On March 3, 2025, Libya's National Oil Corporation (NOC) announced the launch of its first international bidding round for oil and gas exploration since 2007, igniting excitement among investors and energy experts. After 18 years without new tender opportunities, this ambitious plan aims to stimulate exploration and production, utilizing Libya's vast natural resources.
The announced tender encompasses 22 exploration areas, divided evenly between land and sea, covering over 235,000 square kilometers. According to data referenced by the Energy Research Unit, these areas are believed to contain resources exceeding 10 billion barrels of oil equivalent, with 9 additional areas poised for potential new discoveries holding about 1.68 billion barrels of oil equivalent.
The proposed exploration model is set to entice foreign investors. The NOC has shifted to using Production Sharing Agreements (PSA), which replace the previous Exploration and Production Sharing Agreements (EPSA 4) model used for the last tender back in 2007. This shift is expected to make the investment climate significantly more attractive by increasing the internal rate of return for contracting companies to 35.8%, compared to just 2.5% under previous arrangements.
"The new round is set to open wide doors for increasing the country’s oil and gas reserves and compensates for the quantities produced previously," stated Musaad Suleiman, Chairman of the NOC. He expressed optimism about the round's potential impact on Libya's economy, envisioning it as pivotal to restoring production capabilities and attracting global expertise.
Currently, Libya's oil production hovers around 1.4 million barrels per day, and the country aims to raise this number significantly, with targets set between 2 and 3 million barrels daily. Gas production is also on the agenda, with plans to increase output from 1.2 billion cubic feet per day to 4 billion cubic feet.
Yet, the tender has not come without its criticisms. Former Oil Minister Mohammed Aoun has highlighted concerns over the legality of the bidding round, arguing it conflicts with the resolutions set forth by the Libyan Parliament. He pointed out potential political instability and security challenges as significant barriers to attracting investment. Aoun remarked, "This bidding round does not match the expectations of establishing transparency and promoting the good of the nation," which he believes could jeopardize Libya's economic future.
Aoun, who previously proposed plans for the development of specific oil fields, has called attention to the lack of follow-through by the current administration, indicating the need for coherent governance to support investment efforts. His concerns accentuate the reality faced by Libya’s energy sector, which has struggled with mismanagement and the absence of effective regulatory frameworks.
Libya's ability to realize its new ambitions heavily relies on its geopolitical climate. Economic analysts such as Mohammed Al-Shaibani assert the necessity of political agreement among competing factions to provide the stable environment required for attracting foreign investments. Al-Shaibani noted, "The previous political stability also determines investment for these endeavors," emphasizing the urgency of national unity to secure economic growth.
This tender also coincides with international interest as previous exploration activities had been largely stalled. The response from major oil companies is being closely monitored. The NOC's current strategy insists on complete transparency and accountability to local and international stakeholders, aimed at rebuilding trust and encouraging participation.
The Libyan government’s efforts to improve regulatory processes signify its intent to restore the sector’s credibility. To bolster transparency, comprehensive geological and geophysical data sets will be made available through Virtual Data Rooms (VDR), enabling interested parties direct access to assess and evaluate the potential of the proposed areas.
Despite these advancements, Aoun has maintained concerns about existing financial evaluations, urging scrutiny on projected budgets and the long-term sustainability of agreements made. His assessment highlights worries about the environmental impact and the financial prudence of entering lengthy contracts without adequate oversight.
While optimism abounds with the new tender, the shadows of past governance issues linger. Libya's efforts to engage international partners come against the backdrop of previous mismanagement and corruption within the oil sector, which has eroded both public trust and investor confidence.
Nonetheless, the current political leaders face the opportunity of changing the narrative and reconciling past mistakes. Emphasizing shared profits and sustainable practices, the state aims to prove it can manage these resources effectively.
With significant deposits of oil and natural gas lying untapped beneath its soil, Libya is poised on the precipice of potentially revitalizing its economy. The success of the latest bidding round may well hinge on external collaboration alongside effective governance strategies, balancing investment attractiveness with transparency and accountability.
With high stakes involved, Libya’s next move could reshape not just its economy but its standing within the global oil market. The international community watches closely, and Libya has much to prove.