meed-logo

line1 line2 line3
SIGN IN / REGISTER

Uncertainty and instability damage Libyan oil sector optimism

24 February 2025

 

Register for MEED’s 14-day trial access 

Optimism among stakeholders in Libya’s oil and gas sector has evaporated in recent months as the approval of the country’s budget has been delayed and instability has undermined operations at state-owned oil and gas companies.

In early February, the UN Support Mission in Libya (Unsmil) called for all the conflicting parties in the North African country to start work immediately on agreeing on a unified state budget.

It said a transparent and equitable budget is crucial for strengthening fiscal responsibility, optimising resource allocation and ensuring economic stability in Libya.

Unified budget

A unified budget is also expected to enhance the ability of the Central Bank of Libya to implement effective monetary policies, stabilise the exchange rate and manage public spending sustainably.

Several meetings have been held to attempt to reach an approval on a unified budget for 2025, but little progress has been made by Libya’s rival political factions towards reaching an agreement.

In December, Stephanie Koury, acting UN special representative for Libya, said: “A unified budget is essential to establish clear spending limits and ensure transparent management of public resources.”

Libya’s oil and gas industry is one of the most important sectors, in terms of generating government revenues, that has been impacted by the budget delays.

One industry source said: “If a unified budget isn’t approved within the next 30 days, the consequences are going to be very serious.

“You can forget about all of the progress that has been made in the country’s oil and gas sector over the last two or three years – we are going to set right back to square one.”

Without a budget being approved, state-owned oil companies are struggling to push forward with their investment plans and the development of projects.

Licensing round

As well as ongoing delays to projects and approvals in Libya’s oil and gas sector, the country’s plans for its first oil and gas licensing round in 15 years are being delayed.

In January 2024, Libya’s National Oil Corporation (NOC) announced its plan to launch the round.

The bid round for exploration and production agreements was expected to offer exploration blocks in the Murzuq, Ghadames and Sirte basins.

As well as ongoing delays to projects and approvals in Libya’s oil and gas sector, the country’s plans for its first oil and gas licensing round in 15 years are being delayed.

Throughout much of 2024, there was significant optimism that the round would be launched without major delays and that it could support the country’s plans to boost oil and gas production.

In 2024, NOC announced a plan to execute 45 greenfield and brownfield projects to try to boost the country’s oil production from 1.25 million barrels a day (b/d) to 2 million b/d.

Libya is aiming to hit its 2 million b/d target within three years.

It was initially expected that the planned licensing round would be launched in late October or early November of 2024.

However, in October, delays started to be announced – and now stakeholders have significant doubts about whether the round will be launched before the end of 2025.

The budget delays and other ongoing disagreements between the country’s rival political factions are damaging the image of the country’s oil and gas sector and are likely to make international companies less interested in participating in the bidding round, if it is eventually launched.

One industry source said: “In the middle of last year, a lot of big international companies were showing interest, but now it is all negativity.

“People were talking about the licensing round and new projects, as well as expanding existing projects.

“Now, all of those discussions have evaporated.”

Sentiment is also being damaged by clashes in the country.

In 2024, there were several violent clashes between militias, including in Zawiya in July.

These were followed by further hostilities in the same region in December, which occurred next to the Zawiya refinery and caused a major fire at the facility.

Oil sector leadership

Instability in Libya’s oil and gas sector has been exacerbated by major changes in senior positions within the country’s publicly owned oil and gas companies and the oil ministry.

In June 2024, Libya's sidelined oil minister Mohamed Oun called on Tripoli-based Prime Minister Abdelhamid Dbeibeh to clarify who was in charge of the ministry.

Exactly who ran the oil ministry became unclear after Oun returned to work on 28 May 2024, following the lifting of a temporary suspension by a state watchdog.

During his absence, Oun was replaced by oil ministry undersecretary Khalifa Rajab Abdulsadek, who represented Libya at an Opec+ meeting on 2 June.

Oun complained that Dbeibeh refused to recognise him as oil minister after his return to work, and Oun then cut off all communication with him, making it impossible to carry out his duties.

