Natalia Katona
- Libya’s 2025 licensing round offered 22 onshore and offshore blocks, attracted 44 applicants, with 37 companies pre-qualified – yet only 5 blocks were ultimately awarded in February 2026.
- Major winners included Chevron, Eni, QatarEnergy, Repsol, and TPAO, while dozens of other qualified companies chose not to submit final bids despite Libya holding Africa’s largest proven oil reserves.
- With such limited new acreage moving forward, Libya’s target to increase production from around 1.4 million b/d to 2 million b/d by 2030 would now be increasingly difficult to achieve.
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Libya’s first oil licensing round in more than 17 years, launched by the National Oil Corporation (NOC) in March 2025, was meant to signal the country’s upstream comeback after more than a decade of war and fragmentation. The round offered 22 onshore and offshore blocks, including 19 undeveloped discoveries, and drew strong early interest: 44 companies and one consortium applied, with 37 pre-qualified by July.
Established players such as Eni, TotalEnergies, BP, Repsol and OMV were joined by a wide range of international entrants, from CNPC subsidiary CNODC and Chinese private firms ZPEC and Jereh, to Russia’s Lukoil, Indian Oil Company, Turkey’s TPAO, and gas-focused investors including QatarEnergy, Woodside and Shell. The broad participation initially signalled renewed investor willingness to re-engage with Libya, encouraged by recovering production and the relative stability following the October 2020 ceasefire.
Yet the outcome, announced on 11 February 2026, fell sharply short of expectations. Only 5 (two offshore and three onshore) of the 22 offered blocks were ultimately awarded – a noticeable gap between early expressions of interest and binding commitments. Participation in the final bidding phase narrowed to a small group of companies: Chevron, ConocoPhillips, TotalEnergies, Eni, QatarEnergy, Repsol, TPAO, Hungary’s MOL, and Nigeria’s Aiteo.
The most competitive award was onshore Block S4 in the Sirte Basin’s Waha area, where Chevron won over a TotalEnergies-ConocoPhillips consortium, marking a notable return by the US major that had exited Libya after the 2011 civil war. Repsol and TPAO emerged as key winners elsewhere, securing offshore Block 07 alongside MOL and jointly acquiring onshore Block C3 in the Sirte Basin. For Spain’s Repsol, Libya remains a cornerstone asset where it already leads international operations in the Murzuq Basin, while TPAO’s entry reflects Ankara’s strategic alignment with Libya’s Tripoli government.
MOL’s participation demonstrates a different logic: Libya is among the few remaining regions where mid-sized independents can still access large-scale conventional oil opportunities. Offshore Block 01 was awarded to an Eni-QatarEnergy consortium, reinforcing an existing partnership model that QatarEnergy has deployed globally (for instance, in Egypt, Namibia and Brazil), taking minority stakes alongside experienced operators in high-potential frontier basins. Nigerian independent Aiteo secured onshore Block M1 in southwest Libya, becoming its first upstream expansion outside its domestic market.
The failure of Libya’s widely anticipated licensing round, initially seen as a turning point for its upstream revival, underscored the importance of legal, geological and economic realities over naive expectations of a rapid energy comeback. Libya retains Africa’s largest proven oil reserves and has restored production to approximately 1.3 million b/d, near pre-war levels. However, the country’s political geography remains divided between legal authority and physical control.
The internationally recognized Government of National Unity (GNU) in Tripoli, acting through the NOC, retains the legal authority to award contracts and access international financial systems, while many producing assets (particularly in the Sirte Basin) are secured by eastern forces aligned with Khalifa Haftar’s military force, the Libyan National Army (LNA). This dual structure has become an operational reality: investors sign contracts with Tripoli for legal validity while relying on dubious security arrangements with eastern authorities to ensure uninterrupted operations. Although the 2020 ceasefire halted large-scale hostilities, localized clashes continue, including renewed confrontations in March 2025 over infrastructure and political control, reinforcing investor concerns that security conditions remain fluid.
Security risks were not the only negative factor in play. Legal and contractual uncertainty also impacted investor participation. Before 2011, Libya attracted oil majors under the highly restrictive EPSA IV regime, where contractors retained just 5–15% of profit oil and IRRs could fall as low as 2.5% – terms that became untenable once political stability collapsed.
The 2025 licensing round introduced a revised model expected to offer improved returns, with IRRs reportedly rising to 35.8% and the state take reduced to around 66%. However, key provisions (including force majeure conditions, cost recovery, and stabilization terms) remained unclear during the licencing process, and such ambiguity in a politically fragmented environment significantly raised investment risk.
The structure of the offered acreage also limited participation. Many blocks contained mature discoveries requiring redevelopment rather than frontier exploration – something that usually attracts smaller independent operators specializing in late-life assets and rapid monetization. However, the NOC’s qualification criteria required companies to have large existing reserves and production portfolios, effectively excluding smaller firms better suited to developing such assets. This contrast between asset profile and eligibility requirements dramatically narrowed the pool of viable bidders.
The outcome underscores that Libya’s upstream revival remains constrained by structural realities despite its resource potential and geographic proximity to Europe. The NOC has articulated ambitious targets of increasing oil production to 2 million b/d and gas output to 57 Mcm/d by 2030, which is highly unlikely given the limited number of awarded blocks. And even those awarded in the 2025 round are unlikely to substantially contribute to production before the early-to-mid-2030s, as they require to undergo a full exploration-to-production cycle. This way, the short-term output growth will mostly depend on investments in existing producing assets rather than new exploration.
Libya’s licensing round ultimately marked a cautious, selective return of few investors rather than the broad upstream revival many had anticipated. Companies already operating in Libya, regional players with geopolitical alignment, and investors willing to accept elevated risk have taken initial positions, while many global majors preferred to simply wait aside.
The NOC is preparing a second licensing round, but its success will depend on addressing the issues demonstrated in the 2025 round: clarifying contractual terms, aligning asset profiles with eligible investor categories, and demonstrating sustained political and security stability. Until those conditions improve, Libya’s vast hydrocarbon wealth will remain trapped by many risks, preventing the country from turning its resource abundance into real production growth despite strong regional demand in the Mediterranean for a new and diversified supply.
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