Libyan Energy: A Catalyst for Economic Diversification, Structural Reform
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Libya has entered 2026 with renewed momentum in its energy sector, positioning hydrocarbons, renewables and the downstream industry as parallel engines for economic stabilization and diversification. While oil and gas continue to dominate fiscal performance, a growing pipeline of renewable projects, refinery development and infrastructure upgrades signals a gradual shift toward a more resilient and value-added economic model. This comes as economic growth moderates, with real GDP projected to expand by around 4.0–4.4% following the oil-led rebound of 2025. Energy diversification is increasingly being integrated into Libya’s hydrocarbon-based economy, aimed at stabilizing revenues, retaining greater domestic value and addressing long-standing infrastructure gaps.
Current Economic Model
Libya’s economy remains largely dependent on oil and gas, which account for roughly 95-97% of exports of over 90% of government revenue as of 2026. Oil production is expected to average around 1.3 million barrels per day (bpd) this year, with the state-owned National Oil Corporation (NOC) targeting 1.6 million bpd by year-end and a longer-term ambition of 2 million bpd within three to five years.
Libya’s production growth is increasingly leveraged to support downstream expansion and industrial value creation. Key projects include the 30,000 bpd Southern Refinery near Ubari, operated by Zallaf Oil & Gas, which is designed to supply fuels to southern markets and reduce imports, and the $8 billion Mellitah Gas Development led by Eni and the NOC, delivering up to 750 million cubic feet per day to domestic power and export markets. Strategic operators such as Eni, Petrofac, Honeywell-UOP and Mellitah Oil & Gas are central to this transition.
Role of Renewable Energy
Driven by the need to meet rising domestic power demand while freeing hydrocarbons for export, renewable energy development has become central to Libya’s energy strategy. Under the National Strategy for Renewable Energies and Energy Efficiency (2023-2035), Libya aims to install 4 GW of renewable capacity by 2035, representing 20% of its energy mix.
Several large-scale projects are advancing in 2026. The 500 MW Al-Sadada solar project, developed by TotalEnergies in partnership with the General Electricity Company of Libya and the Renewable Energy Authority of Libya, is expected to enter commercial operation this year, marking the country’s first utility-scale solar plant. In eastern Libya, a 1,500 MW solar development led by PowerChina and EDF Renewables is under site assessment, while AG Energy’s 200 MW Ghadames solar project is entering construction as the country’s first privately developed renewable facility.
Infrastructure and Investment Gaps
The NOC estimates $3-4 billion is required to modernize aging oil and gas infrastructure in the country, while Libya’s broader annual infrastructure financing gap is estimated at over $37 billion. Electricity grids, pipelines, refineries, transport networks and water systems all require rehabilitation after years of underinvestment.
However, Libya is seeing renewed engagement from international oil companies, EPC contractors and state-backed investors across energy, industrial and infrastructure segments. Companies including Eni, TotalEnergies, Repsol, OMV, Shell, Chevron and SLB are expanding existing operations, pre-qualifying for new bid rounds, or advancing gas, power and decarbonization projects with the NOC. At state level, investment partnerships with Italy, France, China, Turkey and Gulf-based groups are supporting power generation, renewable energy, refining and logistics infrastructure, reinforcing Libya’s re-entry into regional energy and industrial value chains.
This year’s edition of the Libya Energy & Economic Summit (LEES) in Tripoli – taking place from January 24-26 – is positioned as a key platform to address these challenges. By convening international energy companies, financiers and policymakers, LEES 2026 is promoting project pipelines, technical workshops and public-private partnership frameworks aimed at mobilizing capital and rebuilding investor trust. For Libya, the alignment of hydrocarbons, renewables and infrastructure reform remains central to translating energy wealth into sustainable economic diversification.