Even against the background of the recent announcement that the gas monopoly Gazprom would purchase Rosneft oil company, analysts did not fail to notice that Gazprom chief Alexei Miller visited Libya. His talks with Libyan Prime Minister Shukri Muhammad Ghanem and National Oil Company President Abdallah Salem al-Badri on cooperation prospects in the oil and gas industry suggest that Russia intends to start and greatly expand practical cooperation, as the current level does not meet either sides' needs.
Indeed, the several dozen million dollars in the trade between Russia and Libya cannot compare with the billions in trade 10-15 years ago. From 1969 to 1991, the Soviet Union exported $20 billion to Libya. And now Libya is one of the most solvent states in Africa.
Expanding cooperation in exploration, production and constructing oil and gas pipelines is fully in the spirit of the 2000 Russian-Libyan inter-government agreement on cooperation in the oil and gas and electricity industries. Russian experts estimate that such cooperation would account for over half of bilateral trade between Russia and Libya, which, according to current forecasts, may reach $4 billion a year. Currently, Russian energy sector is represented in Libya by Zangaz (the new name of Zarubezhneftegazstroi), Tatgeorazvedka, Tekhnopromexport and several other companies. Although, several years ago, Libya asked LUKoil, Yukos and Zarubezhneft to take part in tenders for the development of oil deposits.
When analyzing the Russian gas concern's interest in Libya, it may be supposed that Gazprom was first attracted by the prospect of developing gas deposits. With 1.3 trillion cubic meters of gas, Libya has the third largest natural gas reserves in Africa after Algeria and Nigeria. However, Libya's gas potential is practically untapped, as only 7 billion cubic meters of gas are produced there. And even though Libyan liquefied natural gas (LNG) is the most inexpensive in Europe, only 10% of Libya's gas is exported as LNG to Spain.
It may also be supposed that since Gazprom will produce oil as well as gas in the near future, the Russian concern might be interested in Libyan oil projects. Libya is a member of OPEC, and now that trade sanctions have been lifted, it is beginning to play a growing role in OPEC's general policy. Libya's light low-sulphur ("sweet") crude reserves are 7 billion metric tons (the largest in Africa), or 3% of the world resources. Over a half of Libya's annual output (about 60 million metric tons) is exported. Libyan oil is inexpensive; oil production in Libya is two times cheaper than in Saudi Arabia and at least eight times cheaper than in Russia.
Gazprom's press service did not confirm our speculations as regards future Gazprom projects in Libya, saying that the talks were preliminary and secret. However, Gazprom did not deny anything either.
Russia's slowness in Libya is difficult to understand, especially for Libyans. However, this cannot be said about Russia's neighbors, Ukraine. The diplomatic and business activities of Ukraine in Libya have been fully rewarded - Ukrainian companies have received 4 of 11 promising oil blocks. Currently, more than 3,000 Ukrainian experts are working in Libya under contracts. China has also been active in Libya. Overall, over 20 large foreign companies work successfully in the Libyan oil industry, which is almost completely controlled by the state.
Gazprom's expected participation in Libyan projects and the potential for other large Russian companies to participate as well, is a positive sign that Moscow has finally started to want to increase its economic relations with Libya to the same level of the political relations between the two countries.
