By:Fdiintellgence

In early March, downtown Tripoli, the head of Libya’s National Oil Company (NOC) launched a public bidding war for nearly two dozen oil exploration contracts.

‘‘It is a source of life,’’ Masoud Suleman, NOC’s chairman, said of the black liquid that sits in plentiful amounts beneath Libya’s sand and seas.

The bid is the first of its kind in Libya for almost two decades, spurred by the country’s latest push to increase oil production and earmarked for international energy companies.

The oil-rich nation has been mired in chaos since the ousting of late dictator Muammar Gaddafi in 2011. For more than a decade, the country has been divided between rival administrations, with a UN-backed government seated in the western city of Tripoli and the other in the eastern city of Tobruk, each backed by an array of foreign patrons and militias. Libya’s cities sporadically erupt in bloody gun battles; its oil refineries are periodically blockaded by armed actors trying to exercise political power.

What stability there is, is “fragile’’ and “increasingly at risk”, concluded senior UN official Rosemary DiCarlo at a Security Council meeting in New York in February.

But Libya has been free of a full-scale civil war for five years. Over that time, a handful of foreign investors have announced investment projects bound for the north African country. Now Libya’s leaders are pushing for more, despite the considerable internal challenges that remain.

Africa’s oil hub

Oil has been the lifeblood of the Libyan economy since production began in the early 1960s. Little has changed since. According to the World Bank, the country’s oil and gas sector in 2023 accounted for 60% of its total GDP, 94% of total exports, and 97% of all government revenues.

On the streets of Tripoli petrol is cheaper than water (averaging less than $0.03 a litre) thanks to large reserves, long-standing government subsidies and a sparse population of just over seven million people.

The country has the capacity to further increase production, the NOC says. According to the state oil company, Libya has the ninth largest known oil reserves in the world; yet it produces only 1.4 million barrels a day, lower than other countries with similar caches.

Khaled Gulam, a spokesman for the NOC, tells fDi that the state company’s short-term goal is to up production to 1.6 million barrels per day, with a medium-term target of reaching 2 million barrels per day. This latter goal will cost up to $5bn, he explains, but will be aided by a return of formerly suspended exploration activities.

In late 2024 energy industry heavyweights, Italy’s Eni, Austria’s OMV and Spain’s Repsol all announced the resumption of previous oil exploration operations in Libya after a decade-long hiatus.

“[A new] positive environment has encouraged numerous foreign companies to return and recommence their operations,’’ says Mr Gulam, referring to improved security conditions.

European interest in north African energy has been magnified by the war in Ukraine, as EU countries seek to loosen their dependence on Russia. In 2023, Eni and the NOC inked a $8bn agreement to develop two offshore gas fields, Libya’s largest investment deal in two decades.

Mr Gulam declined to provide details on the state of the bid. However, he says the NOC has received interest from numerous firms and that the bid is set to finish at the end of 2025.

Not all share his optimism. Jalel Harchaoui, an associate fellow specialising in Libya at the London-based Royal United Services Institute for defence and security studies, believes energy companies may refrain from bidding until they see evidence of previous energy investment projects yielding results.

‘’Eni’s January 2023 investment in offshore gas has shown no progress in more than two years,’’ Mr Harchaoui points out.

In a statement, Eni told fDi that offshore drilling at the fields is expected to start later this year while gas production is planned for 2027.