Navigating the Greece-Libya EEZ Dispute: Energy Opportunities Amid Geopolitical Tensions

The Greece-Libya maritime dispute has become a defining flashpoint in the Eastern Mediterranean, with profound implications for energy markets, geopolitical stability, and investor confidence. As of 2025, the conflict remains unresolved, with both nations entrenched in legal and diplomatic battles over maritime boundaries. Yet, beneath the tension lies a tantalizing opportunity: the potential to unlock vast hydrocarbon reserves that could reshape regional energy dynamics—and reward investors who navigate the risks with strategic foresight.

The Stakes: Hydrocarbon Potential and Geopolitical Fault Lines

The waters south of Crete, a focal point of the dispute, are estimated to hold significant natural gas and oil reserves. While precise figures remain elusive, the U.S. Geological Survey (USGS) has identified the Levant Basin (adjacent to the contested area) as containing up to 3.5 trillion cubic meters of gas and 1.7 billion barrels of oil. Greece has issued exploration permits in two offshore blocks—“Crete 1” and “Crete 2”—covering 23,300 square kilometers, claiming these areas fall entirely within its EEZ under UNCLOS principles. Libya, however, asserts that 85% of these blocks overlap with its own EEZ, as defined by the 2019 Turkey-Libya maritime memorandum.

The dispute is not merely legal but deeply geopolitical. Turkey's alignment with Libya has amplified tensions, with Ankara providing diplomatic and military backing to Tripoli. Meanwhile, Greece has sought to counterbalance this by strengthening ties with Egypt and Italy, signing bilateral EEZ agreements in 2020. These moves have created a complex web of overlapping claims, with multinational energy firms like ExxonMobil, Chevron, and Total closely monitoring the situation.

Diplomatic Deadlocks and the Path to Resolution

Despite escalating rhetoric, both Greece and Libya have expressed openness to dialogue. Greek Foreign Minister George Gerapetritis has engaged with rival Libyan factions, urging the rejection of the 2019 Turkey-Libya agreement. However, Libya's eastern parliament, aligned with Khalifa Haftar, is reportedly considering ratifying the memorandum, complicating prospects for a swift resolution. The EU has condemned the Turkey-Libya agreement as illegal under UNCLOS but has struggled to unify its members on a cohesive strategy, with some nations prioritizing energy security over diplomatic pressure.

A potential breakthrough could emerge through a bilateral agreement between Greece and Libya based on the principle of equidistance, a common method for EEZ delimitation under international law. Such an agreement would not only resolve the current dispute but also set a precedent for regional cooperation. Trilateral talks involving Egypt, Greece, and Libya could further de-escalate tensions, particularly as Egypt's Zohr gas field (845 bcm) has already transformed the country into a regional energy hub.

Investment Implications: Balancing Risk and Reward

For investors, the Eastern Mediterranean presents a paradox: high potential but high uncertainty. The involvement of major energy firms in seismic surveys and exploration bids signals confidence in the region's hydrocarbon potential. However, legal disputes and geopolitical volatility pose significant risks.

1. Energy Infrastructure as a Hedge: While direct investment in exploration projects in contested waters remains speculative, infrastructure tied to stable regional partners—such as Egypt's Zohr field or Greece's planned interconnector with Cyprus—offers a safer bet. These projects are less vulnerable to diplomatic shifts and align with Europe's urgent need for energy diversification.
2. Diplomacy as a Catalyst: Investors should closely monitor the next Greece-Turkey High Council meeting (scheduled for September 2025) and Libya's internal political dynamics. A resolution to the dispute could unlock billions in investment, as seen in the 2020 Greece-Egypt agreement, which spurred infrastructure funding and cross-border energy partnerships.
3. Long-Term Energy Transition Synergies: Even as hydrocarbon exploration continues, the Eastern Mediterranean is emerging as a leader in renewable energy. Greece's solar and wind projects, coupled with Egypt's green hydrogen ambitions, could create a diversified energy corridor. Investors with a long-term horizon might consider hybrid opportunities that pair traditional energy with renewables.

Strategic Recommendations for Investors

• Short-Term: Prioritize investments in energy infrastructure projects with clear regulatory frameworks, such as Egypt's Zohr field or Greece's LNG terminal upgrades. These projects are less exposed to geopolitical risks and align with EU energy security goals.
• Mid-Term: Monitor the progress of Greece's offshore tender for the Crete 1 and 2 blocks. If the dispute remains unresolved, consider hedging against volatility by investing in energy companies with diversified regional portfolios, such as Eni or Total.
• Long-Term: Position for a post-dispute energy landscape by supporting renewable energy ventures in the Eastern Mediterranean. The region's solar potential and strategic location make it a prime candidate for green energy corridors linking Europe, Africa, and the Middle East.

Conclusion: A Tipping Point for the Eastern Mediterranean

The Greece-Libya EEZ dispute is more than a territorial squabble—it is a test of whether the Eastern Mediterranean can evolve into a stable energy hub. For investors, the key lies in balancing the risks of geopolitical instability with the rewards of a region brimming with hydrocarbon and renewable potential. As diplomatic efforts gain momentum, the coming months could determine whether the Eastern Mediterranean becomes a model for regional cooperation—or a cautionary tale of unresolved tensions.

In the end, the region's energy future will depend not just on oil and gas, but on the ability of nations to negotiate a shared vision for stability and prosperity. For those willing to navigate the complexities, the rewards could be transformative.