Oun was ultimately officially replaced by Abdulsadek, who continues to run the ministry.

NOC has seen other major changes. The resignation of chairman Farhat Bengdara was accepted in January and he has been replaced by acting chairman Massoud Suleman.

NOC subsidiaries have also seen tumultuous changes in recent months.

In mid-February, the chairman of Libya’s state-owned Waha Oil Company, Fathi Ben-Zahia, was detained on several charges, sparking concerns about the future of oil and gas projects in the country.

Waha is one of the biggest and most active subsidiaries of NOC and is responsible for some of the country’s biggest active oil projects.

The charges against Ben-Zahia include a LD770m ($156m) contract fraud, according to a statement issued by the country’s Attorney General’s Office.

The statement said that preliminary research by the attorney general’s deputy public prosecutor had revealed that the Waha chairman had awarded a contract worth LD770m for sea defences at the Sidra oil port, when a lower bid of LD339m was submitted by another company competing for the contract.

Prior to the arrest of Ben-Zahia, Waha was seen as one of the best-performing state oil companies in the country.

In November last year, Waha Oil Company reported its highest crude production level in 11 years.

The company recorded a daily output of 350,549 barrels, contributing to Libya’s total daily production of 1.4 million barrels.

Private sector

While the country’s public sector oil companies have run into more problems in recent months, and struggled to deal with issues related to the delays to the unified budget, Libya's first private company to export oil has seen significant growth.

Arkenu Oil Company, which was set up in 2023 and is linked to the faction that controls eastern Libya, has exported oil worth at least $600m since May 2024, according to shipping records and UN experts.

According to experts, this means that some of the country's oil revenue is likely being channelled away from the central bank.

One industry source said: “The activities of Arkenu Oil Company are worrying because it shows that institutions like NOC and the central bank are losing their grip on the country’s oil and gas sector.”

Economic problems

Projects in Libya are also suffering from broader economic issues that could get a lot worse if there are further delays to the approval of a unified budget for 2025.

NOC is already suffering from major cash flow issues that will be exacerbated by further delays.

It is also likely that value of the Libyan dinar against the US dollar on the black market will be weakened, and more pressure will be put on the country’s foreign exchange reserves.

Further currency weakness is likely to make it harder to import materials and equipment for new projects, as well as making it more difficult to get spare parts for existing facilities.

One source said: “Right now, the dialogue about oil and gas projects in Libya is changing dramatically.

“Before, we were talking about which new projects were going to get developed and how quickly. Now, we are no longer talking about new projects and there are concerns that existing facilities will face major problems.”

The ongoing challenges in Libya, and the failure to deal with key issues, means that in the future the country could see declines in upstream production rates and refinery throughput, rather than the expansions that were previously expected.

READ MEED’s YEARBOOK 2025

MEED’s 16th highly prized flagship Yearbook publication is available to read, offering subscribers analysis on the outlook for the Mena region’s major markets.

Published on 31 December 2024 and distributed to senior decision-makers in the region and around the world, the MEED Yearbook 2025 includes:

> GIGAPROJECTS INDEX: Gigaproject spending finds a level
https://image.digitalinsightresearch.in/uploads/NewsArticle/13419239/main.jpg
Wil Crisp

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Oman opens bids for 1GW battery storage advisory role

    4 June 2026

    Oman’s Authority for Public Services Regulation (APSR) has opened technical bids for a consultancy contract supporting a planned 1,000MW/four-hour battery energy storage system (bess) project.

    The tender seeks independent regulatory, technical and commercial validation services for the scheme. The project is planned with a rated capacity of 1,000MW and a storage duration of four hours, equivalent to 4,000 megawatt-hours (MWh) of energy storage.

    According to a tender board notice, technical bids were opened on 25 May.

