Libya Looking for Partners to Modernize Azzawiya Refinery and Meet Rising Domestic Demand

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Researched by Industrial Info Resources (Sugar Land, Texas)--Libya's state-owned integrated oil company National Oil Corporation (NOC) (Tripoli) is reportedly looking for a joint venture partner to take a 50% stake in the 120,000-barrel-per-day (BBL/d) Azzawiya refinery, as the country seeks to modernize its refining sector in an attempt to meet rising local demand.

NOC Chairman Shokri Ghanem indicated that the company was expecting to finalize a 50:50 joint venture with an international oil company this year for the country's second-largest refinery in Azzawiya. The refinery mostly supplies the domestic market and is in need of refurbishment and investment to improve efficiency.

NOC is reportedly in the final stages of talks with U.S. and European oil companies interested in obtaining a 50% share. NOC is looking for improvements in technology and management techniques to increase the production of gasoline to meet the local market's increased demand.

The move to sell half of the Azzawiya refinery is in line with the Libya's strategy in recent years to incorporate international joint venture partners to upgrade and operate refineries more efficiently. In July 2008, NOC signed a $2 billion joint venture agreement with a consortium to own and upgrade the Ras Lanuf refinery.

The 50:50 joint venture agreement was formed by NOC and a consortium known as the Star consortium, consisting of TransAsia Gas International (Dubai, United Arab Emirates)--part of the Al Ghurair Group (Dubai)--and Star Petro Energy (Dubai), part of the ETA Star Group (Dubai), which in turn is partly owned by the Al Ghurair Group.

In March 2009, NOC and the Star consortium finalized the formation of the 50:50 joint venture to form the Libyan Emirates Refinery Company (Dubai), which will be responsible for the refinery upgrade.

The project will consist of two phases, with the refurbishment taking priority, followed by the installation of a coker to upgrade the fuel oil-to-coke and vacuum gas oil units. The coke will be used for heat generation, while the vacuum gas oil will be converted to diesel fuel and exported to European markets.

The plant uses feedstock from the NOC Sarir and Messla light crude oil fields, and when the upgrade is completed in 2013, the refinery will produce about 100 million tons per year of refined petroleum products.

Libya has five refineries in total, producing a total of about 380,000 BBL/d. The Ras Lanuf refinery is the largest in the country, with a production capacity of 220,000 BBL/d. The Azzawiya refinery, with a 120,000-BBL/d capacity; the Tobruk refinery, with a capacity of 20,000 BBL/d; and the Sarir and El-Brega refineries, each with capacities of 10,000 BBL/d, make up the total.

About 60% of Libya's refined products are exported, mainly to Europe. Consequently, a joint venture contract for the Azzawiya refinery would be a good strategic move in terms of Libya's energy resources and the ongoing development in the European and Mediterranean energy network.

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