoli, they now find themselves confined in secure compounds without their families.

Many businessmen travel with security advisers.

Libya's interim government has struggled to impose its authority on a country awash with weapons. Attacks on diplomatic and aid missions in the east have highlighted the ongoing volatility.

Last month, Tripoli's international airport was seized by an armed group for several hours.

"Security is a concern and when you hear of such violent incidents as we have recently, you worry and it may deter some foreigners from coming here," one European businessman said during a recent trip to Tripoli.

"But you have to weigh the risks against the opportunities."

Source: Reuters 

Libya Seeks U.S. Investment in Areas From Oil to Tourism

Libya is seeking to boost its oil production by a third to 2 million barrels a day by year-end, surpassing last year’s pre-conflict level, Libyan ambassador to Washington Ali Aujali said.

How fast Libya returns to pre-war levels or surpasses them “depends also on the oil companies, how fast they are returning” to restart or expand operations, Aujali said, speaking at a Bloomberg Government breakfast in Washington yesterday.

Beyond oil, Libya is eager for American investment in tourism, health care and education, he said. The nation, whose governance is still in flux, plans to hold the first election for the national assembly next month after four decades of rule by dictator Muammar Qaddafi.

“The environment is great” for U.S. companies, in large part because the Obama administration is credited by Libyans with pressing for NATO military action that helped topple Qaddafi last year, Aujali said.

“They appreciate what the Americans did,” he said, and American flags are often flown alongside Libyan ones around the country.

Libya’s governor for OPEC, Samir Kamal, set expectations lower than Aujali did, telling reporters last week in Vienna that the government hopes to reach 1.6 million barrels a day by year-end.

Aujali said the North African nation has restored crude oil production to more than 1.5 million barrels a day, or 90 percent of official production figures before Qaddafi was ousted in a violent uprising. The months-long conflict sent production levels plummeting to 45,000 barrels a day in August, according to a monthly Bloomberg survey of oil companies, producers and analysts.

Rising Output

Libyan production was restored to 1.45 million to 1.55 million barrels daily by the end of May, according to figures from the Organization of Petroleum Exporting Countries.

Oil Minister Abdul-Rahman Ben Yezza said last week that Libya plans to spend about $10 billion to develop long-term oil and natural gas projects and increase its crude production capacity. He said the country also has a five-year plan to increase production to about 2.2 million barrels a day.

Aujali said “we need more investment” to develop the oil industry and fulfill a longer-term goal of restoring Libya’s crude production capacity to its historical high. The U.S. Department of Energy estimates it exceeded 3 million barrels a day in the 1960s.

Aujali cited ConocoPhillips (COP) (COP), Exxon Mobil Corp. (XOM) (XOM) and Occidental Petroleum Corp. (OXY) (OXY) as among U.S.-based multinational energy giants that have returned to Libya, and urged other U.S. companies to invest in all sectors of Libya’s economy.

American Opportunities

American companies need to “be more involved, to be more aggressive to visit Libya to see where they can make business,” he said, so they don’t lose opportunities to other countries such as Italy, which has been proactive in seeking business prospects.

Aujali cited health care, infrastructure, education and tourism as sectors in which the Libyan government is seeking foreign investment. He said tourism remains one of the least- developed industries, citing Libya’s 2,000 kilometers (1,243 miles) of beaches and its cultural attractions, including Leptis Magna, one of the best-preserved Roman ruins in the Mediterranean,

Aujali said Libya is seeking American universities and hospitals interested in assisting with training and technology and setting up branches or partnerships, as many have done in the Persian Gulf and North Africa.

Unfrozen Assets

Libya is looking to the U.S. and NATO countries to help rebuild after a bloody conflict that cost the nation billions of dollars in lost trade and revenue, according to the International Monetary Fund. The revolution killed 30,000 people and wounded 50,000 others, according to the Libyan government.

“You supported this revolution at a critical time,” he said. Still, “the new road is not built,” so the U.S. needs to stay involved to ensure the democratic transition is completed.

The Obama administration has done everything possible to assist Libya’s government, including making available $31 billion in Libyan government assets under U.S. jurisdiction that was frozen as a penalty on Qaddafi’s government, Aujali said.