    Thirteen companies submitted proposals including:

    • Afry Management Consulting (Sweden)
    • CESI Middle East (Italy)
    • DNV Dubai Branch (Norway)
    • Engineering Systems Group (Kuwait)
    • ILF Consulting Engineers (Austria)
    • Innovision Engineering Consultancy (UAE) 
    • Mott MacDonald (UK)
    • Sargent & Lundy Abu Dhabi (US)
    • Surbana Consultants Dubai Branch (Singapore)
    • Tractebel Engineering Consultancy (Belgium)
    • TUV Rheinland (Germany)
    • Universal Consulting Engineering (Egypt)
    • WSP International (Canada)

    As previously reported, APSR issued the request for proposals in April as part of wider plans to increase the share of renewable energy in the sultanate.

    The sultanate’s first utility-scale solar photovoltaic (PV) plant integrated with battery energy storage (Ibri 3) entered construction at the beginning of the year, comprising a 500MW solar PV plant and a 100MWh bess system.

    Last month, state offtaker Nama Power & Water Procurement Company signed a power-purchase agreement with local firm O-Green for Oman’s first round-the-clock renewable energy project.

    The company is also seeking consultants to provide separate environmental, social and governance and legal advisory services.

    Renewable energy is expected to increase from 4% of the generation mix in 2024 to 30% by 2030, driving the push for more utility-scale storage projects.

    Over roughly the same period, demand is forecast to double, reaching 10 terawatt-hours by 2031.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17106014/main.jpg
    Mark Dowdall
  • Building around the strait

    4 June 2026

    Commentary
    Colin Foreman
    Editor

    The closure of the Strait of Hormuz has turned a lingering, and previously unlikely, threat into reality in 2026. The shutdown of the maritime chokepoint, which is about 33 kilometres wide at its narrowest point, has plunged the global economy into crisis, with fuel prices spiking and fears of energy shortages growing. While diplomatic efforts are under way to resolve the disruption, the GCC’s geographic Achilles heel remains.

    The closure has also highlighted the importance of alternative logistics and energy corridors. Saudi Arabia’s East-West pipeline has enabled the export of 7 million barrels a day of oil from the Gulf coast across the kingdom to the Red Sea, while the UAE has rapidly scaled up operations at Fujairah and directed Adnoc to accelerate development of its 520km West-East pipeline.

    Others have had fewer options. Geographically constrained states such as Kuwait recorded zero crude exports in April, reflecting their near-total dependence on shipping oil through the Strait of Hormuz.

    For the projects market, the crisis is already having, and will continue to have, a significant impact. Ongoing projects are struggling with disrupted supply chains and resulting cost escalation, while future spending is likely to be diverted towards schemes that improve the GCC’s access to markets outside the Gulf.

    For the projects market, the crisis is already having, and will continue to have, a significant impact

    For oil and gas exports, proposed pipeline routes would run south from Kuwait through Saudi Arabia and the UAE and into Oman, enabling shipments from expanded ports on the Arabian Sea. For goods entering the region, the GCC railway scheme has taken a step forward, with procurement starting in May.

    These projects will cost tens of billions of dollars and will take years to complete, which means the events of 2026 will shape the region’s infrastructure priorities for the coming decade.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here

     

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17105852/main.gif
    Colin Foreman
  • Fitch cuts global airport outlook on Iran war

    4 June 2026

    Fitch Ratings has revised its global airport sector outlook to ‘deteriorating’ from ‘neutral’, warning that disruption linked to the Iran conflict is creating a more challenging operating environment for airports and airlines and clouding traffic visibility into 2026.

    In a note issued on 3 June, Fitch said the conflict has increased uncertainty over “regional airspace availability, airline operations and travel demand”, with implications for route stability and the quality of traffic flows. While most airport operators’ traffic and earnings have remained broadly stable so far this year, the ratings agency expects a softer macro backdrop, a less favourable passenger mix and weaker non-aeronautical revenues to increase sector risks over the next 12 to 18 months.

    The revised outlook is particularly relevant for the Gulf, where major airports have built business models centred on international connectivity, long-haul flying and transfer traffic. Fitch said the disruption is particularly affecting airports with exposure to transfer passengers and internationally connected airline networks — categories that include the region’s largest hubs.

