Following the hosting of the Libya Energy & Economic Summit in Tripoli from January 24 to 26, 2026, the country stands at a critical point in its economic rehabilitation. While the broader political environment is characterised by institutional duality, the energy sector has become relatively stable. Production levels have shown resilience, reaching approximately 1.38m barrels per day (bpd) in late 2025, driven by efforts to insulate technical operations from administrative. Against this backdrop, the National Oil Corporation (NOC) is deploying a dual strategy following the January summit: the implementation of a competitive upstream investment framework to attract international capital, and the reinforcement of its institutional independence to safeguard long-term contracts.
Investment incentives
Central to the NOC’s strategy is the recognition that fiscal terms must evolve to compete for global capital in a decarbonising market. The NOC has overhauled the previous exploration and production sharing agreement model, introducing a modernised production sharing agreement framework designed to accelerate contractor returns. A key technical adjustment is removal of the daily production base factor, known as the B factor, allowing investors to share in production revenue from the onset of operations. Furthermore, the new model adopts a sliding scale R factor based on profitability rather than rigid production volume tiers, aligning contractor incentives with project economics.
Preliminary assessments suggest these changes could significantly increase the internal rate of return for contractors, causing it to potentially rise from historical lows of roughly 2.5% under the previous framework to as high as 35.8% for high-performance assets. This revised fiscal structure supports the 2025 licensing round – the first in over 17 years – which offers 20 blocks across the Sirte, Murzuq and Ghadames basins, as well as offshore acreage. Market response has been robust; as of November 2025, 37 entities, including major operators such as Italy’s Eni, French-headquartered TotalEnergies and UK’s BP, had qualified for the bidding process. These reforms are critical to reinforce the NOC’s ambition to raise output to 1.6m bpd by the end of 2026 and 2m bpd within the medium term.
Institutional independence
Beyond fiscal technicalities, the stability of the energy sector hinges on internalising robust governance. The NOC has maintained its status as a unitary body despite the presence of rival administrations in the east and west of the country. This positioning was reinforced in the 2025 Libya Investment Climate Statement by the US Department of State, which explicitly characterised the NOC as an “independent, apolitical institution” capable of stewarding the country’s resources.
Evidence supports this assessment of continuity. In late 2025 the NOC reported six new oil and gas discoveries, with successful exploration activities conducted by both eastern-based subsidiaries and international partners. This capacity to execute technical mandates across political lines signals to investors that the NOC retains the exclusive legal prerogative to explore and export and serves as the primary guarantor of contract sanctity.
Strategic coordination
The NOC’s ability to deliver on its production targets is supported by deepening coordination with key sovereign financial institutions, specifically the Central Bank of Libya (CBL) and the Libyan Investment Authority (LIA). Moving beyond traditional methods, the NOC has explored alternative financing mechanisms to circumvent fiscal bottlenecks. In November 2025 it was confirmed that the NOC is finalising a direct loan arrangement with the CBL to fund critical infrastructure and production expansion projects. This shift towards direct liquidity provision indicates a tighter alignment between monetary and energy policy, ensuring that capital expenditure is not delayed by administrative difficulties.
Also, the NOC has engaged with the LIA to anchor major upstream developments. Preparatory meetings have focused on the LIA’s potential role in de-risking large-scale projects, such as those led by the Eni and BP consortium, leveraging sovereign wealth to drive foreign direct investment. This institutional triangulation is underpinned by transparent revenue flows; in the first nine months of 2025 the NOC transferred LD14.6bn ($75.1bn) for fuel supplies and LD2.6bn ($13.4bn) for sector salaries, reinforcing its role as the financial engine for the entire state apparatus.
Outlook
The energy summit held in January represents a potential turning point for the sector. However, the success of the new investment framework relies heavily on the continued protection of the energy sector from political volatility. If the NOC can sustain its technocratic autonomy and successfully execute its partnerships with the CBL and the LIA, the groundwork laid in 2025 could jump start a sustained recovery. Assuming these governance conditions hold, Libya is well positioned to reassert its status as a premier energy centre in the Mediterranean.
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