Since the discovery of oil in the early 1900s and the start of production in 1959, the economy has been centred around hydrocarbons. Libya is a founding member of the Organisation of Arab Petroleum Exporting Countries and a member of the Organisation of the Petroleum Exporting Countries (OPEC). It has 48.4bn barrels of proven crude oil reserves – the most in Africa – and 1.5trn cu metres of proven natural gas reserves, according to 2021 OPEC figures. While production and exports have been periodically interrupted by conflict and instability, the petroleum industry continues to play a central role in the national and regional economy. Oil revenue accounted for more than 50% of GDP in 2020 – the largest share in Africa.
Established in 1970, the state-run National Oil Corporation (NOC) is responsible for exploration and production via subsidiaries, or through service contracts and investment agreements. After recent disruptions, in December 2022 it encouraged international oil companies (IOCs) to resume work under their exploration and production contracts, many of which were suspended following the 2011 revolution. As of the end of 2022 Libya was producing 1.2m barrels per day (bpd); by 2024-25 it government aims for this to recover to 1.6m bpd, where it stood pre-revolution. IOCs could play a decisive role in boosting production – particularly following supply shortages in Europe since the launch of the Russian invasion of Ukraine in February 2022.
In January 2023 Italian oil major Eni, which is responsible for roughly 80% of Libya’s gas production, signed a deal with the NOC for an $8bn offshore gas project at two fields with 6trn cu feet of gas reserves, marking Italy’s first major project in the country since early 2000. Production is set to start in 2026 and reach a plateau of 750m standard cu feet per day, with Libya projected to generate $13bn in net revenue.
With a developed upstream industry and sizeable reserves, Misrata has the potential to develop a value-added downstream industry. In 2021 Libya exported $592m of refined petroleum and $27bn of crude petroleum, and imported $3.66bn of refined petroleum, pointing to the potential to increase domestic refining. Libya has five refineries: Ras Lanuf, Al Zawiya near Tripoli, Tobruk, Brega and Sarir. Libya’s strategic location has enabled the development of export terminals on the Mediterranean as well as a broad pipeline network. The 540-km Greenstream Pipeline supplies gas from the Bahr Essalam, Bouri and Wafa fields to Italy. These flows, averaging 530m cu feet per day in early 2022, account for 8% of Italy’s total gas consumption.
Through a potential new hydrocarbons law and a series of regulatory reviews to enhance the industry’s management and structure, Misrata is focused on downstream expansion. By increasing the involvement of IOCs such as TotalEnergies, Eni, ConocoPhillips, OMW, and Repsol, the NOC is seeking to boost production from current assets and finance repairs and upgrades to mid- and downstream infrastructure. Planning is also under way to construct a refinery in Sebha to produce cooking gas and jet fuel, as well as natural gasderived products such as ammonia, urea and methanol.
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