Op-Ed: Libya Needs a Bankable Oil Sector, Not Just More Oil Money

Libya's National Oil Corporation (NOC) has set an ambitious target to increase crude oil production to 2 million barrels per day by 2031. While technically achievable, this goal necessitates an estimated USD 36 billion in investments over the coming years. The critical question, however, is not where this money will come from, but rather how Libya's oil sector is structured.

Currently, the NOC and its subsidiaries are almost entirely dependent on government funding. This structure prevents them from gaining the legal and financial independence needed to secure loans from commercial banks, access capital markets, or issue debt instruments. Despite controlling significant oil reserves, these entities are not considered bankable under the present system.

To achieve the production target, fundamental institutional reform is paramount. The proposal suggests transforming the NOC into an independent, state-owned holding company, akin to models in Algeria, Saudi Arabia, and the UAE. This holding company would manage its resources commercially and fulfill state obligations through royalties, taxes, and dividends.

Simultaneously, the producing subsidiaries would become financially independent corporate entities with their own balance sheets and governance structures. This transformation would enable them to raise capital through diverse financial instruments, rather than relying solely on government budgets. Such a move would not only fund production growth but also foster a more efficient, transparent, and sustainable oil sector, attracting billions in private investment while maintaining state ownership of natural resources.