February 2012

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February 2012

1. - The Political Economy till 2011 and Beyond ...... 4

PESTLE Analysis of Libya Sector ...... 7

2. Libya Hydrocarbon Industry Overview...... 9

Libya Oil and Gas Resource Endowments ...... 9

Oil Production, Consumption and Reserves ...... 10

Production, Consumption, Reserves for Natural Gas ...... 13

Liquefied Natural Gas (LNG) ...... 14

Oil and gas Regulatory Environment ...... 18

Key Ongoing Projects in Libya’s Hydrocarbons Sector ...... 24

Major Players in Libya Hydrocarbons Sector ...... 24

3. Libya Infrastructure Sector ...... 26

Key Ongoing Projects in Libya’s Infrastructure Sector ...... 30

Major Players in Libya Infrastructure Sector ...... 30

4. Libya Power and Water sector ...... 32

Key Ongoing Projects in Libya’s Power and Water Sector ...... 35

Major Players in Libya Power and Water Sector ...... 37

5. Libya Buildings Sector Overview ...... 38

Key Ongoing Projects in Libya’s Buildings Sector ...... 41

Major Players in Libya Buildings Sector ...... 42

6. Scenario Analysis and Future Outlook for the Libya Construction ...... 44

Methodology ...... 47

Code of Ethics ...... 47

Ventures Onsite MENA Projects Database ...... 48

Figure 1: PESTLE Analysis - Libya Construction industry ...... 7 www.ventures-me.com P a g e : 2

February 2012

Figure 2: Libya Oil Production and Oil Consumption (Thousand barrels per day), 2005-2010 ...... 12 Figure 3: Libya Natural Gas Production and Consumption (BcM), 2005-2010 ...... 13 Figure 4: Production Share of Key Upstream players ...... 20

Table 1: Libya Macroeconomic Indicators, 2010 ...... 6 Table 2: Libya Oil and Gas Statistics 2010 ...... 9 Table 3: Key Oil and Gas Players in Libya ...... 21 Table 4: Libya Oil & Gas Projects, 2012 ...... 24 Table 5: Libya Infrastructure Projects, 2012 ...... 30 Table 6: Libya Power & Water Projects, 2012 ...... 35 Table 7: Libya Buildings Projects, 2012 ...... 41 Table 8: Scenario Analysis for Libya Construction Industry and Impact on its Key Sectors, 2013...... 45

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Table 1: Libya Macroeconomic Indicators, 2010

Surface Area (Square Kilometres) 1,759,540 GDP (US$ Billion) 90.57

GDP Growth (%) 4.2% Population (2011 estimates) 6,597,960 GDP per capita (US$) 40,300

Inflation (%) 2.5%

Exchange Rate (per US$) 1.2648 Libyan Dinars (LYD)

Labour Force 1.728 Million

Budget Surplus/Deficit (% of GDP) 4.4%

GDP Shares By Sector Agriculture: 2.7% Industry: 66.7% Services: 30.5%

Source: CIA- The World Factbook 2011 (All statistics unless mentioned are 2010 Estimates) A budding Libyan Democratic Republic, with luck, political acumen and lucrative oil revenues, could form part of a new arc of stability across North . Given the large under explored Oil reserves in the nation, Libya spells a positive and more bountiful era for foreign companies and investors.

War-torn Libya’s oil output is vital to the global economy and there are many ways to get investment exposure. Oil markets are often in a state of fluctuation, and any variations in either the supply or demand side of the equation — however small — can have an outsized effect on global prices. Libya is an exceptional example of how an important oil producer can have a large impact on oil prices worldwide.

While Libya isn’t the most significant oil player in the world, it is large enough that any disruptions result in a direct outcome on global prices. At present Libya have reserves of 46 billion barrels of crude, making it the largest holder of oil in Africa and the ninth-largest worldwide.

During the unrest that engulfed the country for much of the second and third quarters of 2011, Libyan oil output nose-dived from 1.3 million barrels a day to 10,000 barrels a day in August 2011 during the worst phase of the conflict.

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Libya’s oil and gas exploration and production activities are being carried out by the National Oil Corporation’s (NOC) subsidiary companies, wholly owned by NOC, and other global oil companies licensed by special participation and sharing agreements. These activities cover wide areas, both onshore and offshore, throughout the Country’s territorial waters and continental shelf.

Its strategic geographical placing on the Mediterranean coast makes Libya’s oil products easily reachable to one of the world’s main consumer markets, - the European market, of close to half a billion consumers.

Furthermore, Libya has a network of onshore oil, gas and product pipelines as well as completely equipped crude oil export facilities in addition to a gas pipeline connecting Libya to the European market through Italy; this established infrastructure provides investors with great rewards in both.

According to the 2011 BP Statistical Energy Survey; Libya had total proven oil reserves of 46.4 billion barrels or 3.4% of the world reserves at the end of 2010. About 80% of Libya’s proven oil reserves are located in the Sirte basin, which is responsible for 90% of the country’s oil output.

