Islamic debt is one option being considered, Mohamed Alloub, chairman of the state-run Libyan Petroleum Institute, said in a Sept. 18 interview. While loans for a petrochemical venture between Saudi Arabian Oil Co. and Dow Chemical Co. will cost as much as 185 basis points over Libor, or 2.3 percent at yesterday's rate, Giyas Gokkent of National Bank of Abu Dhabi PJSC said Libya may have to pay more than 6 percent.
Libya, bigger in size than the U.S. state of Alaska, is seeking to boost refining capacity to 1 million barrels a day from 380,000 barrels to meet growing domestic fuel demand. Its oil output tumbled in the last year by two-thirds from levels produced before the 2011 civil war that ended Muammar Qaddafi's 42-year rule. Borrowing from foreign banks would let the government use its own funds for schools, hospitals and housing, Alloub said in the capital Tripoli.