The real risk behind the Turkey-Libya delimitation: Prolonged uncertainty undermining future developments

Libya ratified its 2019 maritime delimitation MoU with Turkey, which puts Libya and Egypt at odds as Cairo tries to expand its exploration frontier westward. The ratification from Libya’s East-based House of Representatives overturned years of opposition and effectively unified Libya’s two political establishments behind it.

The biggest commercial consequences for MENA+ are twofold, and are split along geographical lines. The agreement gives Turkey a claim to Greek waters, impacting four frontier blocks south of the Greek island of Crete where Chevron and ExxonMobil are planning their next seismic campaign. The water south of the line is allocated to Libya, and it extends into the deepwater Herodotus basin margin, Sotirios-Ioannis Lekkas, a professor of international law at the University of Sheffield, tells EnterpriseAM.

SOUND SMART- The Herodotus basin is an underexplored deep-water frontier basin located along the northwest offshore margin that is yet to generate any oil or gas production. Egypt issued its first exploration license in the basin in 2018, with a few international players like ExxonMobil, Chevron, and QatarEnergy actively drilling as of this year. Most of the concessions, by our tally, are in national waters that are not contested by delimitation agreements.

That’s why rejections of the ratifications were immediate and near-universal. Cairo called the agreement “null and void” within 24 hours, saying it infringes Egypt’s sovereign rights in its exclusive economic zone (EEZ) and continental shelf. Athens, Nicosia, Brussels, Washington, and Jerusalem followed. Foreign Minister Badr Abdelatty told Turkish counterpart Hakan Fidan directly in Istanbul on 23 October that Egypt categorically rejects the memorandum; spokesman Nader Zaki dismissed it the next day as “ink on paper” and said Cairo is assembling a legal dossier with international law experts.

International law sides with Egypt and the Europeans: The memorandum binds nobody outside the two signatories under international law, Lekkas says. The claim that Turkey is using to press into what are now Greek waters argues that islands like Crete, Rhodes, and Karpathos should not have weight in determining a country’s EEZ is not an international law concept, Lekkas says. Islands have occasionally been given less than full effect, he says, but only where a state consented in a negotiated boundary. “It cannot simply be imposed unilaterally by one or more states on other states,” he adds.

But focusing on the legalities misses the point: Before 20 October, the eastern Libyan parliament rejected the agreement, and Egypt counted Tobruk as an ally on the boundary question. That is no longer the case. Libya now carries a unified national position into a claim it previously held at half strength, and it carries it alongside a partner with the survey fleet and naval capability to harass commercial operators.

There’s precedent for Turkey leveraging naval capabilities to halt exploration in contested areas, Martijn Murphy, principal analyst for upstream North Africa and Eastern Mediterranean at Wood Mackenzie, tells EnterpriseAM. In February 2018, Turkish naval vessels turned back the Saipem 12000 drillship from Cypriot Block 3, where Italy’s Eni was carrying out a drilling campaign for the concession. No court had upheld any Turkish claim, but the drilling stopped anyway and never resumed.

But we think Turkey is less likely to act directly against Egypt. Against Egypt, the equivalent move would require Ankara to act at sea on a Libyan claim rather than its own — a slower and more exposed proposition, and one nothing in Egypt’s current relationship with Turkey suggests is imminent.

These conditions create enough commercial uncertainties to force the rivals to the negotiation table. With high-potential basins now contested by Turkey and Libya, Greece and Egypt may find it harder to attract foreign oil and gas exploration companies. Those who enter these contested areas, as a result, will have to have a bigger risk appetite — effectively narrowing the pool of willing investors in those basins.

And prolonged uncertainty is ultimately a risk for everyone involved: “If tensions remain confined to diplomatic exchanges, exploration should continue. But if they translate into operational disruption, companies may delay drilling or redirect investment elsewhere. Ultimately, there are plenty of opportunities competing for investment capital [elsewhere]," Peter Stevenson, East Med editor at Mees, tells EnterpriseAM.

Competing concessions are the one to watch

What both sides need to be worried about is competing concessions: “The decisive trigger that puts all at risk will be competing licenses, contested surveys, or interference with drilling. International investors can accommodate diplomatic disagreements more easily than uncertainty over whether a rig can operate,” Cyril Widdershoven, senior advisor at maritime energy investments advisory Blue Water Strategy, tells EnterpriseAM.

For Egypt, the acreage under that could be contested is deepwater in the west, not its productive eastern fields. The Herodotus Basin — roughly 90k sq km by Egypt’s own Petroleum Ministry count, in water running from 1 km to beyond 3 km — lies offshore northwestern Egypt, north of the Western Desert, and parts of it are shared with Cyprus. Its southeastern boundary is the Nile Delta Basin, its northern edge the Mediterranean Ridge running toward Greece’s Crete, and to its west are Libyan waters.

