LIBYA COMMERCIAL ROUND-UP FOR MARCH 2009

UNCLAS SECTION 01 OF 05 TRIPOLI 000293

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SUBJECT: LIBYA COMMERCIAL ROUND-UP FOR MARCH 2009

ENERGY


1. (U) Libya Oil Holdings Changes its Label Brand in Morocco:
The Libyan state-owned oil group Libya Oil Holdings (LOH),which
manages a network of 182 fuel distribution stations in Morocco,
will now be called "Oilibya" in Morocco. LOH is an integrated
oil company involved in the shipping, trading, refining,
marketing and sale of crude oil and refined petroleum products
in 21 countries in Africa. [africanmanager, 3/1/2009]


2. (U) Tripoli Asks Oil Firms to Cut Production Share: Libya's
state-owned National Oil Corporation (NOC) announced in its
website that it will negotiate with four international oil
companies, - Wintershall, ConocoPhillips, Amerada Hess and
Marathon Oil - operating in the country to accept a lower share
of oil production. The three American firms are NOC's
international partners in the Oasis Waha Oil Company.
Negotiations with Wintershall started in 2008, and Wintershall
expects an amicable solution, which allows both sides to reach
their aims in Libya as it was done in previous renegotiations
signed with other international oil companies during 2008.
[MEED, 3/4/2009]


3. (U) Eni Opens Tender for Libyan Gas Project: Italian oil
major Eni is to launch Libya's first water alternating gas (WAG)
scheme as part of its program to increase reserves at the Bu
Attifel field in the east Sirte basin. The enhanced oil recovery
pilot project involves the alternate injection of water and gas
to provide better production efficiency and reduce wastage from
the injection process. Current production from the field is
about 90,000 barrels a day. Eni is operator of the field as part
of an equal joint venture with the state-owned National Oil
Corporation. Eni says the scope of the project involves the
conversion of existing deep wells to water alternating gas
injectors along with a connection to an existing water injection
network and new high pressure gas compressor station. [MEED,
4/5/2009]


4. (U) Joint Venture Firm to Manage Ras Lanuf: Libya's National
Oil Corporation (NOC) has set up a joint venture company with
the UAE-based Trusta group to develop the Ras Lanuf oil refinery
in Libya. The new joint venture company, named Libyan-Emirates
Refining Company (LIRCO),will upgrade the refinery, Libya's
largest export facility, to produce output that is easier to
market in Europe. The company was formed with $375 million
dollars in combined assets; the two sides look to invest nearly
$2 billion dollars in the joint project. The initial agreements
were signed last year. The NOC had previously announced plans
for 2009 to choose a partner to revamp and possibly expand the
Azzawiya Oil Refining Company, its second-largest oil processing
plant; where the partner would take a 50 percent stake in the
plant, which processes 120,000 barrels of crude a day, in return
for funding the upgrade. [Reuters, zawya.com, bloomberg.com
3/10/2009]


5. (U) NOC Chairman Says "Libya Plans to Buy All of Verenex
Energy": Libya plans to buy all of Canada's Verenex Energy Inc,
said the chairman of Libya's National Oil Company, Shukri
Ghanem. Ghanem said Libya plans to buy all of the company, not
just its assets in Libya, by exercising an option to pre-empt a
friendly C$10-a-share bid by China National Petroleum
Corp.(CNPC),offering the same price as the agreed by CNPC. With
the assumption of debt, the CNPC offer is worth $406 million
dollars. So far, there is no sign Libyan authorities have taken
any of the steps buyers of listed companies usually take, such
as hiring advisers or issuing a formal bid, suggesting the sale
may not happen quickly. [Reuters Africa, 3/26/2009]


6. (U) Gazprom Opens Tenders for Libyan Oil Blocks: Russian
Gazprom Libya has invited contractors to prequalify for nine
projects to support exploration activities in its two blocks in
Libya. Gazprom won an exploration contract offshore in Libya's
third licensing round in 2008 and won an exploration contract
onshore in Libya's fourth licensing round. Gazprom Libya expects
the basin-modeling work to run from May until November, while it
expects the environmental work to start in January 2010. [MEED,
3/28/2009]


7. (U) Verenex to slow work in Libya's Ghadames in 2009:
Canada's Verenex Energy is temporarily reducing the pace of its
exploration program in Libya 40% from the original 2009 budget
adopted in October 2008. Also, Verenex announced that its latest
exploratory well drilled had strong gas shows and found

