Libya hires Goldman Sachs for advice on oil production

Libya, the holder of the largest oil reserves in Africa, hired Goldman Sachs Group to provide information on its behalf to credit rating companies, the first contract with a US bank after the removal of sanctions.
"While there must have been some dealings between American and Libyan banks after the sanctions, this is the first contract given by Libya to a US bank for works to be done on behalf of the government," Said Laswad, an economics professor at Tripoli's Al-Fateh University, said. Shokri Ghanem, the chairman of state-run National Oil, met with a Goldman Sachs delegation in Tripoli at the request of the North African nation's central bank.
"They wanted information on oil, gas production, revenue and other data," he said.

Oil and natural gas account for more than half Libya's gross domestic product of $ 72 bn, according to the World Bank. The US in 2004 began lifting two decades of diplomatic and economic sanctions after Muammar al-Qaddafi, Libya's leader since 1969, pledged to renounce terrorism and abandon efforts to acquire weapons of mass destruction.
The improvement in relations with the West enabled the Libyan government to attract more oil companies, including ExxonMobil and Dutch Shell, to increase production and revenue to speed up work on roads, ports, schools and housing, which had been hampered by the sanctions.

Qaddafi also started to reduce state control of the economy and improve efficiency, selling stakes in banks to foreign lenders including Arab Bank and BNP Paribas. He increased the responsibilities of the central bank, which held in May its first open market operation. The central bank on May 13 sold bonds for the first time in an effort to regulate credit supply. Local banks bought certificate of deposits worth 635 mm dinars, or $ 530 mm, maturing after 91 days, bearing an interest of 2.21 %.
"The Goldman Sachs team is tasked with negotiating with the credit rating institutions and giving them information about Libya," said National Oil. "The action is in conformity with the global drive for more transparency."

National Oil's Ghanem, who served previously as prime minister, in March said Libya's sovereign wealth fund will avoid buying assets in the US because of politically motivated restrictions on investments by Arab states there. Oil prices doubled in a year to a record $ 139.89 a barrel on June 16, allowing Libya to build a sovereign wealth fund that reached $ 100 bn by the end of 2007.
Libya, a nation of 6 mm people that's larger than the US state of Alaska, ranks third in oil production in Africa, behind Angola and Nigeria, with an output of 1.7 mm bpd in May, according to Bloomberg estimates. It seeks to increase its production capacity to 2 mm bpd this year and 3 mm barrels day in 2012.