The Italian “Friedman Institute” Highlights the Growing Importance of Libyan Oil and Gas Supplies to Italy

The Italian “Friedman Institute” recently released an analytical report on Libyan oil and gas supplies, emphasizing Italy’s strategic role in Mediterranean energy dynamics.

The institute highlighted Italy’s efforts to position itself as a key energy hub in the Mediterranean, supported by its continued reliance on Libyan oil and gas. According to a recent analytical memo published by the institute, Italy stands to benefit significantly from Libya’s vast untapped energy resources. Despite the ongoing instability in Libya, the report sheds light on the increasing importance of Libyan oil supplies to Italy and the geopolitical challenges and opportunities they present.

According to the institute, Libya’s National Oil Corporation (NOC) announced that nearly 70% of Libya’s territory remains unexplored for oil and gas resources, signaling significant growth potential in the sector.

Farhat Bengdara, Chairman of the NOC, affirmed the corporation’s commitment to developing these resources through international partnerships. Libya already boasts Africa’s largest proven oil reserves, with over 48 billion barrels of oil and substantial natural gas reserves. However, despite these rich resources, Libya remains a high-risk investment destination due to its unstable political and security environment.

Italy’s Energy Agreement with Libya: A Double-Edged Sword

The institute noted that the $8 billion energy deal signed between Italy and Libya in 2023 has sparked widespread controversy. Critics, including Libyan political figures and international energy experts, have raised concerns about the legality of the agreement and its long-term implications.

Experts have also pointed out that instability, rising domestic demand, and underinvestment have severely hindered Libya’s ability to meet gas export needs for foreign markets.

The risks associated with Libya’s oil market were further underscored by the five-week conflict over control of the Libyan Central Bank. This disruption had far-reaching impacts, particularly on European energy markets. If prolonged declines in Libyan exports persist, European stakeholders may need to reassess their strategic and contractual commitments.

The institute also referenced recent tensions involving armed groups in response to exploration activities by an Italian oil company in the Hamada oil and gas field. Such events highlight the risks posed by Libya’s persistent instability, especially for foreign investors. A Middle East expert remarked that these incidents underline the increasing threats to foreign investments in Libya.

Challenges to Italy’s Energy Ambitions

Italy’s ambitions in Libya’s energy sector face challenges from competing regional powers. Countries such as Turkey, France, and the UAE have already made significant investments in Libya’s energy resources and may resist Italy’s growing dominance in the region.

European media have reported that Italy is well aware of these potential risks and has taken steps to secure its oil operations.

The Friedman Institute’s analysis underscored the crucial geopolitical role Libyan oil resources play in Italy’s energy future. While instability and security risks continue to plague Libya, the potential rewards for Italy are substantial.

The institute concluded by noting that Italy’s efforts to secure a central position in the Mediterranean energy landscape, combined with Libya’s untapped resources, could help diversify its energy supplies and strengthen its geopolitical influence.