FATHI BEN SHATWAN Secretary for Energy

United World: Could you please give us an overview of Libya's energy sector?

Mr. Ben-Shatwan: Libya's energy sector is divided into three parts: Oil and Gas, Electricity and Renewable resources. We have eight oil and gas basins that occupy about 1,400,000 km², which is 78% of Libya's land area. We are currently utilizing 400,000 km² of that area, which means that we are only a third of the way through discovering our oil resources. We have so far discovered about 39 billion barrels of oil and about 54 trillion cubic feet of gas, and studies conducted so far indicate that Libya potentially has 100 billion barrels of oil reserves. Two years ago we were producing 1.4 million barrels a day and today this has risen to 1.7 million b/d. We hope to increase our production to 2 million barrels a day by mid-2006 and eventually to 3 million b/d by 2010. In the 1970s, we produced 3.3 million b/d but we decreased our production due to some obstacles we faced under the sanctions. We currently are in discussions with OPEC concerning an increasing in our production quota based on our historical performance.

With regards to electricity, we are producing nearly 5000 MW and we are going to add another 5000 MW by the year 2010; the wider plan is to possibly export electricity to Europe in the future. We think that in the future, exporting electricity will be a much more coveted resource and activity than either oil or gas. We are still carrying out a feasibility study in this regard and if the results are positive, we will propose our plans to European countries and take it from there.

Renewable energy is still a new sector here. We have been carrying out some pilot projects recently and we are thinking of generating 6% of our energy source in the future from renewable resources. We have been using solar energy in our pilot studies, particularly in small desert towns where it is hard to connect to the electricity grid. We are also thinking of using hydrogen as a source of energy, as well as wind farms in certain areas.

We are looking forward to implementing a master plan that we are currently working on for this sector. This looks forward to the year 2020. One of our main targets is increasing our oil production to 3 million b/d by 2010. We are also nearly finished with a new law for the oil sector, which deals with all the new aspects of this sector; the old law was from 1955. We have simplified matters recently by implementing the EPSA IV, the Exploration and Production Sharing Agreements, which makes oil blocks open for bidders. There are two reasons why international oil companies are excited about this process. The first is that they want to secure energy supply due to the difficulties this sector is facing in terms of stability of the market. The second reason is the current price of oil; at $60 a barrel, it's a profitable business even if they are bidding for a low production profit share with us. American companies are very well aware of Libyan territory; they have a solid past experience, and they are familiar with our geology. This makes them strong competitors in the market.

United World: In your view, what makes Libya an attractive destination for foreign investors?

Mr. Ben-Shatwan: Our oil is of a high quality, and our production costs are low at $1 a barrel. Furthermore, the country enjoys a high level of stability and security. We are peaceful people; your average Libyan is able to separate international politics from the foreign people who come to our country, they will not automatically associate one with the other. Furthermore, many foreign investors are familiar with Libya as an investment destination from past experience, prior to the embargo period. One of these returning investors is Occidental, for example, who just won concessions for 9 oil blocks which, to put in perspective, is nine times the size of Qatar.

United World: The rising prices of oil have made headlines this year. What do you feel is OPEC's role in regulating oil prices and what role does Libya play in OPEC?

Mr. Ben-Shatwan: We need to consider things logically. Crude oil is probably the cheapest liquid in the world; one liter costs less than a liter of water! We also need to consider the value of money, rather than the price of oil; in the past three years, the dollar has lost about a third of its value. $60 a barrel today is the equivalent of $40 a barrel three years ago. Therefore, it really isn't expensive as some would claim. The expense that people complain about is what they are paying for fuel, and that is mostly due to taxation. The fluctuation in prices today is no longer due to simple economic factors like supply and demand; there are other issues like security or instability in oil-producing countries that are influencing supply and demand. Funnily enough, another reason is the limited capacities of oil refineries around the world; this is due to reluctance from oil companies to invest in downstream projects in this sector, they prefer high profit margins in upstream projects. This is why we are implementing a strategy in Libya of "if you want to go upstream, you need to invest downstream with us as well." It is an important strategy to contribute to stabilizing prices. Everything is blamed on OPEC, which is really unjustified; there are, as I explained a number of factors outside of OPEC's capacity, which are affecting oil prices.

Today, Libya has a more solid chance of playing a bigger role in OPEC as our estimated oil reserves rise as a result of increased oil exploration.

United World: As a final statement, would you care to send out an invitation to American investors?

Mr. Ben-Shatwan: Americans are not strangers to Libya, particularly the elder generation who were here in the 1950s. Many still have friends in Libya. A lot of Libyans were educated in the United States and so the American culture is not new to us. They're welcome to do business here.

United World: Thank you very much for your comments.

Mr. Ben-Shatwan: Thank you.