And we may have one of those contested plays already on the Egypt-Libya side. Libya’s National Oil Corporation and Turkey’s state-owned oil champion TPAO signed an MoU in 2025 that covers geological surveys in four offshore areas, the easternmost of which — Area 4 — sits over waters Egypt considers its own, next to the Herodotus Basin, the Geopolitical Desk reports. That’s not yet an exploration agreement, but it is definitely one to watch.

On the northern track, four Greek blocks are located in the waters Turkey claims against Athens. The exploration concessions that are on top of the watchlist for possible delays are Chevron and HELLENiQ Energy’s South of Crete I and South of Crete II blocks, ExxonMobil and HELLENiQ’s Southwest of Crete block, and ExxonMobil’s West of Crete, both Widdershoven and Wood Mackenzie’s Murphy tell us. Chevron said it was planning to start seismic survey work in September — one month before the ratification of the Turkey-Libya agreement.

Nothing east of the disputed water is exposed on either geographical track. “Existing gas production in Israel and Egypt, along with Cyprus’ planned gas developments, is much less directly exposed. I also don’t see an immediate threat to Egypt’s LNG infrastructure or its ambitions to become a regional gas hub. Those depend much more on securing sufficient gas supplies and commercially attractive agreements,” Mees’ Stevenson tells EnterpriseAM. Cronos — the Eni-TotalEnergies FID taken in July that ties four Cypriot subsea wells back through Zohr for processing at Port Said and liquefaction at Damietta — sits in the Levantine Basin, hundreds of kilometres east of the memorandum line.

The uncertainty is yet to be priced in

On financing, the three analysts agree there is no repricing yet, and that the impact will show up first as a delayed well rather than a higher interest rate. “There is no evidence yet that financing costs have risen across the region. Early exploration is commonly funded from corporate balance sheets. This means that the first response may be a postponed well rather than a visible increase in borrowing costs,” Widdershoven says.

That’s not to say that repricing is fully out of the question — prolonged uncertainty could force it in. “If developments stall, unresolved access or export-route risks will negatively affect financing altogether, " Widdershoven adds. “Unresolved maritime claims could make lenders more cautious, increase the returns investors demand and potentially delay investment decisions, but we’re not at that stage yet, Stevenson concurs.

Some operators may be more willing than others to go in despite the uncertainty. Chevron took four offshore exploration leases in Greece with HELLENiQ knowing the Libyan claim existed. “Chevron almost certainly would have factored this into its risk assessment before picking up the two South of Crete blocks last year and are currently tendering for seismic surveys,” Murphy says. Stevenson reads it the same way, pointing to Chevron’s decision as a signal that such uncertainty is “manageable for major international players.”

Expect more companies to be more anal about their contracts. “Companies will nevertheless want strong government backing and clarity over their contractual rights before committing significant capital,” Stevenson says. That would mean asking for “clearer operating assurances and contractual remedies” and pursuing political-risk cover where available, Widdershoven tells us.

US to the rescue?

One way some markets could push for a resolution is to secure US oil majors' presence in contested areas. “Greece may consider the presence of the US Majors something of an insurance policy against competing claims,” Murphy says, pointing out that risking relations with oil majors, who are tied to major explorations with both Turkey and Libya, would be a hard pill to swallow. In essence, that means Washington may end up with Leverage on all sides, he adds.

REMEMBER- Chevron and ExxonMobil signed exploration MoUs with Turkey’s TPAO this year, and Chevron also holds the Sirte S4 onshore licence inside Libya.

The US had brokered delimitation agreements in the Mediterranean before: In October 2022, US energy envoy Amos Hochstein brokered an Israel-Lebanon maritime border agreement that unlocked TotalEnergies’s stranded work on the Qana concession in Lebanon’s Block 9 and stabilized the line running past Israeli firm Energean’s producing Karish field. Qana came up dry in October 2023, but the boundary held commercially, and a TotalEnergies-Eni-QatarEnergy consortium signed for Block 8 in January 2026 under the same line.

And the Trump administration has a commercial case for doing it again: There are Chevron and ExxonMobil blocks on the Greek side, Chevron is active inside Libya, and both majors hold MoUs on Turkish areas.

For now, Turkey is pitching a four-way agreement — without Greece: Turkey’s messaging so far has been courting Egypt to its side in the Mediterranean competition, offering talks for a four-way delimitation agreement including Libya and Italy. But excluding Greece and Cyprus would be a hard sell for Cairo as it means compromising its Greek and Cypriot partners, with whom Cairo signed a delimitation agreement in 2020 — and whose gas Cairo is betting on for its regional gas hub ambitions. REMEMBER- The Ankara-Cairo competition isn’t only upstream. The two countries are building rival downstream visions that would depend on them acting as natural gas tolling hubs, we previously reported. While neither is a net exporter currently, both are aiming to leverage a mix of their geography, infrastructure, and historical role as trade hubs for this model. Egypt’s model is anchored on Idku and Damietta’s liquefaction and future pipeline flows from Cyprus and Israel, while Turkey wants to leverage its robust regasification and storage capacity, as well as reliable pipeline flows from neighboring producers to European importers.