    Hub exposure

    Although the agency did not name Gulf airports specifically, its analysis implies that hubs reliant on long-haul corridors and complex network connectivity are more exposed to “rerouting risk, changing airline capacity decisions and weaker visibility on international demand”. For Gulf operators, that risk is compounded by the potential for further airspace restrictions and ongoing uncertainty around the availability of key flight paths linking Asia, Europe and parts of Africa.

    At the same time, the agency noted that some “Asia-Pacific airports have benefited from the redistribution of transit and long-haul traffic” away from disrupted Gulf hubs. Any sustained diversion of connecting passengers would be material for Gulf airports because duty-free, retail and food and beverage spending is typically stronger among international transfer travellers than point-to-point passengers.

    Fitch’s change of outlook also reflects a broader slowdown in the sector’s growth trajectory. Global passenger growth was strong in 2025 and early 2026, but the pace has started to cool from the post-pandemic recovery period. Fitch pointed to the International Air Transport Association’s latest projection of “4.9% passenger traffic growth in 2026”, a deceleration versus 2025, with early-2026 monthly data showing the slowdown already under way.

    Fitch also warned that non-aviation revenues could come under pressure, particularly where passenger mix shifts away from high-spending travellers. The agency expects a “low single-digit decline in nominal retail revenue for European airport operators” this year, highlighting how quickly discretionary spend can soften when operating conditions turn more volatile.

    Fuel availability and pricing is another risk. Fitch said there is rising uncertainty about jet fuel availability, especially in Europe due to disruption to Middle East supply, potentially increasing airline costs and encouraging capacity reductions. The agency expects fuel reserves to cover the summer months in Europe, even if the Strait of Hormuz remains effectively closed, but warned that winter operations could be more challenging if disruption persists.

    Higher airfares and fuel surcharges could also weigh on near-term demand, Fitch added — a headwind for Gulf airports that have benefited in recent years from strong leisure demand and the restoration of long-haul travel.

    Fitch expects airport performance to become more uneven, with point-to-point leisure airports typically better positioned than large hubs reliant on transfer traffic and international corridors. The ratings agency cited European examples, contrasting airports such as Barcelona or Venice with Heathrow and the Paris airports.

    The same dynamic could play out in the Middle East: airports with a large share of local origin-and-destination demand may be relatively insulated compared with major connecting hubs whose business models depend on stable long-haul routings and predictable network planning by global airlines.

    The risks for the Gulf’s aviation sector were highlighted again on 3 June when Iranian drones struck Terminal 1 at Kuwait International airport, causing significant structural damage. The incident was the third major drone strike on the hub in recent months. On 1 April, a drone strike hit fuel tanks managed by Kuwait Aviation Fuelling Company, sparking massive fires. On March 28, another multi-drone raid severely damaged the airport’s primary radar systems.

    Other airports in the region have been damaged since the conflict began, including Dubai International airport, Zayed International airport in Abu Dhabi and Hamad International airport in Doha.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17105933/main.jpg
    Colin Foreman
  • Iran conflict curbs migrant labour flows to Gulf

    4 June 2026

    The International Labour Organisation (ILO) has flagged early signs that the conflict involving Iran is affecting the Gulf’s labour market. Speaking to CNBC, the ILO’s acting deputy chief, Sher Verick, said departures of migrant workers from sending countries have fallen sharply this year.

    “We don’t yet have numbers about those leaving the Gulf, but what we have are numbers that show that the departures of migrant workers from sending countries are significantly down,” Verick said. “For example, in the Philippines, the departures year on year are down by 78%.”

    Verick said disruptions in the Middle East are preventing workers from travelling to take up jobs and earn income, with knock-on effects for remittances that support household consumption, education and healthcare in sending countries. He added that the ILO would be watching for data on return flows from the Gulf back to Asian sending markets.

