Libya’s Oil Sector: Recent Changes, Political Dynamics, and Investment Opportunities

Over the past eight weeks, Libya’s National Oil Corporation (NOC) has undergone significant leadership and structural changes amid the nation’s complex political landscape. These shifts have major implications for international businesses and investors assessing opportunities in Libya’s oil sector.

 

Political Dynamics and Leadership Changes 

In January 2025, NOC Chairman Farhat Bengdara resigned, officially citing health issues. However, political analysts suggest deeper power struggles influenced his departure. Bengdara, appointed in 2022, was seen as a technocrat with international backing, particularly from the UAE. His leadership faced increasing pressure from internal factions seeking greater control over oil revenues. Reports indicate that rival political groups within the Government of National Unity (GNU) and Libya’s House of Representatives attempted to place their allies in key positions at NOC, complicating governance and strategic decision-making.

His successor, Acting Chairman Masoud Suleman, has prioritised increasing production, improving transparency, and reducing financial inefficiencies. However, his restructuring efforts, including potential office closures and financial streamlining, face resistance from entrenched interests benefiting from the status quo. A critical policy shift under Suleman is the planned termination of the Crude-for-Fuel Swaps Program, a long-criticised arrangement shaping Libya’s fuel procurement strategy for years.

 

The Crude-for-Fuel Swaps Program: Pros and Cons 

This program was initially designed to address Libya’s refining limitations and liquidity challenges by exchanging crude oil for refined petroleum products. While it ensured stable fuel supply, it became controversial due to inefficiencies and governance concerns.

Pros:

  • Maintained continuous fuel availability despite limited domestic refining capacity.
  • Helped Libya navigate liquidity issues, especially during financial instability.
  • Provided an alternative procurement method when traditional channels were constrained. 

Cons:

  • Lack of transparency made it vulnerable to corruption, benefiting select political factions.
  • Financial inefficiencies led to undervaluation of crude, causing government revenue losses.
  • Allowed geopolitical actors to exploit the swaps for broader political leverage.

Suleman aims to transition Libya to a more transparent, cash-based fuel procurement system to curb corruption and align oil trade with international best practices. However, this shift may cause short-term fuel shortages if alternative mechanisms are not swiftly implemented.

 

International Influence: Stabilisation and Disruption

Libya’s strategic location and vast oil reserves continue to attract global players:

  • Italy: Energy giant Eni has maintained long-term operations. In October 2024, Eni and BP resumed onshore drilling in the Ghadames Basin, signalling renewed foreign investment confidence.
  • Turkey: Turkish Energy Minister Alparslan Bayraktar announced plans for offshore exploration in late 2024.
  • Egypt and Russia: Egypt’s tensions with Turkey over Libya’s governance add volatility, while Russia’s reported involvement with private military contractors has disrupted NOC operations in certain regions.

 

Economic Reforms and Transparency Efforts 

Suleman’s leadership is focused on restoring investor confidence through financial reforms, improved reporting, and the elimination of opaque fuel trading mechanisms. By partnering with the Libyan Central Bank and the attorney general, he aims to establish direct fuel procurement systems, reducing reliance on barter-based swaps and ensuring more efficient use of state oil revenues.

 

Expanded Investment Opportunities for International Businesses

Libya’s vast untapped reserves and government reforms present an opportune moment for international energy firms. The key areas of investment include:

  • Enhanced Oil Recovery (EOR) Technologies: Aging oil fields require modern extraction techniques such as CO₂ injection and digital reservoir monitoring.
  • Participation in Licensing Rounds: New exploration blocks are expected in the Murzuq and Ghadames basins, with opportunities in deep-water drilling and unconventional resources.
  • Infrastructure Development: Outdated refineries, storage facilities, and transport networks need modernization.
  • Port and Logistics Investment: Key oil ports such as Es Sider, Ras Lanuf, and Zawiya require upgrades to optimize exports.
  • Security and Risk Management Services: High demand for risk assessment, asset protection, and crisis response due to ongoing security risks.
  • Marginal Oil Fields Development: Untapped fields offer lucrative joint venture opportunities for firms with expertise in well rehabilitation and artificial lift technologies.

