Libya's Oil Sector Must Reform to Reach Production Goals

Libya's National Oil Corporation (NOC) has set an ambitious target to increase crude oil production to 2 million barrels per day by 2031. Achieving this goal will require a significant investment of USD 36 billion over the coming years.

The real challenge, however, lies not in securing funding but in reforming the institutional structure of Libya's oil sector. Under the current system, NOC and its subsidiaries rely heavily on government funding, limiting their ability to borrow from commercial banks or access capital markets.

Naaman Elbouri, a leading Libyan banker, believes that transforming NOC into an independent state-owned holding company would be key to unlocking the sector's full potential. This would enable NOC to manage its investments and financial resources independently, operate on commercial principles, and fulfill its obligations to the state by paying royalties and dividends.

Such a transformation would not only provide the necessary financing for the production target but also create a more efficient, transparent, and sustainable oil sector. It would reduce pressure on public finances, attract billions of dollars in investment, and allow the sector to finance its own growth rather than relying on government funding.