    Job risks

    The ILO has also assessed the share of jobs most exposed to conflict-related disruption. “Globally, we see around 15% of employment in that high exposure category, but this is much higher in the Middle East, at over 50%, and in Asia Pacific at around 22% of employment,” Verick told CNBC.

    Sectors most affected include transport, given reliance on fuel and other energy sources, and manufacturing due to supply chain exposure. Tourism-linked activities are also vulnerable, while agriculture is affected by disruption to fertiliser supply and pricing.

    A report by Fitch in early June said the conflict is placing several sectors across the GCC under severe operational and financial strain. Industries including aviation, hospitality, chemicals and residential real estate development face heightened vulnerabilities.

    Airlines are grappling with route disruption and higher fuel costs, while the hospitality sector has seen weaker occupancy amid security concerns and travel disruption. Regional chemical producers face higher feedstock prices, and residential real estate developers risk slower investment, which could dampen employment in construction – a sector that relies heavily on migrant labour.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17105894/main.gif
    Colin Foreman
  • Read the June 2026 MEED Business Review

    4 June 2026

    Download / Subscribe / 14-day trial access

    For decades, the Strait of Hormuz has served as a critical artery of the global energy system. Despite being only 33 kilometres wide at its narrowest point, this strategic maritime passage has traditionally handled around one-sixth of global oil consumption and nearly one-third of worldwide liquefied natural gas trade.

    Following Iran’s effective closure of the strait in 2026, Gulf states have been compelled to rapidly identify and develop alternative transport corridors. This effort extends beyond safeguarding oil exports from the region to ensuring the continued flow of food, consumer products and industrial supplies that underpin the Gulf’s economies. Read more here. 

    June’s market focus is on Iraq, which is entering mid-2026 with the largest project pipeline in its post-2003 history, encompassing more than $420bn in planned and ongoing investments. However, the country faces an exports collapse that could challenge its ability to deliver this ambitious programme.

    This edition also includes our Top 100 report – an annual ranking published by MEED that identifies the 100 largest publicly listed companies in the Middle East and North Africa based on their market capitalisation.

    In the latest issue, we explore why the UAE’s Opec departure fulfils multiple ends; investigate why insurers will only cover a fraction of war damage to oil and gas facilities; analyse Saudi Arabia’s real estate ownership reforms; and examine the first trade deal between the GCC and a G7 nation.

    We hope our valued subscribers enjoy the June 2026 issue of MEED Business Review. 

     

    Must-read sections in the June 2026 issue of MEED Business Review include:

    > AGENDA: Gulf races to reroute trade

    > EXPORT ROUTES: Regional war boosts oil and gas pipeline project activity

    > CURRENT AFFAIRS: UAE’s Opec departure fulfils multiple ends

    INDUSTRY REPORT:
    MEED Top 100
    > Middle East stocks recover unevenly

    > OIL & GAS: Insurers will only cover a fraction of war damage to oil and gas facilities

    > LEADERSHIP: Building the infrastructure that makes net zero possible

    > LEGAL: Saudi Arabia’s foreign property ownership milestone 

    > TRADE TALKS: UK-GCC trade deal talks conclude

    > IRAQ MARKET FOCUS: 
    > COMMENT: Iraq’s reform window narrows
    > GOVERNMENT: Al-Zaidi takes Iraq’s premiership under US shadow
    > BANKING: Financial challenge tests Iraq’s resolve
    > ECONOMY: Iraq enters era of resilience, reform and rising risks 
    > OIL & GAS:     Iraqi oil and gas sector in crisis
    > POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
    > CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

    > MEED COMMENTS: 
    >     Institutional capital sees past conflict risk
    > Gulf conflict fails to slow Dubai’s projects push
    > Oman steps up hydrogen plans
    > Bidders assess partnership strategy for utilities projects

    > GULF PROJECTS INDEX: Gulf Projects Index resumes growth trajectory

    > APRIL 2026 CONTRACTS: Middle East contract awards

    > ECONOMIC DATA: Data drives regional projects

    > OPINION: Hoping for a long, cool summer

    > BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17088038/main.gif
    MEED Editorial