Eni’s Libya Gas Discovery Hits a Wall: Greenstream Pipeline’s Reliability Remains the Real Bottleneck

Eni's latest find is a substantial one, with preliminary estimates indicating the two adjacent offshore structures, Bahr Essalam South 2 and 3, contain more than 1 Tcf of gas in place. Located just 16 kilometers south of the existing Bahr Essalam field, the discovery is positioned to tie back to established infrastructure, suggesting a potentially rapid path to production. The scale of this new resource is impressive on paper, but its impact on the gas export balance is immediately framed by the stark reality of Libya's current output and utilization.

That reality is one of severe underutilization. While the new discovery adds to vast reserves, Libya's actual gas export performance has been in steep decline. In 2025, the country's gas exports to Italy fell to a 22-year low of 105 million cubic feet per day. This figure represents a 22% drop from the prior year and is just 11% of the peak volume seen in 2007. The Greenstream pipeline, with a capacity of 775 million cubic feet per day, sits largely idle, a direct reflection of the domestic supply constraints.

The domestic picture offers a clearer context for this export shortfall. In February 2026, Libya's total natural gas production reached 68.923 billion cubic feet. Yet, of the 65.174 billion cubic feet available for consumption, only 47.248 billion cubic feet were used domestically. The remaining volume-over 17 billion cubic feet-consisted of acid gases and low-pressure hydrocarbons, indicating a significant portion of produced gas is either flared, vented, or simply not captured for use. This disconnect between production and domestic consumption is the core bottleneck.

The commodity balance question, therefore, is not about the discovery's size, but about its ability to overcome these entrenched constraints. The new 1 Tcf of gas is a minor addition to Libya's vast reserves, but its potential to ease the export deficit hinges entirely on whether the country can first solve its domestic utilization problem and then navigate the political and infrastructural hurdles that have kept the Greenstream pipeline underused for years. The discovery is a promising piece of the puzzle, but it does not address the system's current state of underperformance.

The Critical Bottleneck: Greenstream Pipeline Underutilization

The Greenstream pipeline is the physical artery for Libya's gas exports, and its chronic underuse defines the current supply constraint. Designed with a capacity of 8 billion cubic meters per year (about 775 million cubic feet per day), the pipeline has the technical ability to move far more gas than Libya is currently exporting. Yet, in 2025, actual exports averaged just 105 million cubic feet per day, a figure that represents only about 13% of the pipeline's total capacity. This stark gap between potential and reality is the central bottleneck.

The pipeline's operations have been repeatedly disrupted by the country's political and security instability since its 2004 start. It halted briefly for approximately eight months in 2011 due to conflict, and its restart was not seamless. This history of interruptions is a critical factor. It means the pipeline's reliability is not guaranteed, and any new gas supply would face the same operational risks. The infrastructure exists, but its function is contingent on a stable political environment and secure operations, conditions that have been absent for years.

For Eni's new discovery to have any meaningful impact on the export balance, it must first overcome this pipeline constraint. The new gas would need to be processed, tied back to the existing infrastructure, and then flow through Greenstream. But the pipeline's capacity is not the only issue; its operational history suggests that even if the gas is ready, getting it to Italy is not a simple matter of turning a valve. The system's capacity is a fixed number, but its availability is a variable shaped by conflict and governance.

The bottom line is that new discoveries, no matter how large, cannot bypass this bottleneck. The 1 Tcf of gas found is a potential asset, but its value is locked behind a pipeline that has been operating at a fraction of its capability for years. Until Libya can ensure the pipeline runs reliably and at higher volumes, the commodity balance for Italian gas imports will remain constrained by the system's weakest link: the Greenstream pipeline's underutilization.

Development Reality: Timeline, Targets, and the Path to Impact

Turning Eni's new discovery into a tangible shift in the export balance faces a long road of practical and financial hurdles. The company's latest find is in a block, O1, that was only awarded in February 2026. The development path is clearly defined but lengthy: the consortium, led by Eni, has a five-year exploration period to conduct seismic surveys and drilling. This timeline alone means the new gas is not a near-term solution. Even with the discovery's proximity to existing infrastructure, the process of confirming reserves, securing financing, and building out tie-back facilities will take years.

The broader ambition for Libya's gas sector adds another layer of complexity. The National Oil Corporation has set a target to raise its natural gas production over the next 5 years to around 1 Bscf/D. This goal, which requires massive investment and political stability, underscores the scale of the challenge. The country's gas reserves are vast, estimated at up to 80 trillion cubic feet, but unlocking them is a multi-year project. For context, Libya's current production is around 69 billion cubic feet per month, or roughly 2.3 billion cubic feet per day. The target implies a more than doubling of output, a trajectory that depends entirely on consistent investment and a stable operating environment.

The immediate period, 2026-2027, is critical for testing this trajectory. Eni currently has three development projects in execution in Libya, and two of them will start up in 2026. The performance of these existing projects will be a key indicator of whether the company-and the country-can translate plans into production. Success here would provide a model and cash flow for future ventures. Failure would reinforce the pattern of underutilized potential.

The bottom line is a gap between potential and execution. Eni's new discovery is a promising addition to its portfolio, but it is just one piece of a much larger puzzle. The path to meaningful export volumes requires navigating a five-year exploration phase, achieving a national production target that demands unprecedented investment, and demonstrating that new projects can come online on schedule. Until Libya can show it can manage these steps reliably, the commodity balance for Italian gas imports will remain constrained by the same old bottlenecks.

Catalysts and Risks: What Could Change the Commodity Balance

The path from discovery to a tangible shift in the gas export balance is paved with forward-looking factors that will determine whether Libya's potential is unlocked or remains stranded. The primary catalyst is political stability and security. Without a consistent, stable operating environment, the Greenstream pipeline will continue to face disruptions, and new projects like Eni's will struggle to secure financing and execute on schedule. The recent licensing round, which attracted international players for the first time in nearly two decades, is a positive signal of re-engagement. But that momentum is fragile and contingent on the country's ability to maintain security and governance, which are prerequisites for both consistent pipeline operations and new project development.

A key risk is that new discoveries like Eni's will remain stranded or underdeveloped if the Greenstream pipeline's capacity and reliability issues are not resolved. The pipeline's history of halts due to conflict is a critical vulnerability. Even if Libya produces more gas domestically and new fields come online, the system's ability to move that gas to European markets is capped by the pipeline's operational reliability. The discovery adds to reserves, but its value is locked behind a bottleneck that has plagued the sector for years. Until Libya can demonstrate it can run the Greenstream pipeline at significantly higher volumes for sustained periods, new production will face the same fate as past volumes: underutilized potential.

The specific target of 700 to 750 million cubic feet daily for gas production this year serves as a crucial benchmark for what's needed to make a real impact. This range, set by the National Oil Corporation, represents a meaningful step toward the longer-term goal of 1 billion cubic feet per day. Achieving it would signal that domestic production is ramping up and that the system can handle more volume. More importantly, it provides a concrete, near-term target for monitoring progress. Success here would be a prerequisite for the Greenstream pipeline to move beyond its current underutilized state and begin to contribute meaningfully to easing the export deficit.

The bottom line is that the commodity balance hinges on a sequence of events. Political stability is the first domino. If it falls, it could unlock investment and enable projects like Eni's Structures A&E to reach their target of 750 million cubic feet per day by 2027. If it doesn't, the pipeline's chronic underuse will likely persist, and new discoveries will remain stranded assets. For now, the thesis remains one of potential deferred by persistent risk.