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Col Mu'amar al-Qadhafi

Update No: 034 - (01/09/06)

Mu'ammar al-Qadhafi, Leader (and sometimes critic) of the Revolution
As September 1 marks the anniversary of the 'Fatah revolution' (it was more of a bloodless coup) that brought him to power in 1969, the tone and intensity of the leader's speeches and pronouncements on the current state and future of Libya intensifies during the month of August. In such periods, the Colonel hints at the sort of changes he envisages for the country, as well as its problems. Indeed, through his son Saif ul-Islam, the man many believe shall succeed him, Qadhafi highlights Libya's problems, acting in the guise of an opponent of his very own rule (though Qadhafi claims he is merely a guide rather than a president or ruler). Qadhafi has delivered more than the usual number of critical speeches, however, perhaps in an apparent frustration at the slow pace of social progress and the inability to reduce Libya's dependence on oil. Significantly, his critical speeches were pronounced before audiences ranging from professionals to state planners as well as teachers and religious leaders. Saif al-Islam further qualified his father's sentiments telling Libyans their country was in a political impasse and needed reforms to free it from what he called the grip of "Libyan mafia" which monopolizes power and wealth. 

While, Qadhafi's complaints are not new, the frequency of the complaints proffered in August was unusually intense. Predictably, the focus was on Libya's failure to diversify the economy and its reliance on oil: "We don't make anything. We only sell oil and are but mere consumers." To the cognoscenti this is Qadhafi "classic," the one who wrote a compilation of short stories decrying the state of modern life entitled "The Suicide of the Astronaut" in 1994, longing for a return to the certainties of the bedouin life of the desert. The Colonel also warned "the type of society where nothing is produced and goods are imported in exchange of oil is a catastrophe," noting that for its low population and oil producing capacity, Libya should by now have become "an economic power such as Japan". One of the main social groups targeted by Qadhafi has been that of government employees taking on two or three jobs to earn extra money, leaving the cities and public services in disarray. This phenomenon was very common in the decade of the 1990's when Libya endured UN sanctions and a black market for consumer goods that rendered public sector salaries almost worthless. In this Qadhafi is hinting that the pace of reforms has been slowed and compromised at the implementation level. Nevertheless, Qadhafi is talking less to Libyans than he is 'through' them trying to get the message across to countries (United States, Europe and China) interested in developing its oil resources to invest in other economic sectors.

Infrastructure Investment
In fact, Libya is attracting investment in sectors other than oil, though few Libyans are likely to be involved at the execution level. Even if oil remains the one resource foreign investors are most ready to develop, infrastructure in Libya needs renewal and there are several projects being planned. However, Libya is ensuring that there is a greater diversification in suppliers and contractors when it comes to lucrative construction and engineering projects. Infrastructure projects, as well as oil exploration, have seen greater demand from Asian countries. Several engineering and construction firms from various Asian countries have been working to win Libyan contracts, which in 2006 alone could reach a value of some US$8 billion. A sizeable bite of that amount has already been taken by Asian firms, which is not unusual considering that the first two phases of the Great Man Made River (GMMR) project transferring underground spring water from the a desert oasis to the main inhabited areas of Tripoli and Benghazi was built by the South Korean company Dong-Ha. 

Enter Malaysia & India
However, it is no longer just the Koreans, Japanese and Chinese, who are bidding for Libyan contracts. Malaysian sources have suggested that Libya is poised to hire Malaysia's largest engineering group, Ranhill Bhd to build a town in Tajura near Tripoli. Tajura already features a variety of small beachfront residential housing projects typically to house expatriates, but the development in question is far larger and estimated to be worth US$1 billion. Business Times of Malaysia reports that Ranhill informed its investors last January that it was buying a 60% stake in Amona Africa Consortium Construction Sdn Bhd, which received a preliminary letter of award in December last year from the Libyan government to design, construct and hand over 10,000 to 20,000 units of residential apartments on a proposed 756.79 hectares in the municipality of Tajura. Indian companies are also winning contracts in Libya. Sirte Oil Company, a subsidiary of Libya's National Oil Company engaged in exploration, production and transmission of oil and gas, manufacturing of methanol, ammonia and urea, LNG and extraction and processing of LPG and naphtha, hired the Indian engineering giant Punj Lloyd to work on a pipeline project on Engineering, Project and Construction (EPC) basis. Punj Lloyd said that the US$290 million contract is the company's single largest contract ever, and its first in Africa. The Indian company outbid Athens-based Joannou & Paraskevaides, along with Bonatti of Italy and Germany's MAN Ferrostaal in partnership with China National Petroleum Company (CNPC). The order includes two contracts, the fist of which, valued at US$ 149 million, involves the construction of the main 34" diameter, 98.4 km pipeline from Tripoli to Melita as well as a 24" diameter, 21 km branch pipeline to the Zawia power plant. The 22-month long project involves the construction of gas pressure reducing and metering stations and a compressor station at Melita. The second project, estimated at 18 months duration and valued at US$141 million, involves completion of the 34" diameter, 157 km El Khoms-Tripoli pipeline, including civil, mechanical, electrical and instrumentation work on the gas pressure reducing, metering & SV stations, compressor stations at Sidra & Wachkah, telecommunication & SCADA works. 

Third Bidding Round Opens - New Rules
For all the talk of Libya's excessive oil dependency, Libya plans to become one of the main oil producers in the world, just behind such leaders as Russia (which recently surpassed Saudi Arabia's crude oil production levels).
According to its exploration master plan, Libya expects that it will produce around 3 million bpd by 2015 - which is what it produced in a brief period in the early 1970's. Libya's current production is 1.7 million bpd. To achieve the increased extraction, Libya expects to drill at least 50 exploration wells a year, while shooting over 14,000 square kilometers of two-dimensional and three-dimensional seismic surveys costing around US$4 billion. Libya will also have to maintain oil companies' interest in bidding for exploration grounds. 
The new round - Libya's third since 2004, when the US started to ease sanctions and the first with former Prime Minister Shukry Ghanem as head of the National Oil Company (NOC) - started on August 24. Libya is offering 41 blocks in 14 areas in the main oil producing basins, including the Sirt, Ghadames and Kufra onshore. Some offshore blocks also were on offer. The winners will be announced on December 20. While, interest in Libya's low-sulfur oil and proximity to some of the main European refining centers remains high, Ghanem has changed the rules of the bidding process somewhat and Asian companies are once again expected to win. Ghanem told a group of oil multinationals executives that "in this round we expect to get excellent offers and expect companies will spend large amounts for exploration this will give excellent percentages (of production from a given field) to the Libyan side," (Reuters). Ghanem also said that Companies would now be able to extend the exploration period of the contract to allow for the completion of an appraisal well. Whereas, an oil company has three months to complete a well in the previous round, now, this period is unspecified, allowing companies to procure appropriate drilling equipment according to NOC's Ahmed Gaddah, a legal advisor. However, the bidding will be more competitive, and companies' profits margins could suffer more than in previous rounds. Bids will now be evaluated on a points system, such that each aspect of a bid, such as the work program or the signing bonus, will be assigned a given number of points. The company with the most points wins the contract. Companies have until September 9 to submit qualification papers, and they shall be informed of their qualification by September 22. Last year the tough competition made for very aggressive terms, such that oil prices would have to remain at their current high level.  

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