Table 2: Libya Oil and Gas Statistics 2010

Libya Oil Statistics 2010 Libya Natural gas Statistics 2010 Proven Oil reserves (1000 46.4 Proven gas reserves 1.5 Mn bbl) (TcM) Production (1000 bbl/d) 1659 Production (BcM) 15.9 Consumption (1000 270 Consumption (BcM) 6.01 bbl/d) Refining capacity (1000 380 bbl/d)

Source: BP Statistical Review of World Energy - June 2011 Libya expects to increase oil reserve estimates with incentives for additional exploration in both established oil producing areas as well as more remote parts of the country. Recent increases in foreign investment have begun to slow as a result of reservations stemming from OPEC quotas, infrastructure constraints, and contract renegotiations. www.ventures-me.com P a g e : 9

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Resource and skills rich economy-No dearth of finance High World Corruption ranking-Corruption among the and skilled manpower as Libya boasts one of the largest highest in the world and bureaucracy and red tape a literacy rates in the world and a strong oil wealth main challenge for investors in the infrastructure sector backed economy Strong demand base-Availability of a strong demand Slow pace of reorganization post overthrow of Gaddafi- base owing to a young growing and affluent population. Unfreezing of foreign assets has led to locking up of a lot of funds and projects which are likely to delay investment plans in the infrastructure sector High degree of regulation and interference and limited private sector role and independence-Role of private sector as yet limited and all forms of private participation strictly monitored by government. Reforms and privatization proceeding at a slow pace

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Table 5: Libya Infrastructure Projects, 2012

3170 KM Long Railway Executive -- China Civil Engineering 9000 Railway Network Board Construction Corporation (CCECC); Russian Railways 450 Kilometre High- Railway Executive -- -- 2000 Speed Railway Line Board

Sirte to Khums Railway Executive -- China Railway Construction 1850 Railway Board Corporation; China; Russian Railways 453km Tripoli Sirte Railway Executive -- China Railway Construction 1690 Railway Project Board Corporation; China

Infrastructure Works - Housing and -- Tennessee Overseas 1250 Tripoli & Benghazi Infrastructure Construction LLC Board (HIB) Railway Line - Railway Executive -- China Civil Engineering 1200 Northern Region Board Construction Corporation (CCECC) Railway Link from Railway Executive -- China Railway Construction 850 Hicha to Towns in the Board Corporation; China South 800KM Railway Line Ministry of -- China Railway Construction 824 between Misratah and Railways; Railway Corporation; China Sabha Executive Board Tajura Infrastructure Ministry of Housing Ecom Strabag; Austria 640 and Infrastructure Tripoli Metro System Tripoli Municipality -- -- 500 Infrastructure and -- -- NemzetkÃzi VegyÃpszer- 413 Public Facilities Hungary Project Infrastructure Works Housing and -- Punj Lloyd Ltd 392 at Zawara, Ragdaleen Infrastructure and Al-Jamail Board (HIB) Source: Ventures Onsite MENA Projects Database www.venturesonsite.com as of February 2012

The following is the list of major players in the Infrastructure Sector in Libya.

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Given that the immediate reconstruction of social High degree of regulation and interference and restricted infrastructure facilities is the top government agenda; private sector role and independence-Role of private Libya’s sufficient hydrocarbon reserves will be boosted sector as yet limited and all forms of private participation to generate electricity in the short to medium term. strictly monitored by government. Reforms and privatization proceeding at a slow pace Favourable demographics indicates strong demand for utilities

Table 6: Libya Power & Water Projects, 2012

Steam Electric General Electricity 13079 Station at Company of Libya Tripoli (GECOL)

Al Khaleej General Electricity Hyundai Engineering and 1435 Steam Power Company of Libya Construction Company; Libya; Plant (GECOL) Geocean Aubagne; France; Doosan Heavy Industries; Gama International

West Tripoli General Electricity Arabian Archirodon Construction 1400 Steam Power Company of Libya Construction (Overseas)Company-UAE; Plant Upgrade (GECOL) Engineering Daewoo Engineering and Company; Construction; Doosan Heavy Industries; Hyundai Engineering and Construction Company;

Tripoli West General Electricity Hyundai Engineering and 1350 Power Plant Company of Libya Construction Company; Libya (GECOL) www.ventures-me.com P a g e : 35

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This scenario envisages a time frame of the next six months, as is indicated by the NTC, in which, this transition is likely to happen leading to a stable 2013, where growth will resume its lost trajectory.

Scenario 2 is also considered a likely prospect given the inability of a nation ranked high on the global corruption rankings and which is currently headed by a transitional government which has no previous experience of handling the transition to stability. Here it is considered likely that given the priority to restore security and the attempts to quell the disagreements which are likely to arise amid the various factions which had joined forces to overthrow Gaddafi and which now have their own agenda differing from the others, the likelihood of the restoration of stability and the administrative infrastructure to conduct an election for a permanent government are likely to take their time. The slow pace of the unfreezing of the foreign assets of Libya by countries across the world are also likely to leave the country cash strapped and hinder the rebuilding process further. These factors could push recovery time to beyond 2013 under Scenario 2.

Scenario 3 is the pessimistic scenario which is the least likely of the three outcomes, wherein following an inability to bring about stability as a number of the factions both anti Gaddafi and pro Gaddafi have yet to surrender their arms and ammunition even after the civil war has ceased. This indicates not only a threat to security within the economy but a likelihood of future unrest deepening if the lack of developmental progress and chaos in the society without a stable leadership. Under this scenario, similar to the Arab Spring in various parts of the Arab World, there could be revolts and further unrest from the masses that could jeopardize growth prospects for the construction industry.

The likely impact of these scenarios on the key construction sectors, namely building, infrastructure, power, water and renewables and oil and gas is explained briefly with the help of the following table:

Table 8: Scenario Analysis for Libya Construction Industry and Impact on its Key Sectors, 2013

Buildings High Growth in Residential, Commercial and Tourism Segments Infrastructure Resumption of stalled and re-evaluated projects to drive growth Power and Vast gap between demand and supply and growing population and industrial needs to Water drive growth Oil and Gas With Oil production resumed, status quo as this Segment was shielded by all factions in the civil war preventing damage to basic infrastructure

Buildings Project delays and corruption increases likely causing stagnation of growth www.ventures-me.com P a g e : 45