Libya Mega Gas Project Proposed for Revival

Libya’s state-run energy company is proposing reviving a multibillion-dollar natural gas project to ease electricity shortages, a move that may also be a boon for a rival administration in the country’s east.

The National Oil Corp. wants its unit Arabian Gulf Oil Co. to develop discovered gas deposits in the NC-7 block in western Libya, potentially in collaboration with consortium partners Eni SpA, TotalEnergies SE, Abu Dhabi National Oil Co. and Turkish Petroleum Corp., according to a letter from the NOC to Abdul Hamid Dbeibah, the prime minister of Libya’s internationally recognized government.

The project would, however, be overseen by a new company established in Benghazi in the east, according to the letter. Such an arrangement would be beneficial for the eastern administration which has often complained about not getting its fair share of energy revenue, resulting in frequent disruptions to the country’s vast oil production.

Tapping Libya’s gas resources, estimated at about 53 trillion cubic feet according to the US Energy Information Administration, is becoming crucial for authorities to meet export commitments and rising local demand. NC-7 would be one of the biggest new projects in the country, according to the report. But a previous plan to develop the discoveries stalled in 2023 after Libyan objections to the share of profits that would be granted to overseas companies. 

Eni, TotalEnergies and Adnoc declined to comment on the NOC letter, a copy of which was seen by Bloomberg. Libyan energy officials didn’t respond to requests for comment, nor did Turkey’s energy ministry, which controls Turkish Petroleum Corp.

Libya, riven by conflict since the toppling of longtime leader Moammar Al Qaddafi in 2011, is split between Dbeibah’s government in Tripoli in the country’s west, and a rival administration in Benghazi. The two sides frequently feud over energy revenue, leading to shutdowns of the OPEC member’s more than 1 million barrels-a-day of oil output.

Gas Supplies

The NOC’s proposal to headquarter the new gas company, named Jelyana, in Benghazi would help eastern Libya, which is home to much of the nation’s energy finds but has long complained of neglect and lack of influence over key institutions. The region, where military commander Khalifa Haftar holds sway, has frequent demanded the NOC moves its main offices from Tripoli to the east.

It isn’t clear if Dbeibah will approve the proposal. While there’s the issue of control of energy resources, local energy needs are also becoming more acute in the country. 

Despite its abundant oil reserves, Libya has little refining capacity and relies on imports of fuel to keep the lights on and vehicles running. NOC Chairman Masoud Suleman said in the letter that tapping new sources by the end of 2026 is crucial for the country if it’s to avoid using costly fuel imports and meet industrial demand for power.

So far, there’s no sign of the pushback that froze attempts by the NOC and Dbeibah to exploit NC-7 about two years ago.

Then-Oil Minister Mohamed Oun objected to the 40 percent stake being offered to foreign companies as “too high” and “unprecedented” – criticism that was echoed by authorities in eastern Libya. Opponents argued Agoco could develop the field at lower costs, and a legal order paused negotiations.