The Oil & Gas Sector

Saleh M A Rahuma

LIBYAN BRISTISHLIBYAN BRISTISH BUSINESS BUSINESS COUNCELCOUNCEL

WORKSHOPWORKSHOPNOVEMBER - 2008NOVEMBER - 2008

NATIONAL OIL CORPORATION NATIONAL OIL CORPORATION

L B B C WORKSHOPL B B C WORKSHOPLIBYAN OIL GAS SECTOR LIBYAN OIL GAS SECTOR

NOVEMBER - 2008NOVEMBER - 2008

1.1. NATIONALNATIONAL OIL CORPORATION .. OVERVIEW OIL CORPORATION .. OVERVIEW EXPLORATION EXPLORATION PRODUTION & PIPELINES PRODUTION & PIPELINES REFINERY & PETROCHEMICALSREFINERY & PETROCHEMICALS

2.2. TECHNICAL SERVICES TECHNICAL SERVICES ENGINEERINGS (BASIC, FEED, DETAILED)ENGINEERINGS (BASIC, FEED, DETAILED) FEASIBILITY STUDIESFEASIBILITY STUDIES

3.3. SUPPLY OF MATERIALSSUPPLY OF MATERIALS SPARE PARTS SPARE PARTS EQUIPMENTSEQUIPMENTS

4.4. TRAINING & EDUCATION TRAINING & EDUCATION

Libyan Business Welcomes You

Abdul M Al Mayet

REFRESHMENTS

Case Study

Law No. 5Projects and other legal issues

Cyril Vock

10

Doing business in Libya Law n°5 for Promotion of Investment of Foreign Capital

November 2008Aberdeen - London

Libyan British Business Council – UK Trade & Investment

Cyril VockEnergy, Transport and InfrastructureParis+ 33 1 53 05 16 00 cyril.vock@dentonwildesapte.com

11

Law n° 5 : Scope• Sectors open to foreign investment

Agriculture

Industry

Health

Tourism

Oil (drilling & exploration already governed by Petroleum Law)

Regional development

Any other sector approved by the NGP

• Sectors traditionally restricted but opening up

Telecommunications

Banking & financial services

Retail, wholesale and catering

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Law n°5 – The key incentives A 5 year tax exemption from income tax

A 5 year exemption from customs duties on equipment and materials to set up a project, on raw materials, components and spare parts

Goods to be exports exempt from production tax, excise tax and fees

Exemption from stamp duty on commercial documents

Protection against nationalisation

Facilitation of foreign investment procedures

No limit on foreign participation

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Law n° 5 : A balance of duties and rights

Start of project within 6 months of notification of approval

Submission of quarterly reports on the activities of the project to the FIB

Priority employment to Libyan citizens Maintain regular books account / financial

records Prepare an annual balance sheet + a profit

and loss account Start operations within the 6 months after

FIB approval Submit a the final statement of account +

general budget to FIB and the Tax department

Submit quarterly activity report

Right to own a land

Right to open a foreign currency account

Right to repatriate capital

Right to re-transfer uninvested capital abroad

Right to employ foreign manpower

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Options to do business in Libya (1) Set up a branch office / local subsidiary

Create a joint venture

Open a representation office – specific product groupings concerned

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Options to do business in Libya (2) The need to register• All foreign companies wishing to work in Libya must register with

Ministry of Economy and Commerce• You cannot operate without it• What happens if you don’t• What you need to register a foreign company branch

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Formalities Scope Minimum capital

Duration Other key features

Branch / local subsidiary

-Request to Ministry of Economy and Trade

- Board approval of the branch

- Information on branch (activity, address, name)

- Information and documents on parent company

- Negative undertakings

Oil

Survey and planning

Environment protection

Computing

Technical consultations / studies

Health

› 150,000 LYD 5 years renewable

Joint Venture / joint stock company

- Approval by Foreign Investment Board

- « No formalities »-No publicity-Bank certificate for local remittance of funds-Board approval of the company

- Information on company

All fields

Electricity

Contracting / Civil Works

Oil Services

Telecommunications

Industry / Agriculture / Fishing

> USD 50M fully paid up

> Minimum subscribed capital: LYD 1,000,000

Long term -Minimum Libyan participation : 51% (if outside law n°5)

- Liability limited to respective shareholding

Case Study

Starting up in Libya

Sean Granville

Doing Business in Libya

Sureclean Case Study

Presented by Sean Granville

• Leading service provider in the onshore & offshore Oil and Gas, power generation, civil, utility and municipal industries.

• Established in 1985.• UK company (HQ based in the Scottish Highlands) with two

regional facilities located in Aberdeen. • Industry focused, offering specialist services to Oil Majors,

Management Contractors, service contractors and engineering companies.

• Current Turnover £10.5m, with a core, specialist, yet multi disciplined workforce in excess of 100 and owned equipment value £6m.

Who are we?

Service Scope

Global Experience •Danish Offshore Sector

•Dutch Offshore Sector

•Norwegian Offshore Sector

•Europe(Italy, Moscow)

•North Africa (Egypt, & Algeria)

•West Africa (Cameroon, Nigeria, Equatorial

Guinea, Ivory Coast & Angola)

•Caspian (Azerbaijan, Turkmenistan)

•Venezuela

•Gulf Cooperation Council (Kuwait and Oman)

•Canadian Offshore Sector

•Gulf of Mexico

Why overseas?

Why Libya?