 

Recent International Engagements in Libya’s Oil Industry

Foreign investment momentum has increased, with key players returning:

  • December 2024: Spain’s Repsol resumed exploration in the Murzuq Basin near Sharara, one of Libya’s largest oil fields.
  • October 2024: Eni and BP restarted onshore drilling in the Ghadames Basin after a decade-long halt.
  • January 2025: Zallaf for Oil and Gas began production at the Chadar field, producing 7.5 million cubic feet of gas per day alongside 1,500 barrels of crude per day.

 

Financial and Advisory Services Impact

As Libya transitions toward improved governance, financial and advisory firms play a crucial role. Expertise in project financing, investment advisory, regulatory compliance, and corporate governance is essential to securing international investments. The NOC’s reform agenda presents openings for risk assessment, financial structuring, and energy sector advisory firms.

 

Strategic Investment Recommendations for Libya’s Oil and Gas Sector

Libya’s oil and gas sector is undergoing a pivotal transformation, driven by policy reforms, infrastructure development, and growing global demand. With production levels rebounding and new investment-friendly regulations in place, now is the opportune moment for investors to capitalize on high-growth opportunities.

 

Why is Now the Time to Invest? 

  1. Favourable Policy Shifts – The Libyan government is actively working to stabilize the energy sector, introducing more transparent licensing processes and encouraging foreign direct investment (FDI) to rebuild its oil and gas infrastructure.
  2. Rising Global Energy Demand – As the world navigates energy security concerns, Libya’s vast reserves offer a reliable supply source, especially for European markets seeking diversification.
  3. Infrastructure Revitalization – Decades of underinvestment have left Libya’s midstream and downstream segments underdeveloped. The push for modernization presents a unique first-mover advantage for investors.
  4. Geopolitical Openings – With ongoing negotiations for political stability and increasing security measures, Libya is progressively becoming a safer investment landscape.
  5. Green Transition & Gas Utilization – The global pivot towards energy transition opens doors for renewable energy and gas utilization projects, positioning Libya as a key player in Africa’s sustainable energy future.

 

Key Investment Areas:

  1. Upstream Oil & Gas Exploration 
  • Libya’s untapped reserves offer substantial opportunities for early-stage exploration.
  • Licensing rounds and underdeveloped fields present high-reward potential for technically capable investors. 
  1. Midstream Infrastructure
  • Rehabilitation of aging pipelines, crude storage facilities, and refining plants will reduce inefficiencies and unlock production bottlenecks.
  • Strategic investment in export terminals and processing units can enhance Libya’s export capacity.
  1. Downstream Petrochemicals
  • Expansion in fertilizer production, LNG liquefaction, and local fuel refining can boost self-sufficiency and reduce reliance on imports.
  • With growing domestic and regional demand, petrochemical investments promise long-term profitability.
  1. Renewable Energy & Gas Utilisation
  • Libya has one of the highest solar irradiation rates in the world, making solar energy expansion a lucrative venture.
  • Gas flaring reduction initiatives align with global emissions targets and present a profitable, ESG-compliant investment opportunity.
  1. Security & Risk Management Services
  • As the sector expands, so does the need for security infrastructure, cybersecurity, and risk mitigation solutions.
  • High demand exists for on-site security, logistics risk advisory, and crisis management services.
  1. Financial Services & Investment Advisory
  • Trade finance solutions will be essential to facilitate energy transactions and cross-border investments.
  • M&A advisory, project financing, and political risk insurance will be crucial for mitigating investment risks.

 

Conclusion

Libya’s oil sector remains a high-risk, high-reward market. While political instability and security challenges persist, ongoing reforms and international re-engagement present promising opportunities. Companies that navigate Libya’s complex landscape by securing strong local partnerships, adopting risk mitigation strategies, and aligning with NOC’s vision will gain a foothold in one of the world’s most resource-rich oil frontiers.

 

Final Takeaway:

Now is the time for strategic investors to position themselves in Libya’s evolving oil sector, leveraging emerging opportunities in exploration, infrastructure, and financial services.