Libya's Oil Sector Aims for 2 Million Barrels a Day, but Institutional Reform is Key

The National Oil Corporation (NOC) has set an ambitious goal to increase Libya's crude oil production to 2 million barrels per day by 2031. The corporation estimates that this target will require USD 36 billion in investments over the coming years.

However, achieving this target is not just a matter of securing funding, but also requires institutional reform. According to Naaman Elbouri, a leading Libyan banker, the real challenge lies in the sector's institutional structure.

Libya's oil sector currently relies almost entirely on government funding, and its companies lack the legal and financial independence required to borrow from commercial banks or access capital markets. To address this issue, Elbouri proposes transforming the NOC into an independent state-owned holding company, similar to Sonatrach in Algeria, Saudi Aramco in Saudi Arabia, and ADNOC in the United Arab Emirates.

This transformation would allow the NOC to manage its investments and financial resources independently, operate on commercial principles, and pay royalties, concession fees, taxes, and dividends rather than relying on government funding. The producing subsidiaries should also become financially independent corporate entities with their own balance sheets, audited financial statements, professional governance structures, and accountable boards of directors.