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extensive fracturing in the hot shale, which represents a
potential oil and gas resource play. [Oil & Gas Journal,
3/12/2009]


8. (U) Libya to invest $10-$12 Billion in Oil Projects in 2009:
Libya's National Oil Corporation (NOC) chairman, Shukri Ghanem,
said that Libya will invest $10 billion to $12 billion in its
oil industry in 2009, exceeding its total investment from last
year. Ghanem also estimated that the oil market currently has a
surplus of 1 million barrels a day of crude oil production. [Dow
Jones, 3/14/2009]


9. (U) Libyan Center for Remote Sensing Contributes to the
Publication of First Digital Geo-Mineral Map of Arab Homeland:
Arab Organization for Industrial Development and Mining has
announced the publication of its first digital Geological and
Mineral Map of the Arab Homeland.
70 percent of the total map has been digitized. The map would
help research, exploration activities and mining operations in
Arab countries attracting investors in the mining sector through
the definition of the mineral areas and promising areas for
mining investment. [Jana, 3/15/2009]


10. (U) Libya Gas, Oil Bidding Unlikely This Year: On the
sidelines of the 2009 Offshore Mediterranean Conference, Ahmed
al-Ghaber, a senior adviser to the management committee of
Libya's National Oil Corporation (NOC),said Libya is unlikely
to open an oil and gas bidding round this year, adding that the
NOC is busy enough trying to consolidate recent project
developments by companies working in the country. [Reuters
Africa, 3/25/2009]


11. (U) Shell Holds a Workshop on Oil Fields Development
Techniques: As part of the agreement on technology transfer
between Shell Libya and the National Oil Corporation (NOC),
Shell held a workshop for NOC employees on the latest techniques
used in the development of oil fields. Shell's team introduced
the latest techniques used in the additional recovery, and
technical and commercial ways in oil fields development. [NOC
website, 3/26/2009]


12. (U) Increase in Local Petroleum Prices: During the people's
congress meeting, congress members refused GPC's latest decision
related to the increase of local petroleum prices, including
gasoline, starting March 1st. GPC will consider canceling the
decision. [libyaninvestment.com, 2009-03-05]

BANKING


13. (U) Libya to Issue New Bank Notes: The Central Bank of Libya
announced on Thursday that it will issue new bank notes in the
form of 20 Dinar notes (1,300 Libyan Dinars = 1 U.S. dollar),10
Dinars, 5 Dinars and 1 Dinar on the occasion of the 32nd
anniversary of the proclamation of people's power in Libya
celebrated on 2 March every year. The new bank notes were put
into circulation alongside the former notes of the same value on
March 3rd. [afriquejet.com, 3/3/2009]


14. (U) Increase in the Number of Bank Costumers: The number of
customers who deal with banks in Libya during the years
2007-2008 increased by 7%, up to two million four hundred
thousand customers. Al-Jumhuriya Bank reported that Libya has
seen an economic development increase by 24% during the past
five years, adding that the increase in the Libyan market
competition requires all banks operating in Libya to adopt a
scientific method and the advanced platform to improve its
performance through training of Libyan bankers and improvement
of human resources. [Libyaonline.com, 3/252009]


15. (U) First Conference of Libyan Bankers: The conference was
organized by the Libya Central Bank under the theme "Together
towards Promising Banking Sector". Topics discussed included:
the financial strategies of the Libyan Central Bank for widening
the banking reserve, the importance of renovating the banking
role and of advancing internal auditing of banks working in
Libya. [JANA, 3/21/2009]


16. (U) Libya to Sell 25% of Jumhuriya Bank: The Governor of
Libya's Central Bank announced Libya's intention to sell at
least 15 percent of Al Jumhuriya Bank on the local stock market.
Jumhuriya is Libya's biggest state-owned bank with a capital of
more than 1 billion dinars after merging with al-Oumma Bank, the
fifth-largest state-owned bank. Financial authorities will

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assess the impact of the first foreign banks in the country in
more than three decades before continuing with more
privatizations. [Tripoli Post, 3/25/2009]


17. (U) Libya Aims to Grant Licenses for Foreign Lenders to
Enter Libya Next Year: The Governor of Libya's Central Bank
announced that Libya will grant the licenses either alone or in
partnership with Libyan investors. "Now we are working on
conditions and standards to grant licenses," he said. "We are
working also on the number of licenses that might be granted to
foreign banks." He said the aim would be to allow competition
without harming Libya's banking sector. [Tripoli Post, 3/25/2009]

