Libya, Tunisia step up links, plan oil refinery

[tolibya]

TRIPOLI (Reuters) - Libya and Tunisia are thinking of building an oil refinery and pipelines with the help of international investors as the North African neighbours step up economic cooperation, a Libyan official said on Monday.

"We are now thinking of an oil pipeline, a gas pipeline and we are thinking of constructing an oil refinery in the al-Skira region in Tunisia as a joint Libyan-Tunisian effort in addition to international investors," Libyan economy, trade and investment minister Tayeb Safi Tayeb told Reuters in Tripoli.

Tunisia has only one oil refinery in the northern city of Bizerte with capacity of 30,000 barrels a day, and has said it plans to build another with capacity of 120,000 bpd to satisfy its growing economy.

It has far less oil than Libya, whose estimated reserves of 37 billion barrels put it among the global top 10 oil reserve owners.

Tayeb said the two countries planned to build a tourist village on their border and reiterated Libya's intention to establish a free trade zone in the coastal town of Zwara Aboukammash nearby.

In another sign of improving economic ties between the two countries, Libyans and Tunisians will soon be able to transfer funds across the border and exchange them into local currency, Tayeb said.

The decision, which comes into effect on January 15, builds on a 2002 bilateral free trade accord and will bring economic, trade and investment benefits, he added.

Libyan leader Muammar Gaddafi has friendly ties with Tunisian President Zine al-Abidine Ben Ali, who allowed Tunisia to act as a conduit for Libya and the outside world during years of Western sanctions.

Bilateral trade has grown sharply in recent years thanks to Libyan economic reforms and the readiness of Tunisian firms to serve a lucrative market on their doorstep.

But trade between North African states remains tiny and their main markets remain across the Mediterranean in the European Union.

Political differences and mutual suspicion have hampered efforts to boost trade and investment among the Maghreb countries, forcing many young North Africans northwards to Europe in search of work.