For decades, Libya’s oil industry has been tightly controlled by the state-run National Oil Corporation (NOC), which managed production, exports, and revenue distribution. However, in a dramatic shift, private oil firms like Arkenu Oil Company have emerged, challenging the NOC’s monopoly. Arkenu, operating from eastern Libya, has exported over $600 million worth of crude oil since May 2024, signaling a potential transformation in the country’s energy sector.
While some view this as a necessary modernization of Libya’s oil industry, others see it as a politically motivated power play that could further entrench divisions and destabilize an already fragile economy. The rise of private oil entities raises critical concerns about revenue allocation, governance, and the role of military actors in Libya’s economic affairs.
Who Controls Libya’s Oil?
Oil has long been Libya’s economic lifeline, accounting for over 90% of state revenue. Historically, the NOC functioned as the central authority regulating oil production and ensuring that proceeds were deposited into the Central Bank of Libya (CBL) for national distribution. However, Libya’s prolonged political division—between the internationally recognized government in Tripoli (West) and the eastern-based administration allied with Khalifa Haftar’s forces—has created an opportunity for alternative players to step in.
Arkenu Oil Company, operating under the influence of eastern authorities, represents a direct challenge to the NOC’s supremacy. By exporting oil independently, it bypasses traditional state-controlled channels, raising fundamental questions: Who controls Libya’s oil wealth? Where do the revenues from private oil sales go? What does this mean for Libya’s economic future?
The Role of Military Figures in Oil Trade
One of the most controversial aspects of Libya’s privatized oil industry is the involvement of military figures. Arkenu’s operations are closely linked to Haftar's forces and family, particularly Saddam Haftar. This development suggests that the oil trade is not just about business—it is also about consolidating political and military power.
By gaining direct access to oil revenues, Haftar’s forces in the east no longer rely on Tripoli’s financial system to fund its operations. This shift could have profound consequences: Financial Autonomy for the East: If eastern authorities can independently generate and control oil revenue, they might establish a separate economic system, deepening Libya’s division. Less Leverage for Tripoli: The Government of National Unity (GNU) in Tripoli traditionally used oil revenues as a bargaining tool in negotiations with eastern factions. If the east can sustain itself financially, Tripoli’s influence diminishes. Risk of Parallel Economies: Competing oil sales could lead to the establishment of rival financial institutions, further fragmenting Libya’s economy.
The Impact on Libya’s Economy
While some argue that private oil firms introduce competition and efficiency, others warn of economic instability and corruption. Key concerns include: Loss of Centralized Revenue: The NOC ensures that oil income is deposited into the Central Bank of Libya, which then distributes funds for salaries, subsidies, and infrastructure projects. With private firms controlling exports, billions in oil revenue could go unaccounted for, depriving the state of essential funds. Risk of Sanctions: If private firms violate international agreements, Libya could face sanctions or restrictions from the UN and Western governments, deterring foreign investment. Fueling Armed Conflict: Oil revenue has historically funded militias and armed groups. If different factions control different revenue streams, competition for oil fields and ports could escalate into armed conflict. Foreign Involvement: The rise of private oil firms also attracts foreign players. Countries like Russia, the UAE, and Egypt, which have supported Haftar in the past, might strengthen their presence in Libya’s energy sector, leading to further geopolitical tensions.
What’s Next for Libya’s Oil Industry?
The growing influence of private oil firms suggests that Libya’s energy landscape is entering a new, unpredictable phase. Several scenarios could unfold: Legal and Diplomatic Challenges: The Tripoli-based government may push for international recognition of the NOC’s authority, pressuring buyers to reject oil from private firms. Increased Tensions Between East and West: With Arkenu and other private firms gaining traction, Libya’s political divide may deepen, leading to economic fragmentation. Negotiations for a Unified Oil Policy: Some stakeholders may advocate for a compromise between the NOC and private firms, allowing for regulated private-sector participation while maintaining state oversight.
A Fragile Balance
Libya’s oil industry is at a crossroads. The emergence of private firms like Arkenu Oil Company challenges the traditional state monopoly, raising both economic opportunities and political risks. While privatization could modernize the sector, the lack of transparency, political rivalries, and military involvement make this transition highly volatile.
If Libya fails to establish a clear regulatory framework, the unchecked rise of private oil firms could lead to economic chaos, political fragmentation, and renewed conflict. As Libya navigates this uncertain future, the question remains: Will the privatization of oil be a step toward progress, or a path toward further division and corruption?
