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Libya planning
Egypt investments

OPEC member Libya is planning an oil refinery and a natural gas pipeline in Egypt, helping to raise Libyan investment in its Arab neighbour to US$10 billion over the next two years, the Libyan prime minister said. Al-Baghdadi Ali al-Mahmoudi told a news conference in Cairo Egypt and Libya signed an agreement to boost Libyan investment in sectors such as energy, agriculture and real estate, as well as loosening restrictions on movement between both countries. "We have now about US$2 billion (of investments) and we expect that within a period of two years maximum this will reach US$10 billion," he said. "It was agreed that an oil refinery will be built west of Alexandria with Libyan funding and it will be used for Libyan crude," he added.

The Mediterranean port of Alexandria is the second-largest city in Egypt. The refinery would have a capacity of 250,000 bpd, Mahmoudi said, without giving further details. Egypt, which pumps around 700,000 bpd of crude oil, is attracting domestic and foreign investment to its energy sector. Citadel Capital, an Egyptian private equity firm, is on course to finalise a loan package to build a US$3 billion oil refinery near Cairo with a capacity of some 85,000 bpd.

Egypt also said last year the Indian group Reliance was planning to invest in the oil refining, petrochemical and plastics industries in the Arab country. The Egyptian government said it needs strong foreign direct investment (FDI) for the sake of overall growth. In the nine months up to March 2008 FDI was worth US$11.3 billion, more than for the whole of the 2007/8 fiscal year. Mahmoudi said the deal included a natural gas pipeline between Alexandria and the Libyan city of Tobruk. He did give further details on the project.

A senior official at the Egyptian Oil Ministry told Reuters the pipeline would carry Egyptian natural gas. The official, who asked not to be named, said building it would take two years. The oil ministry said in June it will not sign new contracts to export natural gas until the end of 2010 or until it thinks that world prices have stabilised. Gas experts say Egypt, a major natural gas exporter, has a surplus for which it could sign new contracts.

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