Offshore Gas Project and Carbon Management Initiative: "The First Fruits of the U.S.-Libyan Strategic Economic Partnership"
By Mowafag |
Date: 29/07/2025
In a landmark step reflecting Libya's commitment to economic stability, the National Oil Corporation (NOC), through its subsidiary Mellitah Oil & Gas, has signed a strategic agreement with U.S. firm Hill International. The signing was attended by Massad Boulos, Senior Advisor to the U.S. President for African Affairs, following a meeting with Prime Minister Abdul Hamid Dbeibeh in Tripoli on July 23, 2025.
This agreement is a key pillar of the “Return to Life” initiative launched by the Government of National Unity. This roadmap aims to reactivate major development projects and empower national institutions.
Project Scope and Investment
The agreement focuses on developing the offshore Structures A and E, joint projects between Mellitah Oil & Gas and Italy's Eni. The project integrates technical, environmental, and logistical elements, including:
Management and expansion of the A and E offshore gas platforms, 140 km northwest of Tripoli.
An integrated Carbon Capture and Storage (CCS) project to manage CO₂ emissions, a technology supported by the World Bank for green transitions.
Expansion of the Mellitah Complex infrastructure to boost Libya's gas production and export capacity, particularly to Europe, which imported 4.7 billion cubic meters from Libya in 2023.
Total capital investment for the project is estimated at $8 billion, which includes $235 million for carbon management infrastructure. The plan aims to raise Libyan gas production to 750 million cubic feet per day between 2026 and 2027—a 42% increase from Mellitah's current output of 500–530 million cubic feet per day.
Driving a Sustainable Energy Economy
This CCS project is a major leap in Libya's environmental strategy. The NOC estimates it will reduce emissions by nearly 3.5 million tons of carbon equivalent annually. This is critical, as the World Bank's 2024 "Global Gas Flaring Tracker" report ranked Libya among the top 10 nations for gas flaring. The report noted Libya flared 5.9 billion cubic meters of gas, a 25% increase from 2022.
These efforts are part of the NOC's strategy to cut wasted gas flaring by 83% by 2030, aligning with Libya's Paris Agreement commitments.
A Partnership Signaling Confidence
The involvement of major U.S. firm Hill International signals renewed international confidence in Libya's investment climate after a decade of foreign investor reluctance. It also demonstrates the ability of national institutions to lead global-standard energy projects. The presence of Mr. Massad Boulos underscores the strategic cooperation between Libya and the U.S., linked to the American “Prosper Africa” initiative.
The "Return to Life" Plan in Action
Prime Minister Dbeibeh's "Return to Life" plan has focused on reactivating key infrastructure, electricity, and energy projects. The government has allocated over 70 billion dinars to the oil and gas sector, helping push oil production past 1.3 million barrels per day. Similarly, investment in the electricity sector has boosted output to over 8,500 megawatts, up from 5,000 MW when the government took office.
This offshore gas project exemplifies the plan's goals: creating a diversified, sustainable economy that enhances public revenues and repositions Libya as a reliable energy supplier amid rising European demand.
Boosting Revenue and Monetary Stability
At full capacity, the project is expected to generate $4 billion in annual revenues, based on average gas prices of $10-15 per MMBtu. These revenues will directly strengthen the Central Bank of Libya's foreign reserves and support the public budget.
As 95% of Libya's revenue comes from oil and gas, expanding gas exports diversifies income and reduces exposure to oil market volatility. This, in turn, will increase the supply of hard currency, supporting the Central Bank's efforts to stabilize the Libyan dinar. A greater local gas supply will also reduce the fuel import bill for power stations, lowering public spending and helping to curb inflation.
Conclusion
This agreement marks a new phase in Libya's energy strategy, shifting focus from merely increasing production to improving efficiency, reducing environmental impact, and expanding international partnerships. It is a declaration of intent to re-engineer the sector to modern standards with oversight from key partners like the United States.
The primary challenge remains insulating the energy sector from political polarization. However, the window is open for national and foreign financing in Libya’s high-return energy projects, where risks are steadily declining thanks to government will and support.
About the Author:
Mustafa El Manea is a Libyan legal and economic expert with over 23 years of experience. He has worked with investment institutions, sovereign funds, and banks in Libya and internationally. He has served as an advisor to the Central Bank of Libya, a board member of the Libyan Investment Authority and the Libyan Foreign Bank, and represented Libya in meetings with the World Bank and IMF. He chairs the executive team for the Prime Minister's strategic initiatives and has published numerous articles in Arab and international newspapers.
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