Libya Courts Oil Majors Amid Instability in Landmark Licensing Round

In a significant move aimed at revitalizing its oil industry, Libya’s National Oil Corporation (NOC) launched its first major licensing round in 17 years.

Announced in Tripoli, the initiative seeks to dramatically increase the country’s daily oil output from the current 1.3 million barrels to 2 million barrels.

This new round encompasses 22 exploration blocks strategically located in key petroleum basins, including the resource-rich Sirte and Murzuq regions.

Half of the blocks are offshore, while the remainder are onshore, many positioned close to existing infrastructure to expedite development. To attract international energy companies, Libya introduced attractive Enhanced Production Sharing Agreements (EPSA V).

These agreements enable companies to recover up to 70% of their investment costs directly from oil production revenues. Profits will subsequently be divided, with 60% allocated to NOC and 40% to the investors.

Potential internal rates of return could reach up to 36%, significantly exceeding the previous terms, which yielded returns of less than 5%. Additional incentives include signature bonuses and favorable tax provisions.

Already, 40 international firms have expressed interest, with 37 pre-qualified bidders including industry leaders such as ExxonMobil, BP, Chevron, Eni, and TotalEnergies.

ExxonMobil, marking its return to Libya after a decade, signed a memorandum in August 2025 to conduct studies on four offshore blocks.

Despite the appeal of Libya’s substantial reserves—estimated at 48 billion barrels, the largest in Africa—internal divisions and ongoing political instability pose considerable risks.

General Khalifa Haftar, who controls the eastern oil fields, has repeatedly disrupted exports, exacerbating price volatility. Moreover, concerns persist regarding governance and corruption, highlighted by minimal production gains despite substantial funding.

Foreign involvement further complicates matters, with Russia and Turkey maintaining significant military presences supporting rival factions.

These geopolitical dynamics influence investment decisions, as companies navigate challenges including capped foreign ownership stakes, bureaucratic hurdles on profit repatriation, and contractual safeguards against political disruptions.

While the licensing round offers substantial economic potential, investors must weigh lucrative prospects against the realities of Libya’s complex political and security landscape.

The outcome of this round will not only shape Libya’s economic future but also have considerable implications for regional energy markets and global oil stability.