EconSource: Libya’s State Oil Firm Opens Books to Buyers to Soothe Payment Fears

Libya’s National Oil Corporation (NOC) has opened its books to international oil firms and is meeting regularly with the International Monetary Fund (IMF) and the World Bank (WB) to keep them on board with the current payment system for Libya’s oil exports. NOC Chairman Mustafa Sanallah said he and central bank Governor Saddek al-Kaber met with Libya’s major oil buyers to reassure them that none of the payments were going to fuel hostilities between rival factions in Libya or being misused. Sanallah added that the NOC does not think the Organization of the Petroleum Exporting Countries (OPEC) should cut production at its meeting next month, but that the NOC cares solely about ramping up Libya’s production and regaining its market share. [Reuters, Wall Street Journal, Libya Monitor (subscription), 5/19/2015]

British Petroleum agrees to cut spending on Iraq’s Rumaila field after oil price drop
British Petroleum (BP) has cut its development budget for Iraq’s Rumaila oilfield by $1 billion this year, after the Iraqi government warned that a slump in crude oil prices and its battle against the Islamic State (ISIS or ISIL) was making it difficult to pay oil companies. BP has agreed with Baghdad to reduce its 2015 spending on the country’s largest oilfield to $2.5 billion, from the initially planned $3.5 billion. Oil companies have proposed millions of dollars in budget cuts, a senior Iraqi oil ministry official said in March, after the government asked companies to revise development plans and consider postponing new projects. [Reuters, 5/18/2015]

IMF calls for Middle East fuel subsidy reductions
Middle East governments will spend up to $300 billion subsidising fuel costs this year, according to new calculations by the International Monetary Fund (IMF). That amount is equivalent to almost a third of all government revenue in the region. Large scale energy subsidies make little economic sense, according to the IMF, as producers are increasingly strapped for cash after a significant decline in oil prices. In the United Arab Emirates (UAE), steps have been taken to reduce energy subsidies, but the IMF has called for subsidies to be phased out completely. In Saudi Arabia, the IMF estimates that reserves will last only for the next six years at current spending rates. [The National, 5/18/2015]

Egypt targets $6 billion to $8 billion in foreign direct investment for 2014/2015
Egypt’s Minister of Investment Ashraf Salman said he expects foreign direct investment (FDI) in Egypt to reach between $6 billion and $8 billion for the fiscal year 2014/2015. In January, Salman had said that Egypt would aim for $10 billion in FDI. He said that “tough times” are behind the lowered expectations of FDI. In the first half of 2014/2015, FDI amounted to $2.7 billion. Salman added that Egypt’s investment law is expected to be imposed within a month. [DNE, 5/18/2015]

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