A $54bn initiative to turn Libya’s coastline on the Gulf of Sirte into an industrial hub faces a delay of at least six months while approval is sought from the country’s prime minister, according to senior executives working on the scheme.

The plans to turn the oil export towns of Marsa el-Brega and Ras Lanuf into energy cities - industrial clusters based on oil and gas processing and distribution facilities - were first revealed in October (MEED 13:10:09).

The scheme includes developing new petrochemicals production facilities, power stations and oil refineries, as well as a holiday resort, all of which are to be developed in a series of joint ventures with foreign companies.

Work was supposed to start on the first phase of development by mid-2010 and be completed in 2015. However, sources involved in the project now say approval may not be given until the end of 2010.

“With the complications of trying to get approval to go ahead with the projects, in Libya especially, it could be the end of the year before we get any concrete news on anything real,” says an engineering contractor with knowledge of the project.

Four international oil companies are in advanced talks with the Economic & Social Fund for Development (ESDF), which is in charge of the scheme, over separate oil, gas and petrochemicals developments at the two cities, according to a senior adviser working on the project.

Among the interested companies are the UK’s BP and Italy’s Eni, says another consultant who has discussed potential projects with both firms.

However, none of the projects can go ahead without the approval of the General Secretary of the Libyan General People’s Committee (Prime Minister) Al-Baghdadi Ali al-Mahmudi, according to sources close to ESDF and the US’ Fluor, which planned the development.

“The ESDF needs to get approval to create a new company to run the project,” says a senior executive at the fund. “Until we form another organisation, we cannot move ahead.”

Meetings between the ESDF and senior government advisers are due to be held on 3 and 4 February, but the sources say it is unclear when formal approval will be given and as a result, it is impossible to say when they will be able to move ahead with any of the projects.