Can high-quality oil reserves and a massive reconstruction opportunity draw global investors to Libya?

A growing number of international businesses are signaling that it’s time to get in on the ground floor in post-conflict Libya: Even with two competing governments in place, dilapidated infrastructure, and a messy basket of fiscal problems, oil and gas majors are now following in the footsteps of Egyptian construction players — and there are signs players in other industries are putting out feelers, analysts and execs tell us.

Proximity, politics, and a proven ability to take on and mitigate risk saw Egyptian players move in first, including state-backed Arab Contractors and players with close government ties, such as El Argany (a key player born out of post-insurgency Sinai) and Wadi El Nile.

From energy to oil and dry ports: Egypt is in talks to scale itselectricity interconnection to Eastern Libya to a 2 GW line from c. 150 MW today, we previously reported — a ramp-up that could help solve eastern Libya’s chronic blackouts and unblock bns of USD in Egyptian-led reconstruction work in Benghazi and Derna, where projects have been hamstrung by a fragmented grid. Egypt has locked-in a good chunk of Libya’s crude output to make up for lost supply thanks to the war in the Gulf. And Libya announced a planned dryport late last year as a prelude to a joint free zone with Egypt — officials in the east have consistently signaled more infrastructure contracts are coming Egyptian contractors’ way.

More adventurous European outfits came in next — and global oil majors and big African outfits are following. Italy’s Eni and Spain’s Repsol, which had paused drilling in Libya for more than a decade thanks to the war, were early pathfinders, resuming exploration in 2024 and 2025. A recent bid round saw Nigeria’s Aiteo and Chevron clinch exploration concessions.

And service providers are taking note: Switzerland-based engineering services firm Sulzer recently said it plans to set up shop in Libya and build an on-ground equipment maintenance facility in Misrate to serve the sector, we previouslyreported.

“The broad interest now visible across sectors like healthcare, infrastructure, telecom, and construction has a straightforward explanation: both Libyan governments have been spending at an extraordinary rate,” Jalel Harchaoui, a Libya analyst at the Royal United Services Institute, told EnterpriseAM.

Libya has two governments: The UN-recognized government in Tripoli in the west and the Benghazi government in the east, which maintains close ties to Egypt.

Most of the interest from non-oil actors stops short of them committing significant capital to Libya — it’s about servicing contracts, not building new plants. Interest is skewed towards players from “countries that already have a political stake in Libya, like Egypt, the UAE, Italy, and Turkey,” Connor Coleman, senior MENA analyst at the Economist Intelligence Unit, told us. This enables them to navigate risks that would scare off most Western players, he added.

It’s all about the geology…

To understand why the investment outlook for Libya’s oil and gas sector outpaces others, you need to turn to geology. “It’s all about the geological quality of Libya’s reserves, both onshore and offshore,” Harchaoui says. “For companies operating on time horizons of 15 to 25 years, the calculus was straightforward: They needed to be present. Libya offered experienced technical crews, limited uncertainty regarding reserves and exploration prospects, and vast untapped potential — particularly offshore, but also in large onshore patches that remain essentially untouched,” he adds.

This geology is Libya’s competitive advantage: Unlike the complex, capital-intensive deepwater fields in the region like Egypt’s Zohr, Libya’s shallow onshore fields can be quickly brought into service and have much lower costs of production.

Case in point: Italian energy giant Eni announced two offshore natural gas discoveries with a 1 tn cubic feet (tcf) in the Metlaoui Formation, some 16 km south of the operational Bahr Essalam field. While the specific reserve volumes are modest compared to the East Mediterranean’s massive fields, these shallow fields are quick to get into production and cheap to operate. And now, all eyes are on the soon-to-be announced outcome for the gas exploration drilling carried out by an Eni-BP JV in the Al‑Matsola‑1 offshore field in the Sirte basin.

But even with all this progress, major challenges remain: Libya may have the capacity to ramp up crude output as planned this year to 1.6 mn bb/d, but its target to go up to 2 mn bb/d within the next few years will be very difficult to achieve with the current flows of infrastructure investments, Ayed Guembri, the former director of Baker Hughes North Africa, tells us.

The infrastructure problem

Libya’s 2 mn bb/d target is physically constrained by a decade of infrastructure decay despite its theoretical viability, as many brownfield projects can afford improvement in production. “The infrastructure is quite affected by the war,” Guembri said. “I’m talking about the old pipeline that is linking all the infrastructure ... it was quite damaged, and it’s an old one, impacted by corrosion.”

“We need new roads, new laws, security, and a reliable customs system,” Peter Loshi, the Libya Director of the Malta-based oil logistics provider MedservRegis, tells us. “Libya is a huge country. If somebody has to drive 2k km, they might as well get a plane,” he said, arguing that many of the oil fields that await tapping into would need investment in new airstrips and small airports in the desert. Otherwise, these projects remain “just an idea on paper,” he added.

And Italy’s fleet of rigs is an issue: There were 50 available in Libya before the war — and 20 today, Guembri told us. Bringing in more rigs adds to both expense and lead time.

The elephant(s) in the room with us

Banking and the repatriation of profits remain key challenges. “Libya doesn't have a banking system, it’s very primitive,” and decoupled from the global system, MedservRegis’ Loshi tells us. “If you send a payment from one institution to another, it stays a week in the bank... You cannot run a business like that.”

For most players, that means taking local payment in one of two forms. Behind door number one: Taking cash in-country, with all of the risk that comes with it — from theft and fraud to your board asking why they can’t use that money to finance other operations or pay dividends. When does that cash get out of the country? How? It could take years to sort that out.

Behind door number two: Taking what Eni, a multinational player with a long history in Libya, would describe as “equity hydrocarbon” — payment in crude, not cash. Few players have the risk tolerance for either approach to payment.

Libya’s divided government and longstanding issues with corruption are the biggest obstacles to a large-scale return of investments. Libya has two competing governments in the east and the west — and parallel spending reached a level that ultimately contributed to the collapse of the currency last year. Corruption also remains a pervasive issue, with “large volumes” of crude oil slipping out through unofficial channels “before they can be monetized and deposited as USD revenues” with the state, Harchaoui said.

Libya has been sending some positive signals on these fronts. A Tripoli court sentenced a former marketing executive at national oil company NOC to 10 years in prison on corruption charges, and NOC recently terminated a co-development agreement with Arkenu Oil Company, also amid allegations of corruption.

A joint budget? Then there’s the prospect of a ‘unified’ budget — Libya’s first in 13 years. “[The budget] implies a degree of revenue sharing … covering expenditures for both rival governments,” EIU’s Coleman tells us. “Progress on the budgets is real, but it sits within a political order that is still very transactional,” adds. “There are real positive steps and a cleanup of the political order, but they're not a clean break with the old system. The power brokers haven't changed.”

What’s next?

The Libya business story in 2026 isn’t really about security, but whether the governing institutions can turn building momentum into something that lasts. “I think a lot of players will come in as soon as big American companies like Chevron, BP, and Shell are back,” Guembri said. But some of these players, as in the case of Chevron or Exxon, are only back on paper for now. “They're not moving in tomorrow. They are studying the country and taking their time,” Loshi said.

What to watch: How the unified budget unfolds. A key signal is whether the competing governments stay the course and take real steps toward ending parallel spending. “The unification of the budget is a good signal for everybody…. [It] will help stabilize and overcome the challenge of illegal sales of oil,” as well as currency pressures, Guembri believes.

The catch: The budget can’t be a paper tiger. It needs to translate into fiscal discipline: “If you end up with a unified budget, but parallel spending starts again? Then the pressures reemerge,” Coleman concludes.