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Brooke F Adams  10/26/2006 11:55:03 AM  From  DB/Inbox:  Brooke F Adams

Cable 
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C O N F I D E N T I A L        TRIPOLI 00600

SIPDIS
CXCAIRO:
    ACTION: ECON
    INFO:   FCS FAS DCM AMB AID MGT PA POL IPS

DISSEMINATION: ECON
CHARGE: PROG

VZCZCCRO570
RR RUEHEG
DE RUEHTRO #0600/01 2921443
ZNY CCCCC ZZH
R 191443Z OCT 06
FM AMEMBASSY TRIPOLI
TO RUEHC/SECSTATE WASHDC 1339
INFO RUEHRB/AMEMBASSY RABAT 0316
RUEHTU/AMEMBASSY TUNIS 0586
RUEHAS/AMEMBASSY ALGIERS 0331
RUEHEG/AMEMBASSY CAIRO 0451
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHDO/AMEMBASSY DOHA 0003
RUEHTRO/AMEMBASSY TRIPOLI 1514

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000600 
 
SIPDIS 
 
DEPARTMENT FOR NEA/MAG, COMMERCE FOR MASON, ENERGY FOR PERSONS 
 
E.O. 12958: DECL:  10/19/2016 
TAGS: ECON EINV ENRG EPET PREL LY
SUBJECT: LIBYAN NOC CHAIRMAN GHANEM'S VIEWS ON PETROLEUM ISSUES 
 
CLASSIFIED BY: Ethan Goldrich, CDA, Embassy Tripoli, State. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C)  Summary: Charge met with National Oil Corporation (NOC) 
Chairman (and former Prime Minister) Shukri Ghanem on October 15 
to discuss US-Libyan energy sector cooperation.  Ghanem 
expressed confidence in Libyan efforts to boost oil production 
and defended the establishment of the Cabinet-level National 
Energy Committee over the NOC.  End Summary. 
 
¶2. (C)  Charge congratulated National Oil Company Chairman 
Shukri Ghanem on receiving the "Petroleum Executive of the Year" 
award at the 27th annual Oil and Money conference in London on 
September 18-19.  Responding to the Charge's comments on his 
acceptance speech, "The End of Cheap Oil," Ghanem wryly noted 
that although oil prices have rebounded recently, he did not 
expect that trend to continue for long.  In the near term, 
prices should dip following the announcement of a one million 
bbl/day OPEC production cut, the expected result from OPEC's 
October 19 meeting in Doha.  Ghanem lamented the difficulty of 
accurately predicting fluctuations in world oil prices, and 
estimated that roughly $10-15 of the cost of a barrel of oil 
stems solely from market apprehension about war and political 
instability in the Middle East region. 
 
------------------------------- 
Meeting Libyan Production Goals 
------------------------------- 
 
¶3. (C)  When asked for an update on Libya's efforts to boost 
petroleum production to three million bbl/day by 2010, Ghanem 
expressed optimism that this figure could be met on this 
timeline through the continued implementation of the NOC's 
two-prong plan.  The first is the recent opening of Libya to 
exploration by foreign oil companies.  Although the most recent 
concession awards will take 6-8 years to produce oil in quantity 
(if a sizable find is made), other new areas are due to come 
on-line in the next three years.  The second, and likely more 
important factor for production increases in the short-term, 
will be the enhanced and improved oil recovery (EOR, IOR) 
operations being undertaken at Libya's mature fields.  Ghanem 
stressed that the return of U.S. companies and expertise will be 
vital to this effort. 
 
¶4. (C)  Ghanem expressed satisfaction at the progress of the 
latest round of Exploration and Production Sharing Agreements 
(EPSA).  The NOC's review of 70 applying companies produced a 
list of 47 qualified bidders who will have the opportunity to 
bid on concession rights in 12 offshore blocks and 29 onshore 
areas.  Multiple bids are expected from most of the qualified 
companies, so the total number of bids should number well over 
¶100.  Ghanem noted that oil company interest in Libya remains 
high, owing to its vast proven and potential reserves, past 
production history and advantageous geographic location.  He 
confirmed recent meetings with top U.S. oil company executives 
from Occidental, Chevron, Exxon-Mobil, Conoco-Philips and 
Marathon, describing them as positive and routine. 
 
--------------------------- 
The National Energy Council(NEC): "Not a bottleneck" 
--------------------------- 
 
¶5. (C)  Ghanem attempted to clarify the role of the 
recently-formed "National Energy Council" (NEC). (Note: This new 
government entity is composed of the Ministers of Industry, 
Planning, Economy, Finance, and Labor, as well as Ghanem and GPC 
Secretary or "Prime Minister" Al-Mahmoudi.  Its formation has 
 
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raised concerns among largely professional, technocratic 
operation would be become more politicized, or at the very least 
add an unnecessary bureaucratic layer over the GOL energy 
sector. End Note).  According to Ghanem, the new body will "not 
be as people think; it will be strictly consultative, not a 
bottleneck."  Ghanem stressed this point several times, 
emphasizing that the NEC will produce efficiencies, rather than 
more bureaucracy.  The NEC will be tasked by the full Cabinet to 
make energy sector decisions from time to time, and its select 
membership will help ensure that government laws and operations 
do not negatively impact the energy sector. 
 
--------------------------- 
Trade Shows and Conferences 
--------------------------- 
 
¶6. (C)  Noting active USG and US company interest in, and 
support for, the upcoming Project Libya conference (December 
4-7) Charge requested that Ghanem meet with visiting 
representatives of U.S. companies during that period.  Ghanem 
was non-committal, but agreed to see what was possible if he was 
not traveling abroad.  Charge noted the great proliferation of 
conferences in Libya, particularly those concerning the energy 
sector, and many of which made claims to sponsorship by GOL 
entities.  In this vein, Charge inquired whether the NOC was 
supporting the November 21-22 "Libya Oil and Gas Show" (as 
indicated in the exhibition's promotional materials).  In 
response, Ghanem conveyed measured exasperation at the number of 
exhibitions and conferences being staged across Libya, and his 
view that they detracted from "real work."  He opined that many 
of them were primarily money-making operations staged by 
individuals with varying levels of government connections. 
Regarding the 21-22 November event, Ghanem recalled agreeing to 
authorize a NOC statement of support, but stated that the NOC 
did not plan to play an active role in the exhibition. 
 
 
 
 
 
BERRY 
GOLDRICH