A string of recent positive developments has generated great interest in the potential and prospects of Libya’s energy sector. The Government of National Unity (GNU) announced in January plans to launch a bidding round for 22 onshore and offshore exploration blocks – the first such auction in over 17 years. Just prior to that, in late 2024, international energy companies (IECs) Repsol, ENI, BP and OMV resumed exploration activities in the country – after a ten-year absence due to sanctions, political instability and security concerns – and in the same year Libya reached its highest oil production since 2013: 1.4 million barrels per day (bpd). With the GNU’s acting Minister of Oil and Gas’s recent announcement of plans to boost the country’s oil production to 1.6 million bpd in 2025, both ambition and hopes are high.
However, Libya will continue to be a high-risk operating environment because, fundamentally, little has changed in the political and security landscape. Further oil blockades, protests, and funding freezes should be expected because oil continues to be subject to politicisation and the broader political environment remains stagnant. Furthermore, the risk posed by an unclear succession plan for leadership of the east, where most of Libya’s oil facilities and reserves are located, is largely under-appreciated. A security and political vacuum in Libya’s oil stronghold would not only complicate IEC operations but also open the door to greater influence activities from external actors.
Untapped Potential and Persistent Challenges
Libya’s potential has historically caught the attention of IECs and investors alike. Its energy industry accounts for 95% of the country’s economic output, the country boasts the highest hydrocarbons reserves in Africa, and 65–70% of the total land area and territorial waters are not yet explored. However, this potential has never been properly realised. Libya has faced sanctions at different points – in 1980 due to its support for terrorism and efforts to develop weapons of mass destruction, in 2011 to pressure Muammar Qadhafi’s regime, and in 2014 in response to increased violence and illicit exports of Libyan crude. Heavily bureaucratic processes and a failure to attract foreign investment have also stymied the sector’s development.
Most recently, the security and humanitarian crisis that followed the overthrow of Qadhafi in 2011, and the political division that has racked the country since 2014 – when two rival authorities emerged and began competing for control of the country and its resources – have deterred foreign involvement. The 2022 appointment of National Oil Company (NOC) Chairman Farhat Bengdara in a fragile political deal between the two rival authorities ushered in an era of relative stability in the energy sector, allowing production to rise and IECs to return. However, infighting has once again derailed progress. Production declined by a whopping 60% in August 2024 due to political disputes over control of the central bank.
To add insult to injury, Bengdara resigned in mid-January 2025, and his departure has the potential to upset both the delicate balance struck between the two main stakeholders in Libyan politics and plans for the sector. Internal investigations are already underway to examine major decisions taken during his leadership, including ENI’s $4 billion expansion of Mellitah’s offshore gas structures, signed in January 2023. Once again, Libya’s oil industry is set to suffer setbacks because of political wranglings.
The Politicisation of Energy
Libya’s dependence on hydrocarbons revenues has meant that oil, and oil infrastructure and institutions, have been used by national and local actors as bargaining chips since 2011. Protests, blockades and sabotage have been used to communicate discontent with and extract concessions over grievances such as inadequate political representation, unequal distribution of oil revenues, and failure to pay salaries, among others. This will continue to be the case as long as a resolution to broader political and tribal issues remains out of reach, and armed groups operate outside of a central authority’s control. The energy industry will remain a target for national actors looking to control the country’s bank balances; local groups seeking to influence events in their immediate vicinities, as well as in Tripoli and Benghazi; and international players like Turkey, Russia, the UAE and China, among others, securing their own interests – both economic and strategic. Libya’s geographic location linking Africa to Europe, and its position as gateway to the former makes it of high interest both commercially and militarily.
In this complex web of interests and actors, even the United Nations seems to hold little hope. UN Special Representative for Libya Abdoulaye Bathily resigned in April 2024 after just 18 months in post, referencing a “lack of political will and good faith” among the country’s leadership as a key reason behind failure to make any meaningful progress on political dialogue and national elections. Newly appointed Special Representative Hanna Serwaa Tetteh, the tenth to hold the post since 2011, faces an entrenched elite, widespread corruption, rapidly rising prices of basic goods, increasingly powerful armed groups, and low state capacity to deal with socioeconomic issues.
A Looming Leadership Crisis: Haftar’s Succession
Added to this is the pending demise of Khalifa Haftar, the leader of the Libyan National Army (LNA), a critical player in the east. In his early eighties and suffering bouts of ill health, his death is expected to result in rivalries between family members and factions within his immediate circle as they battle for control, territorially and commercially. Haftar’s youngest son Saddam, chief of staff of ground forces, has been widely tapped to take the reins and has been courted by international players such as the US; but while he has become a key figure in Haftar family military, business and diplomatic dealings, his popularity at home, including within the LNA rank and file, is poor due to a penchant for violence. Add to this tribal fears that Haftar is more intent on building a dynasty then rebuilding Libya; disagreements with and between Saddam and two of Haftar’s other sons Belgacem and Khaled; and international meddling to influence outcomes, a smooth transition is far from guaranteed. Any security vacuum could enable a resurgence of Islamist groups, prompt yet more stoppages to Libyan production and exports, fuel armed violence between militias and tribal groups, and give external actors greater latitude to shape developments.
A High-Risk Proposition for the IECs
For some, operating in this context is simply the risk IECs must be willing to take to reap the rewards of Libya’s hydrocarbons potential. In practice, Libya’s security, political, tribal, and family dynamics will dictate the pace and success of its energy industry ambitions. Its track record so far is less than encouraging.