Libya: ''concern on stalled investments'', says SACE insurer

Cautious on Egypt pending Gulf aid, gov't plan, auction results

12 September, 15:44

    (ANSAmed) - ROME, SEPTEMBER 12 - The latest country update by Italy's SACE business insurance group gave Libya a negative review, but held out hope for Egypt.

    ''The situation in Libya is a cause for concern. The oil sector data is negative and expected large-scale Italian investments never resumed. We're cautious on Egypt,'' Giulio Dal Magro, chief economist at SACE, told ANSAmed in an interview. Since the beginning of 2013, SACE has intervened in a very slight number of operations in Libya, whose crucial oil sector is in disarray following strikes by security forces posted to Es Sider, Ras Lanuf, Marsa al-Brega and Zueitina oil export terminals. ''We believe oil is a strategic sector for the country, making up 65% of its GDP, 95% of exports and 96% of tax revenue'', Dal Magro explained.

    ''Libya's National Oil Corporation (NOC) on August 18 invoked a force majeure clause, announcing it may not be able to fulfill September crude and refined oil delivery contracts. Es Sider, which at capacity of 350,000 barrels a day is Libya's largest oil terminal, Ras Lanuf (220,000 b/d) and Zueitina (150,000 b/d) remain shut down. Exports from Marsa al-Brega port terminal are back to normal.'' The strikes and plant and terminal closures will cause losses of 4 billion dollars in 2013, the NOC president said recently. Libyan oil production fell from 1.3 million barrels a day to 800,000 a day between June and August alone, according to Bloomberg news agency. The outlook remains negative in spite of the government's efforts to regain control of the sector ''by any means necessary'', analysts said.

    The outlook on Egypt remains positive in spite of the past two months' political uncertainty and street violence.

    ''We're cautious, but we're staying'', said Dal Magro. ''We need to understand the fallout from the events at the end of August, and we also need to evaluate the impact of the government's 3.2-billion-dollar emergency plan to restart the economy in the next 10 months, as well as the 12-billion-dollar capital injection from Saudi Arabia and the United Arab Emirates after the fall of (President Mohamed) Morsi, and the Bank of Egypt's 1.3-billion-dollar emergency auction a few days ago''. Italians' desire to invest in Egypt however hasn't flagged since the revolution that began on January 25, 2011, said Dal Magro pointing to a positive trend in SACE's operations in the nation on the Nile. Insurance coverage for political risk and bad credit rose from 6.8 million euros in 2010 to 27.8 million in 2011, to 31 million the following year. Between January and July this year, SACE has already issued contracts totaling 35.8 million euros, in what could be a sign that perhaps all is not lost. (ANSAmed).

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