The Hidden Potential of Libya’s Oil Sector Might Be About to Explode—but Here’s Where it Gets Controversial... Despite the uncertainties, recent developments suggest Libya could be on the verge of a significant oil revival, driven by increased international interest. Over 40 companies have now expressed interest in Libya’s first oil licensing round since the fall of Muammar Gaddafi in 2011. The country's National Oil Corporation (NOC) is optimistic about boosting its oil output to 2 million barrels per day (bpd) by 2028, a figure that, if realized, could dramatically reshape the regional and global oil landscape. But the real question remains: does this surge in Western companies' interest truly signal political stability, or is it merely a strategic gamble that could backfire?
Libya still holds Africa’s largest proven crude oil reserves—approximately 48 billion barrels—and before the 2011 uprising, it was producing around 1.65 million bpd of mostly high-quality light, sweet crude. Notably, crudes like Es Sider and Sharara are prized across the Mediterranean and Northwest Europe, thanks to their excellent gasoline and middle distillate yields, making Libya a key supplier for these regions. Production had been slowly climbing from about 1.4 million bpd in 2000 until it peaked at over 3 million bpd in the late 1960s. My recent book (which you can explore here: https://www.amazon.co.uk/dp/B0C2RRNWNY) examines this peak and analyzes the shifting global oil order.
Prior to 2011, Libya’s plans included deploying enhanced oil recovery (EOR) techniques in mature fields to further boost production—estimates suggested it could add approximately 775,000 bpd through such methods. The Sirte basin, home to roughly 80% of the country’s recoverable reserves, has historically been the main hub for Libya’s oil activity, according to the Energy Information Administration. But, the civil war devastated these efforts: oil output plunged to roughly 20,000 bpd during the height of conflict. Since then, there’s been some recovery—up to nearly 1.4 million bpd, the highest since 2013—but political disputes and shutdowns have kept output mostly below 1 million bpd for extended periods.
And here’s where the controversy deepens. Many Western firms now returning to Libya are facing unresolved political and security issues. The 2020 agreement that ended some of the brutal oil blockades was supposed to bring stability. However, it largely sidestepped fundamental reforms needed to address Libya’s long-standing revenue disputes. The deal, signed between Libya’s UN-recognized Government of National Accord (GNA) and the Libyan National Army (LNA) led by Khalifa Haftar, aimed to establish mechanisms for transparent oil revenue sharing and financial stabilization—measures that have yet to be implemented. A joint technical committee was supposed to oversee the fair distribution of income, create a unified budget, and ensure timely payments from the Central Bank of Libya. But as of today, none of these critical reforms have materialized, leaving core revenue disputes unresolved.
This stagnation presents a thorny challenge for companies investing heavily in Libya. The overarching strategy from Western governments appears to be to re-establish influence through increased oil production and presence, believing that a stronger economic footprint can help stabilize the political situation. This approach mirrors efforts in Syria, where Western influence and local alliances are playing out in complex ways amidst ongoing conflict and external interference. Unlike Syria, Western efforts in Libya did not retreat entirely after the 2011 chaos, but political fragmentation and security risks remain high.
In 2021, when Libya’s NOC announced plans to increase production to about 2 million bpd, global oil majors like France’s TotalEnergies committed to expand operations in key fields such as Waha, Sharara, and others, aiming to boost output by at least 175,000 bpd. Waha alone has the capacity to produce roughly 350,000 bpd, with Total investing in maintenance and development. Recently, NOC subsidiaries reported a 20% increase in output since 2024, driven by maintenance, new wells, and discoveries—such as those by Agoco, Algeria’s Sonatrach, and Austria’s OMV in the Ghadames and Sirte basins.
The current licensing round, which encompasses 22 onshore and offshore blocks—including key areas in the Sirte, Murzuq, and Ghadamis basins—will be pivotal. Major firms like ConocoPhillips, Repsol, Eni, and OMV are eyeing opportunities to expand their presence. For instance, BP signed a memorandum to explore potential redevelopment of large fields like Sarir and Messla and assess unconventional oil and gas prospects—signaling a keen interest in Libya’s future energy capacity.
All these efforts matter greatly because Libyan oil production is exempt from OPEC+ quotas and is often overlooked in market analyses until it unexpectedly shifts the supply balance. A substantial change in Libyan output—whether upward or downward—can have outsized impacts on global markets, especially in a period of rising market fragility.
So, is Libya truly on the cusp of a new golden era, or are these developments just well-timed moves in a volatile geopolitical chessboard? The answer depends heavily on whether Libya’s political factions can finally stabilize and implement the reforms needed to unlock its full potential. What do you think—are these recent moves a genuine breakthrough, or is it just a temporary window of opportunity that could slam shut again? Share your thoughts below—this is a story that’s still far from over.