REGIONAL ISSUES


18. (U) Libya to Build 22-story, five-star Hotel in Mauritanian
Capital: Libya will fund the construction of 30 million Euros
hotel in Nouakchott. The hotel named "al-Fateh" will be built
near the national army headquarters in Nouakchott. The
construction process, scheduled to last for over 20 months, will
create 450 jobs, while the hotel will create 300 jobs upon
completion, including 90% of Mauritanians. The al-Fateh hotel
will be built under the form of a date palm tree. The highest
building in Nouakchott so far does not exceed 10 stories.
[Tripoli Post, 3/14/2009]


19. (U) African Development Bank signs Loan Agreement with
Egypt: The loan of $450 million dollars will be allocated for
the implementation of the project of building thermal-steam
generators near the port of Ain Sukhna, which lies 120
kilometers east of Cairo. The aim of the project is to increase
production capacity strengthening the infrastructure that would
allow Egypt to meet the demand for electric power. The total
cost for the project is estimated at 85.1 billion dollars.
[afdb.org, 3/23/2009]


20. (U) Libya Gives Eight Tractors to The Gambia: The provision
of these tractors to The Gambia is part of the agreement between
the two nations in contribution to the development of the
agricultural sector in The Gambia. Libya also will provide
twenty Vietnamese experts on agriculture for two years.
[Allafrica, 3/25/2009]

LABOR


21. (U) Libya to Recruit Thousands of Bangladeshi Workers: Libya
will recruit thousands of workers from Bangladesh as part of an
infrastructure development plan worth more than $100 billion.
The Libyan Embassy in Dhaka is issuing about 300 visas per day
and that number will increase due to a huge demand for workers
in Libya. Bangladesh is one of the world's poorest countries and
depends heavily on remittances from expatriate workers, but host
countries are facing problems with their own slowing economies.
[Reuters, 3/23/2009]

INVESTMENT


22. (U) Libya's 2008 Balance of Payments Surplus at $44 Billion,
Reserves at $136 Billion: The Central Bank of Libya announced
that Libya had $44 billion balance of payments surplus in 2008.
The Governor, Farhat Omar Bin Guidara, told the General People's
Congress that Libya's foreign currency reserves were at $136
billion at the end of 2008. Libya is among the few countries
which are free of any foreign debt, which also helps it maintain
a strong balance of payments. Guidara said Libya's medium term
financial situation would not be a source of concern despite the
global financial crisis, and anticipated a non-oil economy
growing by 5-7 percent for 2009, with government spending the
main engine of growth. Libya's cumulative oil revenues were $462
billion for the 1970-2008 period, with average annual oil
earnings at $11.8 billion, according to government data. The
Libyan government spent $162.3 billion for the same period
according to government figures released to the General People
Congress. [Reuters, 3/6/2009]


23. (U) India and Libya to Promote Investment: India and Libya
entered into an agreement to promote investment by granting each
other most favored nation treatment. The Bilateral Investment
Promotion and Protection Agreement (BIPA) between India and
Libya has been ratified in both sides. According to the
agreement, both the countries will encourage and create
favorable conditions for investors of each other to make
investments in their region and to admit investments in

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accordance with their laws. [India News Online, 3/25/2009]


24. (U) Libya Establishes 20 Billion Libyan Dinar Fund to
Finance Medium and Small Businesses: The Tripoli Business
Incubator program has been established to help Libyan graduates,
unemployed and women to find suitable finance for their projects
and provide them with general business assistance. Libyan
authorities are to establish more business incubators in other
cities. The Tripoli Business Incubator will be assisted in its
early stages by the Jordanian Expertise House. [Tripoli Post,
3/14/2009]


25. (U) Standard & Poor's Agency Issues Credit Rating to Libya:
Standard & Poor's (S&P),a U.S. ratings agency, has issued its
first credit rating for Libya, assigning the country A- for its
long-term prospects and an A-2 rating for the short-term. The
rating is the first assigned to Libya since the country began to
emerge from international isolation in 2003. The credit rating
agency says the outlook for Libya is stable, noting that the
country holds substantial assets and little debt. S&P notes its
rating is constrained by "limited transparency of official
decision-making in Libya", and remarks that private sector
development remains at an early stage. [MEED, 3/18/2009]

