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Last Updated: Thursday, 25 March, 2004, 11:09 GMT
UK plc eyes Libya
Colonel Muammar Gaddafi
Colonel Muammar Gaddafi is being welcomed back from the cold
Tony Blair's historic visit to Libya is set to re-open the door for UK business links with the country.

For many years the north African state was effectively off-limits for British business, being under UN sanctions and accused of state-sponsored terrorism.

But following Libya's decisions to ditch weapons programmes and pay compensation for the Lockerbie bombing, UK companies are eyeing investment and contracting opportunities.

With years of sanctions now in the past, the economy is viewed as ripe for modernisation and foreign investment.

Oil interest

The greatest interest is likely to be in oil and gas.

Libya has a large but underdeveloped oil and gas industry, it has plentiful reserves that are cheap to recover and it is close to European markets.

European oil firms and contractors are keen to step in before their US rivals get re-established in the country.

Libya is also seeking billions of dollars of investment to modernise its general infrastructure.

Leptis Magna
No problem yet with other tourists blocking the view
And with 2,000 kilometres of undeveloped coastline and some of the finest ancient Roman remains in the Mediterranean, the country offers enormous opportunities for tourism investors.

Eight-year tax breaks are on offer to tempt investors and many are apparently biting the tourism minister's hand off.

One British firm is negotiating permission to build a 500 hectare tourism complex, complete with luxury marina, golf courses and fitness clubs.

Aircraft sales?

Oil giant Shell has been among the quickest large UK firms off the mark, signing a deal with Libya's national oil company on the day Mr Blair met Colonel Gaddafi.

The "long-term strategic partnership" will focus on building Libya's gas export capacity and include onshore exploration, Shell said.

The company did not give financial details of the arrangements and said negotiations on specific projects would continue throughout the year.

Another company reported to be actively seeking business with Libya is UK defence and aerospace group BAE Systems.

The Hampshire-based firm, which owns 20% of planemaker Airbus, was unavailable for comment, but is believed to be seeking deals including civilian aircraft sales.

Some charities and campaign groups have called on the government not to permit sales of military equipment to Libya.


The present level of UK trade with Libya is very modest and dwarfed by that between Italy and its former colony.

According to the Department of Trade & Industry (DTI), UK exports to Libya - mostly industrial, power and electrical machinery - were worth 241.1m in 2003, a 12% increase on 2002.

This makes Libya the UK's 58th biggest export market worldwide.

The DTI now sees increased potential for UK businesses in Libya across a number of sectors - oil and gas, airports, ports, logistics, education and training, healthcare and tourism.

But although sanctions have been lifted, and Mr Blair indicates that the country is being welcomed back from isolation, potential problems remain for overseas investors.

Chief among these is the country's need to improve its commercial law framework and offer foreign investors better legal protection.

The BBC's Frank Gardner
"Both countries stand to gain a great deal from this visit"

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