Libya has the third largest remaining recoverable oil reserves in Africa and is among the top twenty countries globally. However, since the revolution against Muammar Gaddafi in 2011 and breakdown of the post-revolution elected government in 2014, Libya has been extremely unstable and the oil industry has been severely affected by the volatility.

Continued investments and low breakeven indicate that there are still significant opportunities in Libya, but dealing with the myriad factors and groups involved is much more complicated than previous dealings under Gaddafi. Most of the international oil companies and service companies have withdrawn from onshore Libya due to the threat posed to oil workers.

There is also the possibility of new fields adding to production volumes from Libya, however, their addition to Libya’s output is forecast only after 2020. Further increases in production will be reliant on encouraging international operators to return to existing fields or nationalizing their assets, which will be dependent on the stability of the political and security situation.

Restoring at least partial production at the shut in-fields is likely to be relatively straightforward. After the revolution in 2011, production output was restored to within 90% of previous levels by 2012. Although the latest conflict has lasted longer and storage facilities at fields and ports have been damaged in the fighting, the overall infrastructure is thought to be mainly intact.

Libya has been exempted from the recent OPEC agreement to cut production but is unlikely to unbalance international oil markets in the short term.  The current volatility is the main deterrent for the oil industry from becoming more active in the country and returning investment is expected to be slow. Maintaining the stability is necessary to re-establish the oil industry; international companies view the country as high risk and many have taken write downs on their assets in Libya.