Plans by Libya’s National Oil Corporation (NOC) and US-based Dow Chemical for a major joint-venture chemicals project in Libya are “dead”, according to a government official.

The two companies first announced a project in April 2007 to expand the existing cracker and add downstream plants at Ras Lanuf, north-central Libya, for an expected cost of $2.5bn-3bn.

“The Dow Chemical deal at Ras Lanuf fell through … it is dead. There is a new strategy … new guidelines, so it couldn’t be done,” says AbdulBaset Abadi, member of the Oil Committee on Libya’s National Transitional Council (NTC).

However, speaking at the MEED Libya Focus Day in Dubai, he added that “Libya still has the potential to be a major refining and petrochemicals hub”.

Libya is expecting to host parliamentary elections in the coming months, and the NTC will be reluctant to sign off any new projects until a new government is in place.

The Dow Chemical deal was one of only four major development deals signed with international companies between the lifting of trade sanctions in 2004 and the end of Muammar Gaddafi’s government in 2011.

Another major chemicals deal, with Norwegian fertiliser group Yara International, also looks in jeopardy due to an investigation into corruption by the previous regime.

Lifeco, a joint venture set up by Yara, NOC and the Libyan Investment Authority in 2009, was planning a $2bn upgrade of the Marsa al-Brega nitrogen fertiliser complex. The project was still at the planning stage at the end of 2010.

“There is suspicion of corruption. There will be an investigation by the [Libyan] general attorney on the basis of the deals, but the contract is still respected until there is a legal decision,” says Abadi.

A joint project of NOC and UK-Dutch oil major Shell Group to upgrade the state-owned company’s liquefied natural gas (LNG) facilities in Marsa al-Brega also looks to be on hold. The deal is dependent on Shell’s gas exploration in the Sirte basin.

“[Shell has been] working on it, but is facing problems. They tried to drill deep targets in the basin for gas, but haven’t succeeded. I have no ideas on future plans,” says Abadi.