• First visit• Desktop study – PEST and SWOT

Analysis• Revisit to validate research• Meeting with possible agents, JVs or

partners

Environmental Impact Studies1. Site surveys 2. Base-line survey (BLS)3. Environmental Impact Assessments (EIA)

Drill Cutting Treatment1. Solidification2. Bioremediation 3. Thermal desorption Waste Management and Disposal1. Exportation2. Hazardous waste handling

Dolphin Oilfield Serviceswww.dolphinoil.com

Al Amaween Street, Hay Al Andalus 2 P.O. Box 2108 Tripoli, LibyaTel/Fax: +218 21 478 1932/3

www.dolphinoil.comAl Amaween Street, Hay Al Andalus 2

P.O. Box 2108 Tripoli, LibyaTel/Fax: +218 21 478 1932/3

Dolphin Oilfield Services

www.dolphinoil.comAl Amaween Street, Hay Al Andalus 2

P.O. Box 2108 Tripoli, LibyaTel/Fax: +218 21 478 1932/3

ENI OIL COMPANYMILLITAH GAS B.V.ZUETINA OIL COMPANYARABIAN GULF OIL COMPANYAKAKUS OIL OPERATIONSMABROOK OIL OPERATIONS CPTL

CLIENT LIST

TOTAL E & PWINTERSHALL LIBYA B.VVERENEXLASMORWE DEA NA/ME GmbHVEBA OIL OPERATIONS

Where are we now?

Case Study Supplying goods and services through another UK company

in Libya

Simon Berdai

Case Study

Selling direct to Libyan companies/organisations

Craig Wood

Craig Wood Emergency Response Services

ERS back ground• Security

• Training for health and first aid

• Rescue work

• Provision of services to the NHS

Libya

• October 2006

• The initial step

• The introductions

• The plan

Building Relationships

• June 2007 for first course• Signed agreement with hospital• Working with the hospital independently• Training well received across the board

Building Relationships

•Further courses ongoing

• Driver training

• Ambulance training

Building Relationships

• Working with oil and gas industry

• Joint venture V’s law 5 venture

• Local presence

Invaluable assistance• British Embassy Tripoli

– Business development– Friendships

• Investment in permanent on site staff– Friendships– Local knowledge

Questions

Case Study

Selling direct to a Libyan government agency

David Cash

Financing Trade

Mike Galer

Financing TradeFinancing Trade

LBBC – November 2008

Topics

• About BACBAbout BACB

• The Impact of the Credit Crunch The Impact of the Credit Crunch

• Trade Finance DynamicsTrade Finance Dynamics

• Libyan Payment SolutionsLibyan Payment Solutions

BACB’s Libyan Credentials• ““Libya in London” Libya in London”

– UK Head Office

– “A”- rated & UK regulated

– Associate HSBC Group

– > 35 years market coverage

• ShareholdersShareholders– Libyan Foreign Bank 26.3%

• Physical Presence in LibyaPhysical Presence in Libya– Authorised office/local staff

• Libyan ClientsLibyan Clients– Most Libyan banks & Oil

companies

• Started with sub-prime US Started with sub-prime US MortgagesMortgages– Heavy losses leading to some bank

failures and widespread rescue packages

• Loss of trust between banks– Freezing up of interbank markets

– Rise in borrowing costs

• Move to wider economy– Economic slowdown

– Collapsing asset and commodity prices

– Deteriorating terms of trade

– Recession

Credit Crunch

Credit Crunch – Oil Prices

Credit Crunch – Freight Rates

Establishing Trust

Exporter/Seller Importer/Buyer

Ship and wait See the goods first

Cash in hand Advance payment

Libyan Challenges• BureaucracyBureaucracy

– Market is openingMarket is opening– New policies in place e.g. Need for Libyan partnersNew policies in place e.g. Need for Libyan partners– Legal, Accountancy and Tax issuesLegal, Accountancy and Tax issues– Change usually takes longer in practiceChange usually takes longer in practice

• ComplexityComplexity

– NOCNOC

– Oil CompaniesOil Companies

– IntermediariesIntermediaries

e.g. Oil Sector EPSAJOINT-

VENTUREWHOLLY-OWNED

Approx 30 Internationally active oil and gas majors

ENI Oil

ENI Gas

Repsol

Harouge

Waha

Zueitina

Sirte Oil Co

Ras Lanuf

Jowef

NAGECO

Nat Oilfields

Nat Oilwells

Brega

Akakus Oil Op

Zawia

Libyan Challenges • Oil Sector (continued)Oil Sector (continued)

– Arrival of the majorsArrival of the majors

– Closure of EU Procurement OfficesClosure of EU Procurement Offices

Libyan Challenges• CommunicationCommunication

– Email / Mobile communications Email / Mobile communications – Use of English in international tradeUse of English in international trade

• BondingBonding

– Wording (e.g. non-contestation clause)Wording (e.g. non-contestation clause)– Acceptable bank namesAcceptable bank names– Managing costsManaging costs

• Getting Paid !Getting Paid !

Equipment Consultancy &

Training Opportunities

Trade Solutions

Exporter/Seller Importer/Buyer

Least Secure Open Account Most Secure

Documentary Collection

Documentary Credits

Most Secure Advance Payment Least Secure

Libyan Payment Solutions

• BACB provides a broad range of Libyan payment solutions BACB provides a broad range of Libyan payment solutions including:including:

– OPEN A/COPEN A/C as paying agent

– COLLECTIONS COLLECTIONS London presentation (BACB clients)

– L/C ISSUANCEL/C ISSUANCE existing facilities for oil sector clients

– L/C CONFIRMATION L/C CONFIRMATION as correspondent of Libyan banks

– BONDINGBONDING Bid / AVP / Performance

• BACB aims to be as flexible as possibleBACB aims to be as flexible as possible

Financing TradeFinancing Trade

LBBC – November 2008

Questions & Answers

Summary

Sir Richard Dalton

DOING BUSINESS IN LIBYATHE SECOND STEP

ABERDEEN

26 November 2008