LIBYAN NOC CHAIRMAN GHANEM'S VIEWS ON PETROLEUM ISSUES

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000600

SIPDIS

DEPARTMENT FOR NEA/MAG, COMMERCE FOR MASON, ENERGY FOR PERSONS

E.O. 12958: DECL: 10/19/2016
TAGS: ECON EINV ENRG EPET PREL LY
SUBJECT: LIBYAN NOC CHAIRMAN GHANEM'S VIEWS ON PETROLEUM ISSUES

CLASSIFIED BY: Ethan Goldrich, CDA, Embassy Tripoli, State.
REASON: 1.4 (b),(d)




1. (C) Summary: Charge met with National Oil Corporation (NOC)
Chairman (and former Prime Minister) Shukri Ghanem on October 15
to discuss US-Libyan energy sector cooperation. Ghanem
expressed confidence in Libyan efforts to boost oil production
and defended the establishment of the Cabinet-level National
Energy Committee over the NOC. End Summary.


2. (C) Charge congratulated National Oil Company Chairman
Shukri Ghanem on receiving the "Petroleum Executive of the Year"
award at the 27th annual Oil and Money conference in London on
September 18-19. Responding to the Charge's comments on his
acceptance speech, "The End of Cheap Oil," Ghanem wryly noted
that although oil prices have rebounded recently, he did not
expect that trend to continue for long. In the near term,
prices should dip following the announcement of a one million
bbl/day OPEC production cut, the expected result from OPEC's
October 19 meeting in Doha. Ghanem lamented the difficulty of
accurately predicting fluctuations in world oil prices, and
estimated that roughly $10-15 of the cost of a barrel of oil
stems solely from market apprehension about war and political
instability in the Middle East region.

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Meeting Libyan Production Goals
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3. (C) When asked for an update on Libya's efforts to boost
petroleum production to three million bbl/day by 2010, Ghanem
expressed optimism that this figure could be met on this
timeline through the continued implementation of the NOC's
two-prong plan. The first is the recent opening of Libya to
exploration by foreign oil companies. Although the most recent
concession awards will take 6-8 years to produce oil in quantity
(if a sizable find is made),other new areas are due to come
on-line in the next three years. The second, and likely more
important factor for production increases in the short-term,
will be the enhanced and improved oil recovery (EOR, IOR)
operations being undertaken at Libya's mature fields. Ghanem
stressed that the return of U.S. companies and expertise will be
vital to this effort.


4. (C) Ghanem expressed satisfaction at the progress of the
latest round of Exploration and Production Sharing Agreements
(EPSA). The NOC's review of 70 applying companies produced a
list of 47 qualified bidders who will have the opportunity to
bid on concession rights in 12 offshore blocks and 29 onshore
areas. Multiple bids are expected from most of the qualified
companies, so the total number of bids should number well over

100. Ghanem noted that oil company interest in Libya remains
high, owing to its vast proven and potential reserves, past
production history and advantageous geographic location. He
confirmed recent meetings with top U.S. oil company executives
from Occidental, Chevron, Exxon-Mobil, Conoco-Philips and
Marathon, describing them as positive and routine.

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The National Energy Council(NEC): "Not a bottleneck"
--------------


5. (C) Ghanem attempted to clarify the role of the
recently-formed "National Energy Council" (NEC). (Note: This new
government entity is composed of the Ministers of Industry,
Planning, Economy, Finance, and Labor, as well as Ghanem and GPC
Secretary or "Prime Minister" Al-Mahmoudi. Its formation has

SIPDIS
raised concerns among largely professional, technocratic
operation would be become more politicized, or at the very least
add an unnecessary bureaucratic layer over the GOL energy
sector. End Note). According to Ghanem, the new body will "not
be as people think; it will be strictly consultative, not a
bottleneck." Ghanem stressed this point several times,
emphasizing that the NEC will produce efficiencies, rather than
more bureaucracy. The NEC will be tasked by the full Cabinet to
make energy sector decisions from time to time, and its select
membership will help ensure that government laws and operations
do not negatively impact the energy sector.

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Trade Shows and Conferences
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6. (C) Noting active USG and US company interest in, and
support for, the upcoming Project Libya conference (December
4-7) Charge requested that Ghanem meet with visiting
representatives of U.S. companies during that period. Ghanem
was non-committal, but agreed to see what was possible if he was
not traveling abroad. Charge noted the great proliferation of
conferences in Libya, particularly those concerning the energy
sector, and many of which made claims to sponsorship by GOL
entities. In this vein, Charge inquired whether the NOC was
supporting the November 21-22 "Libya Oil and Gas Show" (as
indicated in the exhibition's promotional materials). In
response, Ghanem conveyed measured exasperation at the number of
exhibitions and conferences being staged across Libya, and his
view that they detracted from "real work." He opined that many
of them were primarily money-making operations staged by
individuals with varying levels of government connections.
Regarding the 21-22 November event, Ghanem recalled agreeing to
authorize a NOC statement of support, but stated that the NOC
did not plan to play an active role in the exhibition.





BERRY
GOLDRICH