Libya’s oil & gas opening: Opportunities and risks behind the licensing round

Renewed promise to investors

In March 2025, Libya launched its first upstream licensing round in nearly two decades, offering 22 blocks under a revamped Exploration and Production Sharing Agreement (EPSA) framework. With bids set to open in February 2026, the move has drawn interest from 37 pre-qualified firms, including Shell, BP, ExxonMobil, TotalEnergies, Eni, and QatarEnergy.

As the licensing round gets underway, investors are already demonstrating renewed interest in the country. BP has signed an MoU to assess the rehabilitation of the Sarir and Messla fields in the Sirte Basin, while Shell is evaluating redevelopment options at the Al-Atshan field near the Algerian border. In July, US officials announced that ExxonMobil is close to finalising a deal for offshore exploration.

At face value, Libya’s commercial pitch is strong, with vast untapped reserves and some of the lowest production costs in the region. The country has also moved to improve fiscal terms for oil companies in this licensing round.

As an executive at a UK-based market intelligence firm focused on the upstream industry explained to us: “Lower operating costs and promises from the Ministry of Oil about tax revenues – not least, concession holders taking 35 percent of profit – should be enticing for investors.”

Political stability still elusive

Yet despite the country’s promise, the real test for Libya has not changed. Can it achieve the political stability required to attract lasting investment? The Tripoli-based head of an oil services firm put it succinctly: “What we need is stability. Without that, how can investors possibly feel confident?”

After 15 years of conflict Libya still has two rival administrations: the internationally-recognised Government of National Unity in the capital, Tripoli, and the nominal Government of National Stability in the eastern city of Benghazi. In practice, the east is controlled by General Khalifa Haftar’s Libyan National Army (LNA).

This division impacts the oil and gas industry directly. Officially, the state-owned National Oil Corporation (NOC) and the Ministry of Oil & Gas in Tripoli oversee licensing and operations. In practice, the LNA controls most of Libya’s key oilfields and export terminals.

Operational challenges

Security in Tripoli remains particularly precarious, with shifting alliances between tribal militias. A European government contact in the city told us that western Libya is “totally unstable and unpredictable – it’s impossible to predict exactly what will happen next”.

However, our contact testified to the visible growth in commerce in the LNA-controlled east, where the situation is now “much more stable”. While past unrest has regularly led the NOC to declare force majeure at its fields, the east’s positive trajectory offers future hope of more predictable operations for oil and gas companies.

Even so, security is not the only remaining operational challenge. Increasingly ageing infrastructure is also a stumbling block. A Libyan legal contact focused on the upstream oil and gas sector told us: “Our infrastructure is creaking. This has to be addressed somehow, otherwise many companies will be reluctant to re-enter our market, no matter how the political situation develops.”

State institutions buffeted by leadership changes and corruption claims

There have also been significant challenges at the NOC. The NOC and its 15 subsidiaries provide the backbone of the country’s oil and gas operations. Yet leadership at the NOC has been highly unstable.

In January 2025, Farhat Bengdara resigned as NOC chairman. He cited health reasons, but his move came as corruption allegations escalated and the NOC faced a critical shortage of dollars. The Attorney General’s Office (AGO) has since launched probes into Bengdara and several NOC subsidiaries, including retrospective reviews of certain contacts with international partners.

Thankfully, there are tentative signs that the NOC’s current leadership will bring stability. Bengdara’s replacement, Masoud Suleiman, is a veteran oilman with a reputation for technical competence and pragmatism. He has pledged to improve transparency, phasing out an opaque barter system in favour of dollar-denominated transactions through the Libyan Foreign Bank.

Corruption still a major risk

Despite these efforts to bolster good governance in the public sector, corruption remains a key risk in Libya’s wider oil and gas industry. Practices from kickbacks to cross-border smuggling continue to attract scrutiny.

Corporate ownership can be opaque too, and senior political figures are often believed to hold an interest in ‘private’ companies. To cite one example, a Libyan business consultant told us: “Arkenu Oil Company was ostensibly Libya’s first private oil firm, back in 2023 when it was set up. But it is widely understood to be a conduit for Haftar family influence in both upstream and downstream operations.”

For foreign investors, this blurring of public and private interests presents both opportunity and risk: relationships with Haftar-linked firms may facilitate access to projects but carry reputational and compliance considerations.

Looking ahead

Libya’s oil and gas sector is still shaped as much by political families and dynamics as by geology and fiscal terms. Operational challenges remain, and companies willing to engage must navigate a complex environment where state institutions, private firms, and militia interests overlap. However, there are promising green shoots: state institutions are making tentative reforms, and there are signs of stability in the oil-rich east. For those that can strike the right balance, Libya offers a rare upside in an increasingly competitive global energy market – even if, for now, the risks are still as real as the rewards.

At Risk Advisory, we are well-positioned to cut through the complexity of Libya’s oil and gas landscape. We have extensive, on-the-ground experience in the country’s oil and gas sector, and can provide clear, actionable insights into one of the region’s most complex markets. We can specifically help our clients to navigate the complex political and commercial challenges of doing business with a fragmented Libyan state, and to avoid parties that are sanctioned or under scrutiny for corruption.