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The capture and killing o ormerLibyan leader Muammar Gaddaon 20 October 2011 made headlines theworld over. And rightly so; ater dominat-

ing Libya since he took power in a mili-

tary coup in 1969, the death o the mercu-

rial statesman was an event o signicant

local, regional and global importance.

But his passing has also brought with it

considerable uncertainty over Libyas

uture. The capture in late November

2011 o Sai al-Islam, Gaddas most

infuential son, and security chie Abdul-

lah Senussi has drawn a line under thelast vestiges o the previous regime, but

the National Transitional Council (NTC)

has its work cut out as it attempts to bring

some semblance o normality back to

the country.

There are signs that this is already hap-

pening, however. Oil production in many

areas is being brought back up to capacity

Executive summary

Oil production

in many areas isbeing brought backup to capacitysurprisingly quickly

surprisingly quickly, while export acili-

ties have been reopened to enable Libyan

crude to access the international market.The speed with which this is happening

is testament not only to engineering inge-

nuity, but also to the act that Libyas

hydrocarbons inrastructure much o it

in remote areas has emerged remarka-

bly unscathed rom the ghting.

It is a similar story in most other sectors.

Surveys carried out as part o this report

have ound that most acilities and

projects have experienced relatively little

damage as a result o the confict and thatin many existing plants, production is

already resuming.

Work on projects that were under con-

struction is a separate matter. Interna-

tional contractors have yet to return to

the country while they wait or the secu-

rity situation to improve. However, there

is plenty o incentive or them to go back

as most still have perormance bonds in

many cases up to 10 per cent o their

contract values with the clients andmuch o their equipment is also still in

the country.

Contractors, spoken to as part o this

report, state that advanced parties are re-

entering Libya to assess the situation and

to gauge the right moment to return. I the

situation on the ground rapidly improves,

then most o them will be in a position to

return by mid-2012.

The interim government has alreadystated that it will honour legitimate

contracts signed under the previous

regime, although much depends on the

NTCs denition o legitimate. Certainly,

there are concerns among Chinese and

Russian companies in particular, due

to their governments initial unwilling-

ness to support the rebels cause and it

remains to be seen whether there will

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be any lingering animosity towards

these rms that could result in them

being unable to return.

Whatever happens, the hope amongst

contractors is that Libya will become a

major projects hub. It is air to say that

under the Gadda regime, the Libyan

projects market was anaemic at best.

Despite oil production o more than

1.5 million barrels a day (b/d) and the

Arican continents highest gross domes-

tic product (GDP) per capita, the projects

market has consistently underperormed.

Over the past decade, total annual con-

tract awards have never exceeded $8bnand have averaged less than $4bn.

The ault lay primarily with a bloated and

inefcient bureaucracy, which had neither

the decision-making authority nor the

unding approval to proceed with the gov-

ernments project plans. This is despite

Libya having no shortage o unds and the

pressing need or capital investment in

almost every sector as the countrys aging

inrastructure became increasingly unable

to serve the ast-growing population.

It was not uncommon or tendering

activities and contract award procedures

to take years to complete. Projects were

requently cancelled or remained perma-

nently in limbo. Oten, contracts were

awarded only or the successul contrac-

tor to discover that unding had not been

approved or the project. Despite our oil

gures compare very avourably with the

countrys $96bn GDP.

It will take time, however, or spending

to accelerate. By denition transitional,

the NTC is unlikely to embark on anymajor capital spending programme. Until

an elected government takes over, con-

crete developments are not expected to

take place and may not occur until 2013

at the earliest.

But the potential is clear. The Libyan

projects market is in the optimum posi-

tion where there is a pressing need or

projects investment and the nance is

available to und this need. From housing

and hospitals to roads and railways, there

is considerable underdevelopment o

existing inrastructure, which will require

substantial investment in the medium to

long term. In the short run, the emphasis

will be on completing existing schemes

and ensuring that the nations hydrocar-

bons and utilities inrastructure is operat-

ing at a sucient rate.

The private sector, both local and oreign,

will have a key role to play in this projects

evolution. The Libyan economy has hith-

erto been dominated by the public sector.Any new government will be keen to liber-

alise the economy and attract urgently-

needed oreign investment into the coun-

try. As an investment destination, Libya is

ertile territory. For example, its proximity

to Europe, cheap power and competitive

eedstocks make it a prime industrial

investment target, while its thousands o

kilometres o unspoilt beaches, ancient

ruins and good weather should prove

attractive to tourism developers.

The emergence o a new Libya oers the

prospect o a major new projects market

in North Arica. For suppliers, vendors,

investors, contractors and subcontractors,

it provides a potentially lucrative new

market that can oset the increasingly

competitive environment in the Gul. The

risks may, or the time being, be relatively

high, but so will the potential returns.

and gas licensing rounds, there was little

discernible increase in hydrocarbons

activity. The downstream sector remained

moribund, while international oil rms

have been reluctant to invest in upstream

production increases.

With the demise o the Gadda regime,

the hope is that the new government will

be more ecient in its capital spending

programme. It certainly has the cash to do

so. Libya had oreign exchange reserves o

close to $170bn as o late 2010, according

to the International Monetary Fund, while

its oreign assets totalled $152bn. Both