Libya is planning an oil refinery and a natural gas pipeline in Egypt, helping boost investment in its Arab neighbour to $10 billion in the next two years, its prime minister said on Thursday.

'We have now about $2 billion (of investments) and we expect that within a period of two years maximum this will reach $10 billion,' Al-Baghdadi Ali Al-Mahmoudi told a news conference.

'It was agreed that an oil refinery will be built west of Alexandria with Libyan funding and it will be used for Libyan crude,' he added.

The refinery would have a capacity of 250,000 barrels per day, Mahmoudi said, without giving further details. Plans also included a natural gas pipeline between the Egyptian coastal city of Alexandria and the Libyan city of Tobruk, Mahmoudi said.

He did not say if the pipeline would carry Egyptian natural gas or Libyan natural gas or say when it would begin operating.

Other investments could include agriculture, real estate, and further energy projects, Mahmoudi said.-Reuters