RUSSIA DISCOVERS LIBYA ANEW

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MOSCOW, October 11. (RIA Novosti's economic analyst Vasily Zubkov) - Even with the recently announced merger between the gas monopoly Gazprom and the Rosneft oil company, analysts did not miss the visit of Gazprom's CEO Alexei Miller to Libya. His talks with the country's Prime Minister Shukri Muhammad Ghanim and president of the National Oil Corporation Abdullah Salem al-Badri on the outlook for cooperation in the oil and gas industry suggest that Russia intends to make this cooperation practical and expand it significantly.

Of course, the current Russian-Libyan trade volume of several dozens of millions of dollars cannot be compared to the billions of dollars they posted some ten or fifteen years ago. In 1969-1991 the Soviet Union received over $20 billion from exports to Libya. Now this country is one of the most solvent in Africa.

Expansion of cooperation in geologic exploration, hydrocarbon production and pipeline construction is fully in line with the Russian-Libyan inter-governmental agreement on cooperation in the oil, gas and power industries (signed in 2000). If this cooperation developed successfully, these industries would account for over half of the bilateral turnover, which Russian experts forecast to reach $4 billion annually. At present Russian energy companies are represented in the country only by Zangaz (the new name of Zarubezhneftegazstroi), Tatgeorazvedka, Tekhnopromeksport and some others. Although it is well known that few years ago Libya invited LUKoil, Yukos and Zarubezhneft to take part in tenders for development of oil fields.

Analyzing the Russian gas giant's interest in Libya, it can be supposed that it is first of all attracted by opportunities to develop gas fields. For gas reserves Libya with its 1.3 trillion cu m holds third place in Africa after Algeria and Nigeria. However, it makes almost no use of its gas potential, producing just 7 billion cu m annually. And only 10 percent of the output is exported as LNGto Spain, although Libyan gas is the cheapest in Europe.

Also, as the Russian concern will soon engage in oil production, Gazprom may be interested in Libyan oil projects as well. The country is an active OPEC member and now, after the trade sanctions have been lifted, it is playing an increasingly visible role in the organization's policy. For reserves of light sweet crude it holds first place on the continent (7 billion tons or 3 percent of the global reserves). It exports more than half of its annual output of 60 million tons. Libyan oil is one of the cheapest. Its production is two times cheaper than in Saudi Arabia and at least eight times cheaper than in Russia.

Gazprom's press service refused to confirm our suppositions concerning the concern's projects in Libya, referring to the "preliminary nature of the talks and the commercial secret", but did not refute them either.

Russia's slowness in Libya is incomprehensible even to the Libyans. Meanwhile its neighbor Ukraine is quite the opposite. Its diplomatic and business activities in Libya have yielded sufficient benefits - Ukrainian companies received 4 out of the 11 promising oil blocks. Over 3,000 Ukrainian specialists already work in Libya. China is also active in the hydrocarbon-rich African country. On the whole, over 20 foreign companies operate successfully in the Libyan oil industry, which is almost totally controlled by the state.

Gazprom's expected participation in Libyan projects and possible arrival of other Russian majors foster a hope that Moscow has at last decided to bring economic cooperation Libya to the level of their political relations.

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