Eni's Libyan Gamble: Big Gas Rewards Amid Political Risks

Italian oil giant Eni is doubling down on Libya, where it is pushing forward with a slate of major gas projects and exploring new opportunities in the country’s first international bid round in 18 years. The move represents a high-stakes bet for Eni, which aims to capitalize on Libya’s vast energy potential while navigating a complex web of political instability, rival factions, and geopolitical competition.

The Projects Powering Eni’s Libyan Play

Eni’s current focus revolves around three core projects, all critical to boosting gas production and reducing emissions:

1. Sabratha Compression: This project, targeting completion by year-end, aims to enhance output at the Bahr Essalam gas field by reducing flaring. It’s a key part of Libya’s plan to stabilize gas supplies amid domestic demand growth.
2. Bouri Gas Development: Drilling began in April 2025, with production expected to start in 2026. This offshore project is designed to unlock reserves in the Sirte Basin, a region Eni has long eyed for expansion.
3. Bahr Essalam A&E Structures: Offshore drilling here has also started, with engineering underway to link gas fields to processing facilities. The project includes CO₂ capture infrastructure, reducing emissions by 2 million tons annually.

These initiatives are underpinned by Eni’s decades-old partnership with Libya’s National Oil Corporation (NOC) through their joint venture, Mellitah Oil and Gas BV. In 2024, Eni produced an average of 176,000 barrels of oil equivalent per day (BOE/d) in Libya, making it the country’s top international gas producer.

The Bid Round: A $24 Billion Gamble

Libya’s 2025 bid round, offering 22 exploration blocks, marks a pivotal moment for Eni. The country aims to double oil production to 2 million BOE/d by 2025, a goal that hinges on attracting foreign investment. Eni has already signaled interest in the Sirte and Ghadames basins, where it plans four exploration wells this year.

The bid round also pits Eni against rivals like BP and Turkey’s TPAO, which are eyeing the same opportunities. Success here could unlock billions in value: Eni has allocated €8 billion to Libya as part of a €24 billion North Africa investment plan through 2029.

The Risks: Political Chaos and Foreign Interference

Despite the promise of Libya’s energy bounty, Eni faces significant risks. The country remains fractured between rival governments—the Tripoli-based GNU and the Tobruk-based HoR—and militias like Khalifa Haftar’s Libyan National Army (LNA), which controls key oil regions.

Foreign actors are also vying for influence:
- Russia: Provides Haftar with arms and infrastructure projects, complicating stability.
- China and Turkey: Seeking footholds in Libya’s energy sector, potentially crowding out Western firms.
- Italy’s “Mattei Plan”: Positions Eni as a linchpin for European energy diversification, but risks entangling the company in local politics.

The U.S. and EU have imposed sanctions on Libyan kleptocrats, but enforcement remains inconsistent. Analysts warn that without a political settlement, Eni’s projects could be disrupted by factional violence or contract disputes.

Why This Matters for Investors

Eni’s Libyan bet is a microcosm of its broader strategy: leveraging its legacy in mature markets to secure growth in high-risk, high-reward regions. The company’s success here could:
- Boost gas output: Libya’s reserves could help Europe reduce reliance on Russian gas, a priority for Italy’s government.
- Drive ESG progress: Projects like CO₂ capture at Bahr Essalam align with Eni’s net-zero goals.
- Mitigate geopolitical risk: Diversifying energy supply chains amid global instability.

However, investors should note:
- Execution risks: Libya’s history of delays and sabotage could push project costs higher.
- Macroeconomic headwinds: Global gas prices remain volatile, affecting Eni’s margins.

Conclusion: A High-Reward, High-Risk Play

Eni’s push into Libya is a calculated gamble. The projects underway—Sabratha Compression, Bouri Gas, and the CO₂ capture initiative—are on track to deliver 5.5 million tons of annual emissions reductions and 750 million cubic feet of daily gas production by 2026. The bid round could unlock even more value, but only if Libya’s political chaos stabilizes.

For investors, Eni’s Libya exposure adds both upside and volatility. The company’s deep local ties and $24 billion commitment suggest it’s in for the long haul, but the jury is still out on whether the rewards will outweigh the risks. With €8 billion already earmarked, Eni is betting that Libya’s energy potential—and Europe’s need for secure gas supplies—will ultimately triumph over its political pitfalls.

Final Take: Eni’s Libyan projects are a core part of its growth strategy, but success hinges on navigating a minefield of political and operational challenges. For now, the jury is out—but the stakes are undeniably high.