Bloomberg: US oil giants target Libya’s vast energy reserves

American energy companies are increasingly targeting Libya’s vast oil sector as the North African nation seeks to boost production and attract foreign investment, despite persistent political divisions and security challenges, Bloomberg reports.

Before the 2011 uprising, Libya produced around 1.6 million barrels of oil per day. Since then, civil war, blockades, strikes, and armed disruptions have repeatedly undermined output. The government in Tripoli estimates that increasing production by 40% will require investments of approximately $20 billion. Libya currently supplies about 1 million barrels of oil per day to Europe, while its light sweet crude has gained strategic importance amid disruptions linked to the conflict involving Iran.

Frank Talbot, a nonresident senior fellow at the Atlantic Council’s North Africa Program, cautioned that Libya’s goal of raising production to 2 million barrels per day depends on political stability and major infrastructure investment, “neither of which are guaranteed.”

Oil remains the backbone of Libya’s economy, accounting for more than 90% of exports and government revenues. Production plunged to just 90,000 barrels per day during a 2020 blockade led by eastern commander Khalifa Haftar, prompting OPEC to exempt Libya from output restrictions.

The renewed interest from US firms follows growing diplomatic engagement. U.S. Africa adviser Massad Boulos said in January that American companies were “betting on Libya’s future” and that military exercises in Sirte would help safeguard the country’s sovereignty and economy.

In January, Libya signed a 25-year development agreement with ConocoPhillips and TotalEnergies through state-owned Waha Oil Co., a deal officials said could generate more than $20 billion in foreign investment. Chevron later secured an exploration block in the Sirte Basin, while ExxonMobil, Eni, QatarEnergy, and Repsol also expanded their involvement. The blocks on offer are estimated to contain 10 billion barrels of available resources and an additional 18 billion barrels yet to be discovered.

Despite growing investor optimism, analysts warn that Libya’s political fragmentation remains a major obstacle. Rival authorities continue to compete for influence, while armed groups retain control over key oil infrastructure.

“There’s a lack of trust between the sides and they’ve seen more utility from maintaining the status quo than putting that at risk with a big political deal,” said Tim Eaton of Chatham House.

Emadeddin Badi of the Global Initiative Against Transnational Organized Crime was equally skeptical, saying recent cooperation efforts amounted to “glitter, handshakes and exercises with no real substance behind them.”

By Vafa Guliyeva