TRIPOLI, Feb. 2 (Xinhua) -- Libya notched its highest annual oil production since 2015 last year, while experts warn that political fragmentation may threaten long-term gains despite major new deals.
Libya hit a milestone in 2025, averaging 1.374 million barrels per day (bpd) and up 501,000 bpd, with National Oil Corporation (NOC) Chairman Masoud Suleiman announcing the figure at the Libya Energy & Economic Summit last month.
Also on the summit, Libyan Prime Minister Abdul-Hamid Dbeibah announced an agreement exceeding 20 billion U.S. dollars, for a period of 25 years, with TotalEnergies of France and the U.S. company ConocoPhillips.
He said that the agreement aims to boost the production capacity of the Libyan Waha Oil Company by up to 850,000 barrels per day, with projected net revenues exceeding 376 billion dollars for Libya.
Analysts suggest the country is pivoting to risk-sharing partnerships, where foreign firms front exploration costs recoverable from production.
Yet debate rages: can oil bridge to stability or fuel division? Government officials argue that higher production and new contracts could strengthen the Libyan dinar and narrow gaps in foreign reserves, while observers fear oil could become an instrument of exclusion.
Talking about the agreement announced by the prime minister, Mohamed Belqasem Al-Barghouthi, an expert in political economy, flagged ambiguous contract terms that might entrench rifts. He said the deals may deepen political divisions as rival factions seek foreign partners with economic concessions to get backing from the states where the energy giants are based.
Analysts pointed out that oil and gas exports are Libya's primary source of income and competition over oil fuels instability not only in Libya but across the region. Sustainable growth and investor confidence hinge on governance and transparency.
According to Al-Barghouthi, oil revenues constitute the core of Libya's political power struggles. He said controlling the oil sector has become central to both domestic and international powers in the country.
Amid complex political dynamics, the emergence of Arkenu Oil Company, a Benghazi-based private Libyan entity established in April 2023, further complicated the sector.
A UN expert panel report said the company, linked to the eastern Libyan commander Khalifa Haftar, exported about 7.6 million barrels of crude between May and December 2024 outside traditional NOC channels, with an estimated value of nearly 600 million dollars.
Ashraf Al-Shah, former adviser to Libya's High Council of State, questioned the legal and transparency foundations on which Arkenu was granted production and export rights, noting that no other Libyan company had received similar privileges.
He also alleged that the company is being used to facilitate oil smuggling and finance political settlements between rival factions, suggesting a deeper political and economic entanglement beyond ordinary commercial activity.
The NOC maintains that all oil exports are conducted exclusively through its framework and denies allegations of illicit sales, saying the circulated figures lack accuracy.
Analysts say that exporting oil revenues outside the traditional channels of the NOC and the Central Bank of Libya raises serious questions about transparency and unified management of sovereign resources.
Economist Fawzi Daddoush takes a balanced approach to the sector: insulating operations from political interference and leveraging targeted government actions to enable sustainable growth.
Daddoush said to improve governance efficiency needs to remove political actors from direct control of the sector and ensure financial allocations are channeled directly into development and exploration, while a carefully selected unified government enacts legal reforms aligned with transparent investment, exchange rate liberalization, and a stronger monetary policy to sustain growth.
Daddoush noted that the issue is "highly sensitive and critical."
Since the fall of former leader Muammar Gaddafi in 2011, Libya has been split between two rival governments -- the Tripoli-based Government of National Unity and the eastern-based administration appointed by the House of Representatives. ■