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Japan seeks strategic energy partnership

May 2006
A high-level Japanese visitor to Tripoli has been pushing for enhanced energy ties, underscoring the importance of Libya in Japan's wider strategy to diversify its sources of oil supply away from traditional reliance on a handful of Middle Eastern producers.

Former foreign minister and now deputy chairman of the Japanese-African parliamentary commission Napo Taka Machimoro was in Tripoli at the end of April. He met an impressive array of Libyan decision makers, including NOC chief Shukri Ghanem, electricity company Gecol head Omran Boukra, Prime Minister Baghdadi al-Mahmoudi, plus the secretary for planning, and the reform-minded secretary for cooperation, Mohammed Siala.

There was no doubt that this was all about Japan's intention to deepen its energy relationship with Libya, following the incredible success of Japanese IOCs in Libya's October 2005 exploration bidding round. Five Japanese companies Nippon Petroleum, Mitsubishi, Japex, Teikoku Oil, and Inpex Corporation gained six out of the 23 licences awarded, offering some of the lowest shares of production witnessed in that auction.

Machimoro discussed various options for ensuring that Japan maintains this privileged position and does not lose to rival China, which has also been pushing for a greater stake in Libya. Suggestions included supporting technical and technological advances in Libya's energy industry and helping Libya to construct refineries and petrochemical plants something the Chinese have also promised. The Japanese are also offering to help with environmental and infrastructure construction projects.

It seems that Machimoro's visit has rattled China. The day after Machimoro's high-level meetings, the Chinese ambassador met Foreign Secretary Abdelrahman Shalgam, stressing that his country was just as keen to enhance cooperation "in all fields." The mood of the Chinese ambassador will not have improved following the news that Taiwanese president Chen Shuibian paid a surprise visit to Libya on 10 May, where he is said to have been welcomed by Saif al-Islam and to have discussed petrochemicals, among other issues.

Also in the current issue of Libya Focus
Policy Focus:
Tripoli reaps the rewards of realpolitik as Washington restores ties;
Jamahiriyah removed from State Sponsors of Terrorism;
Reform dead in the water?
No resolution to Fathi el-Jahmi case; Libya responds:
NOC head, Shukri Ghanem, happy;
US ties: a personal reflection by Mustafa Kharkoum;
Another Libyan militant handed over: Ibn Sheikh al-Libbi.

Politics and Security:
Cartoon row number two: in Bulgarian national newspaper Novina;
Medics' trial opens and is postponed: Benghazi remains angry;
Foreign Ministry posts;
Investigation into Benghazi car scam;
News in brief;
Qadhafi: The Opera; Song ban;
Wedding bells for Qadhafi cousins;
Censorship still on the agenda;
Crackdown on illegal immigrants.

International Affairs:
Qadhafi upsets Algeria....And the Chinese
Venezuela's Hugo Chavez cosying up in Libya;
Qadhafi to help Liberian President Ellen Johnson Sirleaf.

Energy Industry:
Gazprom steps into Wintershall's Libyan plays;
Gas sector upturn helped by Gazprom;
Shukri Ghanem pushes for production hike as he takes NOC helm;
Japan seeks strategic energy partnership: Napotaka Machimoro visits Tripoli;
IMF urges action on electricity sector;
General Electricity Company of Libya in poor financial state;
Energy in brief: Disappointment for ONGC Videsh as well runs dry;
Azzawiya refinery tender underway;
Ghanem to receive petroleum award;
New drilling and well services awards.

Business Environment:
IMF pushes for accelerated reform;
Managing and harnessing Libya's Oil wealth;
New employment fund and new economic policy committee;
US$50 million ceiling on foreign investment lowered;
Foreign firms in on banking modernization: Oracle; IBM, CMA and Agathon;
Privatisation delay confirmed;
Business in brief: Libya confirms plans for Stock-market; Plan for free trade zone in Benghazi; Aim for 10 million tourists by 2015; Orascom Construction Industries secures $40million contract

For further details about Libya Focus see www.menas.co.uk

© Menas Associates 2006