CONSTRUCTION


26. (U) Marriott International to Open 370-Room Hotel in Tripoli
in 2011: Marriott International announced that it would open a
luxury JW Marriott Hotel in Tripoli by 2011. The 370-room JW
Marriott Hotel Tripoli is owned by Daewoo Tripoli Investment and
Development Co., a joint venture between Korean Daewoo
Engineering and Construction and Libyan Oyia Co. and will be
managed by Marriott under a long-term contract. The 36-story,
innovatively-designed hotel will be located in Tripoli's new
central business district. [Tripoli Post, 3/14/2009]


27. (U) Korean Lotte Engineering & Construction Company Wins $76
Billion Dollars Project in Libya: The project consists of the
construction of facilities including roads, drainage system,
water service, electricity and communications on a 415 hectares
area of land located 100 kilometers west of Tripoli. The
construction is expected to take 48 months until the completion.
[Einnews, 3/12/2009]


28. (U) Libyan Cement Company Undergoes Major Internal
Upgrading: The Joint Libyan Cement Company Incorporated (JLCC),
established as a Libyan company by the Economic and Social
Development Fund (ESDF) and the Austrian Asamer Group in 2008,
has undergone through major internal changes, restructuring the
existing management, and is undertaking an investment program to
repair, modernize and upgrade the cement plants in Benghazi,
Hawari and El Fathaia in order to increase production of cement
to meet the market demand in the long term. All these changes
are planned to be fully completed by the end of 2009. [Tripoli
Post, 3/25/2009]


29. (U) Opening of Al-Wahat Hotel in Houn City: Houn, an oasis
town 500 kilometers southeast of Tripoli, was the administrative
capital of the Italian region of Fezzan and now is one of the
new tourist landmarks in Libya. Al-Wahat hotel was built on an
area of 40,000 square meters. [JANA, 3/25/2009]


30. (U) Chinese Gezhouba Wins $400 Million Dollars Contract in
Libya: Chinese Gezhouba Group Corp, one of the biggest
engineering and construction enterprises in China, signed a
construction contract worth $406 million dollars with the
Housing and Infrastructure Board of Libya on March 25. According
to the agreement, Gezhouba Group will offer services of survey,
evaluation, planning, design and construction of an
infrastructure project in southwestern Tripoli. The project is
expected to take about four years. [China Knowledge, 3/30/2009]


31. (U) Dubai's Drake & Scull to Set Up Libyan Unit: Dubai
contractor Drake & Scull International is setting up a Libyan
unit this year, its second venture in Africa, as it expands
abroad and weathers a downturn at home. The construction sector
is suffering a sharp slowdown in the UAE, while Libya is
undertaking a $126.5 billion five-year infrastructure
redevelopment plan to modernize water and sanitation facilities
and build airports, schools and houses. [Reuters, 3/31/2009]

TRANSPORTATION


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32. (U) New Airbus Planes are Delivered to Afriqiyah Airways:
Afriqiyah Airways will inaugurate new lines in July, September
and November according to its development plan. Starting in
July, there will be two weekly flights to South Africa, Dubai
and Manila; as from September, there will be three weekly
flights to Congo Brazzaville and by November, two weekly flights
between Tripoli and Beijing. [libyaninvestment.com, 3/5/2009]

AUTOMOTIVE


33. (U) Chinese Great Wall Motor Company to Export 3,300 Pickups
to Libya: Chinese Great Wall Motor Company (GWM) won a Libyan
government procurement order to supply 3,300 pickups for around
$30 million dollars. The first batch of 1,000 pickups will
arrive in the Benghazi Port at the end of March and the
remaining 2,300 units will be delivered by June. The vehicles
will service Libyan governmental departments including the
departments of energy, electricity, medical care and sanitation,
as well as traffic and transportation. GWM's technicians are
already in Libya in order to develop after sales service.
[Tripoli Post, 3/25/2009]


INDUSTRIAL


34. (U) Ace Hardware to Open Six Stores in Libya: Ace Hardware
Corp., a retail cooperative, based in Oak Brook, Illinois,
announced its plans to open six stores in Libya during the next
10 years, beginning with two stores this year in Tripoli. Ace
Hardware agreed to terms of a license agreement with Technology
Corner, a consortium of Libyan business interests. The stores
would be the first free-standing hardware outlets in Libya. Ace
Hardware has 4,600 stores worldwide in more than 60 countries,
including Kuwait, Saudi Arabia and United Arab Emirates.
[Tripoli Post, 3/1/2009]
CRETZ