Courtesy of Stratfor (subscription required), news that Libya recently announced a deal involving the development of an oil refinery and gasoline stations in Egypt, as well as a natural gas pipeline running from the Egyptian city of Alexandria to the coastal Libyan city of Tobruk.  As the article notes:

“…This energy agreement could boost Libyan investment in Egypt from the current $2 billion to as much as $10 billion in the next two years alone.

…Libya is positioning itself to expand its energy resources for export purposes, particularly to Italy and the rest of Europe. It now has more breathing room to do this, as relations with the West have seen significant improvements in recent years.

…Western investment has allowed Libya to boost energy production significantly, with the North African country more than doubling its annual natural gas output from 2005 to 2006 to 28 billion cubic meters (bcm), with 13 bcm of that total going to Italy and Spain. Currently, about 8 bcm per year of natural gas is exported from Libya’s Mediterranean coast facility in Mellitah via the Greenstream underwater pipeline to southeastern Sicily, from where it is routed to mainland Italy and then points farther north in Europe. The addition of Egyptian natural gas could boost the throughput to as much as 11 bcm per year.

The Egyptian deal thus makes a good deal of geopolitical sense. By building energy infrastructure to refine Libyan crude for the Egyptian market and hooking Egypt into a natural gas pipeline network to Europe, Libya can expand its political and economic leverage over its formidable eastern neighbor. With energy prices soaring, Libya thus is taking up the opportunity to beef up its energy industry and assert itself geopolitically so that it can become a force to be reckoned with both domestically and in its wider region.”