Amid the worsening global energy crisis triggered by the US-Israel war on Iran, European countries, desperate for alternative energy supplies, trade routes and partnerships, have looked across the Mediterranean for solutions. As a result, governments across North Africa have started to reassess their strategic value. Algeria is in an especially strong position as an established gas supplier, while Egypt can offer infrastructure, refining capacity and access through the Suez Canal.
Libya has also seen its strategic value increase. It has around 48 billion barrels of proven oil reserves, the largest in Africa, and produces 1.5 million barrels of oil per day. It also has substantial natural gas reserves.
Its oil reaches international markets through the Mediterranean, while the Greenstream gas pipeline connects its Mellitah complex directly to Europe. Libya cannot replace the Gulf in terms of oil and gas exports, but it can become a major player in diversification efforts not just in Europe but elsewhere in the world. The challenge the country faces is how to take full advantage amid structural constraints and insecurity.
Libya is simultaneously a major energy exporter and an energy-insecure state. Although the country possesses vast oil and gas resources, Libyans experience regular electricity blackouts due to an inefficient domestic energy system. More than 70 percent of Libyan gas production is consumed domestically, mostly for electricity generation.
Production has struggled to meet both domestic needs and export commitments. Gas exports consequently fell year on year from around 200 billion cubic feet in 2019 to 35 billion in 2025, the lowest export levels in 22 years. At the same time, the country is flaring at least 200 billion cubic feet of gas annually due to underdeveloped infrastructure.
Gas that could generate electricity, support industry or increase exports is instead being wasted. The International Monetary Fund has estimated Libya’s total energy subsidy burden at around $17bn, equivalent to roughly 35 percent of GDP – one of the largest in the world. Much of these funds go into subsidising imported refined fuels, as domestic refining capacity is largely underdeveloped and cannot meet demand.
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