Libya is poised to attract several hundred million dollars in new oil and gas investment as it prepares to award exploration and development licenses to international energy companies in February 2026, marking the first time in over 17 years that the OPEC member has opened its oilfields for new investments.
The North African nation is launching a comprehensive bid round offering 22 exploration blocks split evenly between onshore and offshore acreage, with an estimated 10 billion barrels of oil in place and an additional 18 billion barrels yet to be discovered. Major international oil companies including BP, Chevron, ExxonMobil, TotalEnergies, Eni, Shell, and OMV have qualified for the licensing round, with more than 30 companies competing for contracts.
Libya’s National Oil Corporation is targeting oil production capacity of 2 million barrels per day by 2030, a more than 40 percent increase from current levels of about 1.4 million bpd. Achieving that goal would require a substantial acceleration in exploration and development activity, estimated at four to six times the pace seen over the past decade.
The government has revised its Production Sharing Agreement framework, boosting contractors’ potential internal rate of return to 35.8 percent from just 2.5 percent. Updated fiscal terms include a discounted state take of about 66 percent and modeled internal rates of return approaching 20 percent, placing Libya among the more competitive production sharing regimes globally.
“The new bidding round makes Libya an attractive prospect for investors seeking high-reward opportunities. Collectively, these blocks offer an estimated 10 billion barrels of oil equivalent resources along with additional 18 billion barrels of potential,” said Fiza Jan, senior analyst at Rystad Energy.
Martijn Murphy, principal analyst for North Africa Upstream at Wood Mackenzie, noted that it’s reasonable to expect several hundred millions to be committed in the round, with the figure potentially rising higher if companies bid up offshore blocks. The Sirte Basin in north-central Libya, the country’s primary oil-producing region holding most of its proven reserves, is a particular focus, with deepwater wells potentially costing over $100 million each.
The new licensing round comes as Libya’s economy, heavily reliant on hydrocarbons, is recovering strongly. Oil and gas account for nearly 95 percent of exports and government revenue, with the sector’s expansion helping push real GDP growth to an estimated 13.3 percent in 2025.
However, industry observers caution that above-ground risks remain significant. Political fragmentation, payment reliability, infrastructure constraints, and unresolved offshore boundary disputes continue to weigh on long-term investment confidence. The country is currently run by two governments: the UN-backed administration in Tripoli led by Prime Minister Abdul Hamid Dbeibah and the eastern government supported by military commander Field Marshal Khalifa Haftar.
Companies must navigate security risks, as Libya has previously shut down oilfields and terminals amid clashes between rival factions. Last year, Libya’s National Oil Corporation declared force majeure at Al Sharara, its biggest oilfield in the Murzuq Desert, taking it offline temporarily amid unrest. Libya’s output plummeted to 500,000 bpd in 2020 after repeated shutdowns due to political instability.
Libyan crude is increasingly important to Europe as it looks to diversify energy supplies away from Russia following the invasion of Ukraine. The country’s proximity and a pipeline from western Libya to Italy make it an accessible source for Europe, while its low-sulfur content crude is highly valued by European refiners. At the beginning of 2024, Libya held Africa’s largest proven oil reserves, estimated at 48 billion barrels, accounting for 41 percent of Africa’s total reserves.
“Libya, as a gateway or crossroads to Europe, is in an advantageous place to supply oil and gas. It has more resources than any other country in Africa,” said Bob Fryklund, chief upstream strategist at S&P Global Commodity Insights.
Analysts note that sustained progress on governance, security, and institutional reform will be critical if Libya is to convert its resource potential into durable upstream growth and regain its role as a major global oil supplier. If Libyan output rises towards 1.6 million bpd or higher, OPEC+ will face mounting difficulty in balancing the market, potentially requiring deeper cuts to offset Libya’s growth.
Sources: worldoil.com, thenationalnews.com