Libya's oil industry lies in the hands of a former economics professor and long-time critic of the Qaddafi regime.
Industry insights What now for Libya?
Libya looks to past for future With the long conflict finally drawing to a close, the first task for Libya's rebel government is to restart the oil industry.Read article
UAE a much needed powerful ally As Libya rebuilds it is counting on the UAE for fuel, infrastructure experience and energy investment. Read article
Infighting at Opec opens up rifts The Libyan conflict exposed rifts between producers and consumer, and even within Opec. Read article
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Dr Ali Tarhouni, the rebels' oil minister, must restructure and restart the industry that provided Libya with nearly all of its income before the six-month civil war.
He will have to coax back foreign oil companies, whose engineers evacuated at the start of the hostilities, as well as determine the future of the state oil company, which has been fractured since a Benghazi subsidiary defected to the rebels.
Dr Tarhouni will also have to fill the shoes of Shokri Ghanem, the former Opec envoy and chairman of the Libyan National Oil Corporation.
Mr Ghanem defected in May and threw his support behind the rebels, but he has not taken a position in the National Transitional Council, the rebel government.
Dr Tarhouni had spent three decades outside Libya when he returned to Benghazi in March to serve as the rebels' oil minister.
He left Libya in 1973 after calling for government reforms.
Eight years later, he was placed on a hit list, according to The New York Times.
By then he was part of the way through a doctorate in the US and soon after took a post as a senior lecturer in economics at the University of Washington in Seattle.
Teaching undergraduates microeconomics by day, Dr Tarhouni lived a shadow life planning for a post-Qaddafi Libya.
He tracked Libya's government revenue and its spending in the public sector, estimating that tens of billions of dollars had gone missing.
"With Qaddafi, as with any dictator, the object is to hide as much money for himself as quickly as possible," he told the Washington Report on Middle East Affairs in 1994. "I think he has done a remarkable job."
Dr Tarhouni's Libyan friends in Seattle would come to his house or meet in the nearby mountains to debate the nation's future.
He is optimistic about the prospects for a reformed government.
"Can a constitutional republic which includes indigenous elements survive in a tribal society like ours?" he told the Washington Report in 1994. "I think the chances are good."
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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