Libya has potential for energy project surge
6 July 2023
MEED's August 2023 report on Libya also includes:
> Libyan pipeline contract awarded
> Libyan oil company in pipeline procurement talks
> Libya’s Waha Oil plans water plant
> Halliburton in talks for $1bn Libya oil project
> Eni signs gas deal in Libya
After a string of major energy project announcements in the country, Libya will likely be on course for a surge in project activity as long as it can maintain political stability and security.
However, the current period of stability is looking increasingly fragile amid threats from the military leader General Khalifa Haftar, who has warned of military action unless oil revenues are divided fairly within the next two months.
Eastern politicians claim the Central Bank distributes the bulk of oil revenues to the rival UN-recognised government based in Tripoli, even though the oil is produced in fields largely based in the east of the country.
The US special envoy to Libya, Richard Norland – eager to keep oil production flowing – had urged the east not to disrupt production.
The heightened political tensions come after a promising period of increased business activity within Libya that many believe could still pave the way for a boom in the country’s energy sector – if conflict can be avoided.
Recent announcements include a partnership between Libya’s National Oil Corporation (NOC) and Italy's Eni to develop two regions containing expected gas reserves of 6 trillion cubic feet.
The upstream Mellitah complex integrated expansion is meanwhile estimated to be worth $8bn. It is anticipated to have a production capacity of 750 million cubic feet a day (cf/d) of gas for a period of 25 years.
The deal between Eni and NPC for the expansion project was announced in January, but in April MEED revealed that the project still needed board approval before tenders for the main contracts could be issued.
It is possible that stakeholders in this project, like many other major projects in the country, are taking their time before finalising the contract to better gauge the political and security environment before they commit to large-scale investment.
Security company licensing system overhauled in Libya
Political instability
Libya has been plagued by frequent outbreaks of conflict for more than a decade since the removal of Muammar Gaddafi during the Arab Spring in 2011.
Since his removal, rival factions have continually vied for power and the country has failed to create a unified government.
At the moment, the country has two rival governments. The Tripoli-based Government of National Unity (GNU) exerts control over territory in the west of the country, and the Tobruk-based House of Representatives controls territory in the east.
Elections planned for 24 December 2021 were expected to unify the country under a single government, but they never occurred and many of the contested issues that derailed the democratic process in 2021 remain unresolved.
Key problematic issues include the eligibility criteria for presidential candidates and how candidates with military affiliations should be treated.
It has been reported that both sides have agreed that candidates with military affiliations must automatically resign from their military posts if they become candidates, but debate remains over whether provisions should be in place to stop them from resuming their positions once the electoral process has concluded.
Additionally, both sides have agreed that dual nationals that want to stand as president should give up the citizenship of the second country, but no mechanism has been decided on to verify compliance.
While it is clear that undisputed elections and the formation of a single unified government are the best-case scenario, it is possible that the country’s business community and energy sector will prosper without this in place.
UK foreign office asked to relax Libya travel advice
Conflict cooldown
Since the June 2020 conclusion of Operation Flood of Dignity, a year-long campaign in which Tobruk-aligned military forces tried to capture Tripoli, Libya has seen a significant improvement in its security situation and an uptick in energy sector activity.
The increase in business activity since then has shown that the country can attract international businesses for multibillion-dollar projects without a single unified government in place.
Other business deals that have been announced include the signing of a contract between NOC and US-based Honeywell for engineering work on the planned South Refinery project in Libya.
The project is expected to be carried out in two phases and is anticipated to cost between $500m and $600m.
Additionally, Libya’s Waha Oil Company is in advanced talks with US-based Halliburton over a $1bn project to rehabilitate the country’s Al-Dhara oil field.
On top of the series of announcements regarding major projects with international companies, there has also been an uptick in small-scale energy project activity, according to contractors active in the country.
All this points to the future looking promising for the country’s energy sector, as long as stability and security can be maintained. However, keeping the peace is unlikely to be easy, given the precarious nature of the political situation.
Sudan situation
The ongoing conflict in Libya’s neighbour, Sudan, has sparked an influx of refugees into Libya and rising uncertainty about future stability.
Analysts have warned that increased arms trafficking could be part of the fallout from the ongoing war in Sudan as control over the country’s arms storage facilities and borders is reduced.
Further flows of arms into the south of Libya could potentially embolden militias in the region and erode security.
Additionally, before the conflict in Sudan, the African Union and Arab League played significant roles in mediating the unresolved issues between Libya’s two rival governments.
Likely, at least some of the resources that would previously have been used to try to strengthen stability in Libya will now have to be used to deal with the escalating crisis in Sudan.
