The UK’s HSBC expects to secure an international oil company (IOC) as a strategic partner for a refinery being built by the local Zwara Oil Refining Company (Zorco) in Libya by the end of the year.

The 200,000 barrel a day crude oil refinery is the largest new government-led project in Libya and is expected to cost in excess of $5bn.   

“We are focusing on a limited target list of IOCs, who would be suitable for the project,” says Jonathan Robinson, head of project finance for HSBC Middle East. “Ideally, we would secure one by the end of the year. The percentage stake they would have is yet to be determined.”

Zorco appointed HSBC as financial adviser for the refinery in December 2008. The bank expects to take the project to the international financing market in the second half of 2011, according to Robinson.  

In October 2008, Foster Wheeler Italiana, the Milan-based subsidiary of US engineering and construction company Foster Wheeler, was awarded the contract for consultancy and project management services.   

The refinery will be located at Mellita, which is near Zwara in northwestern Libya, close to the Tunisian border.

It will be built, owned and operated by Zorco, which is the project company of Tamoil Africa Holding, which is owned by the Libya Africa Investment Portfolio and the Libyan government.

Once completed, it will be producing refined oil products targeting the local, regional and international markets.  

In October 2009, HSBC also won the mandate to act as the financial adviser to the Libyan Oasis Electricity and Water Company to build, own and operate several independent power projects (IPPs).

Estimated to cost in excess of $1bn in aggregate, the IPPs will involve a mix of greenfield and brownfield plants, with the capacity of the first plant understood to be approximately 700MW.

“One plant under consideration is already under construction” says Robinson. “Commercial negotiations are ongoing on the power purchase agreement.”