Libya Continues to Set Sights on Gas-Fired Power Plants

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Libya has the largest reserves of oil in Africa--estimated at more than 40 billion barrels-- and relies heavily on oil to meet the country's increasing demand for electricity. However, years of international economic sanctions imposed on the country because of suspected terrorist activities, coupled with the relatively low population, have left the Libyan power sector in a seriously under-developed state.

The United Nations lifted sanctions against Libya in 2003, and the United States followed suit a year later. In 2006, the United States rescinded the country's designation as a state sponsor of terrorism, and since then major international oil companies have increased hydrocarbon exploration and production in Libya.

During the period of sanctions, Libya used its oil reserves for power production. As recently as 2003, just prior to the lifting of sanctions, oil accounted for about 80% of the country's power production. However, using the oil domestically denied the country access to a major revenue source.

Since the lifting of sanctions, the Libyan government has moved the focus for power production to gas, and the state-owned General Electricity Company of Libya (GECOL) (Tripoli, Libya) has plans to convert every power and water desalination plant to gas.

Libya is also investigating the use of renewable energy sources in remote areas of the country. The Renewable Energy Authority of Libya (REAOL) (Tripoli, Libya) has ambitious plans to exploit the vast amounts of solar radiation falling on the country and the wind potential of the relatively flat areas.

REAOL's mid-term plan, covering the period 2008-2012, calls for several windfarms with a total capacity of 500 MW; a large-scale photovoltaic grid that is connected at different locations and has about 10 MW; and the construction of the country's first concentrating solar power plant, with a capacity between 50 MW and 100 MW.

GECOL had a total installed generating capacity of 6,284 MW at the end of 2007 and, with Libya's proven gas reserves of 54 trillion cubic feet, is well placed to achieve the plan. However, with gas demand expected to reach about 3 billion cubic feet per day by 2012 and about 3.8 billion cubic feet per day by 2020, Libya needs to rapidly develop the gas industry for domestic needs and exports.

Libya is linked to Europe by the Greenstream pipeline, which runs under the Mediterranean from Melitah on the Libyan coast to Gela, in Sicily. The pipeline, part of the Western Libyan Gas Project--a 50:50 joint venture between the Libyan National Oil Company (Tripoli, Libya) and the Italian ENI SpA (NYSE:E) (Rome, Italy)--enabled Libya to export about 280 billion cubic feet of natural gas to Italy and the rest of Europe in 2007.

GECOL has turned to Asian countries for help in the modernization program of the power generating stations, particularly India and South Korea. India's Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) won contracts to construct the 600 MW Western Mountain gas turbine power station and expand it a further 300 MW.

In the latest power project, South Korea's Daewoo Engineering and Construction Company (SEO:047040) (Seoul, South Korea) has been awarded the $438 million contract to extend the existing 500-MW gas power plant at Zwitina, some 140 kilometers southwest of Benghazi. The contract calls for a steam turbine and heat-recovery steam generators to expand the plant capacity a further 750 MW. Work will begin in November this year and is scheduled for completion by May 2013.

The contract is Daewoo's fourth major power project in Libya since 2003 with other Korean companies such as Doosan Heavy Industries and Construction Company (SEO:034020) (Gyeongsahngnam-Do, South Korea) and Hyundai Heavy Industries Company Limited (SEO:009540) (Ulsan, South Korea) securing contracts in the power sector in recent years.

View Project Report - 84200026

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.