Libya Seeks Up to $40 Billion to Unlock Vast Oil and Gas Potential Amid Security Challenges

Libya, home to Africa’s largest proven oil reserves, requires between $30 billion and $40 billion in investments to boost production and establish itself as a dependable global energy supplier. Masoud Suleman, chairman of Libya’s National Oil Corporation (NOC), stated in an interview with the Financial Times that the country possesses abundant untapped resources, noting that more than 60 oil and gasfields off the Libyan coast remain undeveloped.

The North African nation has faced severe hurdles, including political instability and violence, since the overthrow of former leader Muammar Qaddafi in 2011, leaving much of its oil production offline. Currently, the divided nation is administered by two separate governments in Tripoli and Benghazi, alongside numerous influential armed groups that discourage potential investors.

Most of Libya's major oilfields and export terminals are located in regions controlled by military commander and politician Khalifa Haftar, who dominates the east and has periodically enforced blockades on ports and oilfields. Meanwhile, the UN-recognised Government of National Unity in Tripoli controls the west with the backing of various armed groups. Recent security incidents, such as an explosive drone attack on the Zawiya Refinery complex that sparked fires and destroyed a fuel storage tank, underscore the ongoing vulnerabilities in the nation's energy infrastructure. Security concerns also led the US company GE to suspend work at a nearby power plant and withdraw technical teams following an attack on the South Zawiya power substation.

Despite these challenges, Mr Suleman emphasized that the attacks were restricted to a limited geographical area caused by a small number of outlaws whom the state is working to neutralize. He assured that all oil and gas investment sites are situated well beyond tension areas and benefit from robust security.

To revive its struggling hydrocarbons sector, Libya has engaged foreign energy companies such as Chevron, Eni, QatarEnergy, and Repsol, with the goal of increasing production from 1.4 million barrels per day (bpd) to 2 million bpd by the end of the decade. Following the NOC's recent bidding round allocating onshore and offshore concessions, the corporation is now reconsidering its business model to address delays caused by government funding shortages in traditional production-sharing agreements. The NOC is exploring a return to concession-style agreements or improved terms to shift more upfront financial responsibilities onto international investors, as demonstrated by a recent direct negotiation with Qatar-based UCC Holding for Area 47.