INTERVIEW: Commodities trader BGN highlights Libya's potential as oil groups return

Commodities trader BGN Group, having operated out of Libya for 12 years, is welcoming other oil companies now looking to return to the North African nation for crude oil.

"Libya is like sleeping beauty," Group CEO Ruya Bayegan told Platts in a recent interview. Noting that Nigeria had successfully developed the Dangote refinery to meet 60%-70% of local demand, "I cannot see why this cannot be replicated in other countries in Africa," she said.

Libya is in the throes of a crude oil revival, with production over 1 million b/d and ExxonMobil, BP and Shell looking to end their years-long hiatus. The country was plunged into chaos following the toppling of Moammar Qadhafi in 2011, and since 2014 has been split between rival governments in the east and west, with political spats and militia groups regularly disrupting oil output. "I think the trust is there now," Bayegan said.

BGN has operated out of Libya since 2013, starting small with its first contract with Libya's National Oil Corp. and growing slowly, she said. "It was a steady and growing business," she said. "Of course we had some bad years, because it's not an easy country. There has been so much up and down. But if you don't work to grow, you will only stay small. Most of the time, we were there working in partnership with the Libyan National Oil Corp."

The company is also investing in vessels, capable of operating on traditional and cleaner fuels, to ship LPG, and recently began metals trading out of Geneva and Singapore.

'Big potential'

"We see big potential in metals, there is growing demand for rare earths and strategic metals," Bayegan said. "This is our next focus area for growth. We are setting up a metals trading desk and investing in upstream operations and processing. West Africa is one of a number of potential sources we are considering," she said.

BGN considers itself one of the biggest LPG offtakers from the US and the top LPG supplier to Egypt and Indonesia, with total trading volume in crude oil, LPG, LNG and refined products now in excess of 50 million metric tons a year from Geneva, Singapore, Dubai and Houston, the CEO estimated. "The LPG is also sourced from countries including Qatar, Kuwait and Algeria," she said.

"LPG infrastructure is key. We are looking at a lot of new ideas, new developments in infrastructure particularly in Africa," she said. BGN's sole LPG infrastructure is a storage terminal in Turkey, she said.

The LPG from the US goes to several Asian countries such as Vietnam, China and Japan and parts of Africa, including providing almost 100% of the demand in Egypt, she said. In fact, BGN was the only LPG supplier to Egypt for eight years, she said. And BGN also provides 50% of LPG needs in Morocco and almost 60% of Indonesia's usage, she said.

Next year, LPG and butane demand will grow 2%, faster than any oil product except for naphtha, according to the International Energy Agency in its October report.

"LPG demand is growing mainly in Africa," partly as a fuel for cooking, Bayegan said. "We see a lot on the demand side and a lot of growth in many other regions. On the other hand, I do not see that much supply. I mean the supply is coming but the demand is growing quicker than supply and we have to address this."

BGN's LPG business was started 17 years ago to meet demand for propane for petrochemicals plants in China, she said. "We started supplying feedstock and it grew from there, and now we have a big presence in many countries. BGN is actually active in 120 countries around the world," she said.

Future investment plans include moving from upstream to midstream, such as storage, terminals and pipelines, she said. "We need to have a footprint through the supply chain. This is our intention."