Sleeping Oil Giant Awakens
Why Every Oil Major Is Racing Into Africa's Most Dangerous Market
In case you missed it, here is the previous article:
Dear Merchants,
Every single oil supermajor just entered Libya simultaneously for the first time in 18 years. They’re going all in on a country that lost 700,000 barrels per day of production.
That’s not normal. That’s not conservative oil company behavior. That’s blood in the water, and the sharks are circling.
Let me show you why this matters for your portfolio and why the next months will determine whether this becomes the decade’s most profitable energy play or an absolute bloodbath.
Libya holds 48 billion barrels of proven oil reserves the largest in Africa. Production costs sit between $1 and $3 per barrel. Read that again. While deepwater Gulf of Mexico wells cost $10+ per barrel and North Sea projects run $20, Libya can pump crude for less than your morning coffee.
When Chevron CEO Mike Wirth stood in front of investors in November 2025 and called Libya one of several “intriguing opportunities for entering new countries,” he wasn’t being polite. He was telegraphing a strategic shift. Chevron doesn’t do “intriguing” for fun they do it when the economics scream.
And the economics are screaming.
The National Oil Corporation just launched its 1st exploration licensing round since 2007, offering 22 blocks with an estimated 18 billion barrels of undiscovered resources. 37 companies prequalified to bid. Winners get announced between February and March 2026. The terms? A complete overhaul of the old production sharing agreements that previously strangled returns.
The new framework eliminates the restrictive factor profitability cap, allows immediate cost recovery and profit sharing from day 1, and critically the NOC assumes contractor tax obligations. Shell, ENI, and the rest wouldn’t be flooding into Tripoli if the deal structure didn’t work. These aren’t charitable organizations 😂
But here’s where it gets interesting and dangerous.
General Khalifa Haftar controls eastern Libya like a medieval fiefdom. He sits on top of the Sharara field producing 300,000 barrels daily, the El-Feel field pumping 90,000 barrels, and the crown jewel Sirte Basin infrastructure. The UN recognized government in Tripoli has legal authority. Haftar has the guns and the oil fields.
In August 2024, he demonstrated exactly what that means. When Tripoli and the eastern administration couldn’t agree on central bank governance, Haftar shut down Sharara and El-Feel for 5 weeks. Production collapsed from 1.15 million barrels per day to 450,000. Brent crude spiked. European refineries scrambled. And Haftar made his point: You want oil? Negotiate with me.
Then in May 2025, he threatened force majeure declarations on multiple export terminals. The message was clear eastern Libya is a political weapon.
Now here’s the geopolitical twist that connects everything: Russia just moved in.
When Bashar al-Assad’s regime collapsed in Syria last December, Russia lost its Mediterranean military bases practically overnight. Naval assets at Tartus, air force installations at Hmeimim gone. For the Kremlin, this wasn’t just embarrassing, it was strategically catastrophic. Russia’s entire Mediterranean power projection depended on Syrian infrastructure.
So Moscow pivoted. Hard.
Russian naval assets redeployed from Syria directly to eastern Libya. The Africa Corps formerly Wagner mercenaries embedded with Haftar’s forces. Weapons, logistics networks, technical expertise in irregular warfare all flowing into eastern Libya.
Haftar, who understands leverage better than most, welcomed them with open arms.
Because here’s Haftar’s calculation Russian military support keeps Tripoli at bay and Turkish-backed militias in check.
But it’s dependence based leverage. Strip away Russian backing and Haftar’s inflated power collapses. Moscow knows this. Haftar knows Moscow knows this. It’s a relationship built on mutual blackmail which means it’s stable until it violently isn’t.
For oil majors writing billion dollar checks, this creates a fascinating problem. Every barrel produced in eastern Libya flows through infrastructure Haftar controls, backed by Russian military hardware, while being sold under contracts authorized by a Tripoli government Haftar doesn’t recognize.
That’s a hostage situation with production sharing agreements.
Let’s break down exactly how the majors are playing this because their strategies reveal what they actually believe versus what they’re saying publicly (+ 💰 The Merchant’s News)