The only Libyan assets that remain frozen by the U.S. are about $3 billion belonging to the Libyan Investment Authority, the government-managed sovereign wealth fund and holding company based in Tripoli, he said. The authority needs to be reorganized under a dependable board of directors before “we feel safe” asking for the funds to be released, he said.

Election Plans

Libya has scheduled elections for July 7. Aujali said 145 political parties have formed, with 3,000 candidates vying for 200 legislative posts. About 80 percent of eligible voters have registered, underscoring excitement about the democratic transition, he said.

Still, the situation remains volatile, Mustafa Abdul Jalil, chairman of the National Transitional Council, said in an interview with state-run Qatar News Agency June 17. Libya risks descending into civil war if the current unstable security situation persists, he was quoted as saying.

Aujali said his country has studied other nations’ models for reconciliation and justice following long dictatorships during which many were persecuted. Libya is “not starting from zero. There are many with experience in the history and we learn from them.”

‘No Revenge’

While some members of the old regime are under arrest, “there is no revenge at the time being against the Qaddafi regime,” he said. “Reconciliation is important. But in the first place, justice has to be made.”

Aujali said he expects a speedy resolution of the “misunderstandings” in the case of a team from the International Criminal Court in the Hague that was detained June 7 by Libyan authorities. Libya accused Australian defense lawyer Melinda Taylor of trying to smuggle documents to Qaddafi’s son Saif al-Islam Qaddafi in a Libyan prison. The Libyan government accuses Qaddafi’s son of directing the killing of thousands during his father’s regime and during the rebellion.

“The Libyan people, they have the right before anybody else to try Saif al-Islam in Libya,” Aujali said of the effort to try him in the international court in the Netherlands.

Source: Business Week

Libya eyes refund of Goldman, SocGen losses

The Libyan sovereign wealth fund is investigating investment losses of $1.75 billion on structured products managed by Goldman Sachs (GS.N) and Societe Generale (SOGN.PA) to see whether it can claim compensation, the fund's chairman said on Wednesday.

Mohsen Derregia, chairman of the Libyan Investment Authority (LIA), told reporters in Milan that the LIA needed to review these investments and how they were managed.

"These were investments made in 2007 to 2008, and some of those losses are quite surprising. We've had losses for around $1.75 billion, of which $900 million was on a single investment with Goldman Sachs," Derregia said.

"We will have to see how these structured products were created, valued and managed. Then we will talk to the investment houses and see if we can claim a refund."

Asked what kind of structured products were involved, Derregia said: "It's not clear to me."

Goldman Sachs declined to comment and Societe Generale could not immediately be reached for comment.

Derregia was appointed head of the LIA in April and is sifting through tens of billions of dollars in holdings and investments made by the fund worldwide during the regime of Muammar Gaddafi, which was overthrown last year.

"To have a clear oversight of everything will take time; it won't be done in one or two months," Derregia said. "Clearly, there will have to be some write-offs, although they are not huge."

The total value of assets managed by the LIA (about $60 billion) had fallen by less than the LIA feared, Derregia added. "It's now midway between $50 billion and $60 billion. People in Libya feared we had lost 50 percent of our assets. It's not like that."

ASSETS SEIZED

Derregia was in Italy to speak to authorities and the financial community about the LIA's holdings in the country, which were seized in March by Italian financial police on the grounds that they belonged to members of the Gaddafi family.

The holdings, worth about 1.1 billion euros ($1.39 billion), include stakes in Italy's largest bank by assets, UniCredit (CRDI.MI), the oil and gas giant Eni (ENI.MI) and carmaker Fiat (FIA.MI).

The LIA has appealed against the seizure, saying that those holdings belong to the LIA, held on behalf of the Libyan government. Derregia and his lawyers said this view was backed by the Italian economy ministry's Committee of Financial Security, which he met on Tuesday.

The next hearing in the case is on July 12.

Derregia said that the LIA would keep its 1.8 percent stake in UniCredit and could buy more shares in the bank if this was in its own interest.

He said it would not make sense to sell down its Italian portfolio now, given current market conditions. "Clearly the value of the shares has declined substantially. There is no incentive for us to sell the shares now or in the foreseeable future."

Asked whether the fund would buy Italian government bonds battered by the euro zone debt crisis, he said: "We hold a lot of assets denominated in euros, and we already have enough bonds."

Source: Reuters