Maintaining peace and finding common ground between Libya’s rival governments is likely to be critical to the future growth of the country’s energy sector and the broader economy.
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Diriyah tenders media district north offices
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War likely to boost oil and gas activity in North Africa
25 March 2026
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The US and Israel’s ongoing war with Iran is likely to boost oil and gas project activity in North Africa, as the high-price environment encourages the region’s national oil companies to push ahead with projects that will allow them to increase exports.
In recent weeks, international oil and gas prices have stayed consistently far higher than levels seen before the US and Israel launched their attack on Iran on 28 February, killing Iran’s Supreme Leader, Ali Khamenei.
For the past two weeks, the price of Brent crude has remained above $90 a barrel and has hit a high of more than $109.
Similarly, the Dutch TTF natural gas benchmark has stayed above €45 per megawatt hour and hit a high of more than €62, up from €31 prior to the 28 February attack.
Gulf disruption
Over the same period, the long-term outlook for oil and gas exports from the GCC and Iraq has dimmed significantly as disruption to transport through the Strait of Hormuz has continued and damage to key regional oil and gas infrastructure has increased.
Damage to infrastructure has included attacks on oil and gas fields, as well as strikes on oil refineries, storage facilities and gas processing plants.
This damage means that even if the disruption to the transport of oil and gas via the strait ends quickly, the war will have a long-term impact on oil and gas production and exports in the GCC and Iraq.
On 18 March, Saad Sherida Al-Kaabi, QatarEnergy’s CEO and minister of state for energy affairs, said Iranian strikes on Ras Laffan Industrial City – home to the world’s largest liquefied natural gas (LNG) production and export facility – had knocked out about 17% of its LNG export capacity.
He said the attacks were expected to cause an estimated $20bn in lost annual revenue and that repairs could take three to five years to complete.
In Bahrain, the Sitra oil refinery, which has a throughput capacity of 405,000 barrels a day (b/d), has been attacked and damaged, leading Bapco to declare force majeure.
Strikes also hit the Ras Tanura refinery in Saudi Arabia, as well as the Habshan gas processing complex in the UAE.
North Africa
The high-price environment and the long-term impact of the ongoing conflict represent an opportunity for North Africa’s oil-producing nations, especially the region’s biggest oil and gas exporters: Algeria and Libya.
Higher prices will dramatically increase government revenues for these countries, giving them more capacity to invest in infrastructure projects, while also providing a significant financial incentive to boost production in the short term.
Both Algeria and Libya are close to European markets that have relied on oil and gas from the GCC and Iraq, and neither country relies on the Strait of Hormuz to transport exports.
The two countries also appear to be seeking to accelerate oil and gas projects at a time of heightened demand from energy-importing nations to secure reliable supplies.
Libya push
Earlier this month, MEED revealed that talks were under way at Libya’s National Oil Corporation (NOC) to potentially launch a new licensing round to award some of the unawarded exploration blocks from the 2025 licensing round.
In the downstream sector, Libya also seems to be pushing to progress projects.
Recently, US-based KBR was awarded a contract by Zallaf Exploration, Production & Refining of Oil & Gas Company to provide project management and technical services for the South Refinery Project in Libya’s southern city of Ubari.
Algeria drive
Algeria is also advancing projects in the country’s oil and gas sector.
On 8 March, Algeria’s president signed a decree ratifying the development agreement for a $5.4bn oil and gas project in the country’s Illizi South block.
The decree approved a contract signed in Algiers on 13 October 2025 between Algeria’s national oil and gas company Sonatrach and Saudi Arabia’s Midad Energy North Africa.
The contract granted both companies the rights to explore and exploit hydrocarbons in the Illizi South area.
The total investment of about $5.4bn will be fully financed by Midad Energy, including approximately $288m allocated to the exploration phase.
Amid disruption to global LNG supplies from Qatar, Italy and Spain are currently in talks with Algeria in an effort to secure increased LNG shipments from the North African country.
Algeria’s prime minister has also received requests from Asian countries, including Vietnam, seeking to secure both gas and oil shipments.
It is unclear how much spare capacity Algeria has to supply LNG to new customers, as much of the country’s production is sold in advance under long-term supply agreements.
However, current market conditions are still expected to increase the country’s revenues significantly, as Algiers is likely to be able to command much higher prices in any new agreements.
While the ongoing war is expected to deepen the crisis for many companies operating in the GCC and Iraq oil and gas sector, the opposite could be true for companies established in Libya and Algeria.
Although in recent years these two countries have been viewed as having more challenging business environments than the UAE or Saudi Arabia, companies that have invested in building positions in North Africa’s oil- and gas-exporting states could be well placed to make windfall profits.
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