The facilities will be built alongside existing infrastructure at the Ras Lanuf petrochemicals complex and the Marsa el-Brega fertiliser complex, under framework agreements signed earlier this year with the US' Dow Chemicals and Norway's Yara Group (MEED 25:4:07).

“If the joint venture agreements are signed by the first quarter of 2008 as expected, then by the end of 2008 we should be in a position to raise finance for a major upgrade of the complexes,” Ahmed Aoun, projects director of state-owned National Oil Corporation (NOC), told MEED on the sidelines of an oil and gas conference organised by the Libyan British Business Council in London on 21 November.

Dow and NOC will invest an estimated $3-4bn in the development of a range of facilities at Ras Lanuf following the rehabilitation of the existing plant.

“There is not a lot of optimisation work to be done,” says Aoun. “We expect to go straight into major investments for new lines. We plan to install a unit to convert naphtha into ethylene, new ethylene production lines, new polyethylene lines and maybe an ethylene glycol facility.”

The level of investment to be made by Yara and NOC in new ammonia and urea lines at Marsa el-Brega is subject to ongoing feasibility studies, but is likely to be in the range of $1-2bn. The rehabilitation of existing facilities is set to increase the capacity of the complex by up to 25 per cent.

Joint venture agreements for the two projects are on track to be signed by early 2008, says Aoun.

“We are now negotiating a range of detailed agreements, including acquisition [of existing facilities], feedstock and joint venture agreements,” he says. “We expect to finish by the first quarter.”

Under the proposed agreements, NOC will hand the existing assets over to the new joint venture companies, while Yara and Dow will each contribute a sum of cash equal to the value of these assets. The complexes are estimated to be worth about $300m each, says Aoun.

“The aim of the new policy is to invite investment into the downstream sector and liberate oil and gas revenues for infrastructure projects to create sustainable revenues and new jobs in sectors such as tourism and fisheries,” he says.

The existing facilities at Marsa el-Brega, which were built in the late 1970s, produce 700,000 tonnes a year (t/y) of ammonia and 900,000 t/y of urea.

Products produced at Ras Lanuf, which was commissioned in 1987, include ethylene, polypropy-lene and polyethylene.

The upgrades of facilities at both locations are subject to further studies and are also dependent on international gas prices.