Oil Majors Shell and BP Resume Energy Projects Across Libya

Shell plc SHEL and BP p.l.c. BP have signed agreements with Libya's National Oil Corporation (“NOC”) to assess hydrocarbon potential across three major oilfields. This move marks a significant revival of foreign energy interest in Libya, which has faced years of instability following the fall of Muammar Gaddafi in 2011. The country, Africa’s second-largest oil producer, aims to attract global energy giants despite ongoing challenges from internal factional disputes.

Shell to Assess Atshan Oilfield Potential

Shell, currently carrying a Zacks Rank #3 (Hold), has signed a memorandum with NOC to evaluate hydrocarbon prospects at the Atshan oilfield and other NOC-controlled areas. The company will lead a full-scale technical and economic feasibility study for future development opportunities.

BP to Reopen Tripoli Office and Explore New Frontiers

In a parallel development, BP will reopen its Tripoli office by the end of 2025, signaling a firm commitment to its renewed exploration ambitions. The British energy giant, which recently shifted its focus from the unsuccessful low-carbon strategy back to fossil fuels, signed a memorandum of understanding to explore the revival of two major oilfields in Libya.

The company will now conduct studies on the Messla and Sarir oilfields and nearby exploration areas to assess Libya's potential in "unconventional" hydrocarbons, such as shale oil and gas. This requires advanced technologies like hydraulic fracturing to extract hydrocarbons trapped in porous rock formations.

Political Disruptions in Libya Since 2011

Libya, a member of the Organization of the Petroleum Exporting Countries and home to Africa’s largest proven crude reserves, is working to attract international oil majors back into the country. The effort comes amid ongoing political instability following the 2011 overthrow of longtime leader Muammar Gaddafi. The nation remains divided between two rival governments that often clash over control of its underfunded oil sector.

Since the civil war, Libya’s oil production has been highly unstable, plummeting from around 1.8 million barrels per day (bpd) to just 100,000 bpd in 2011. Although recent output has hovered between 1.2 million bpd and 1.3 million bpd, it has been marked by significant fluctuations. The country is now aiming to increase production to 2 million bpd within the next few years.

Beginning last year, major international energy companies, including BP, Italy’s Eni, Spain’s Repsol and Austria’s OMV, resumed drilling activities after nearly a decade-long halt that began in 2014. Libya has also launched its first oil and gas exploration tender since the civil war, signaling a renewed push to revive its energy sector.

Opportunities Accompanied by Significant Risks

BP’s original agreement with NOC dates back to 2007 but was suspended due to force majeure during Libya’s civil unrest. The force majeure was lifted in 2023, enabling onshore exploration to resume. BP continues to hold a 42.5% stake in the venture, alongside Eni (42.5%) and the Libyan Investment Authority (15%).

For BP and Shell, this resurgence into Libya’s oil market represents a chance to tap into a market where competition is limited. However, the opportunities are accompanied by significant risks as the armed forces continue to disrupt production and political fragmentation remains unresolved, leading to volatility in operations.

Key Picks

Investors interested in the energy sector might look at some better-ranked stocks like BKV Corporation BKV and Flotek Industries, Inc. FTK. BKV and Flotek currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

BKV Corporation is an energy company that produces natural gas from its owned and operated upstream businesses. The Zacks Consensus Estimate for BKV’s 2025 earnings indicates 338.18% year-over-year growth.

In the oil and gas sector, Flotek serves major and independent energy producers and oilfield service companies, both domestic and international. The Zacks Consensus Estimate for FTK’s 2025 earnings indicates 64.71% year-over-year growth.

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This article originally published on Zacks Investment Research (zacks.com).

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