Libya's oil sector needs institutional reform to achieve production targets, not just more funding

According to Naaman Elbouri, a leading Libyan banker, the primary challenge is not a lack of capital but the institutional structure of Libya's oil sector. Currently, the NOC and its subsidiaries rely almost entirely on government funding, lacking the independence to secure commercial loans or access capital markets. To achieve the production target, Elbouri suggests transforming the NOC into an independent state-owned holding company, similar to Sonatrach or Saudi Aramco.

This would allow it to manage investments independently, operate on commercial principles, and pay royalties and taxes to the state. Additionally, producing subsidiaries should become financially independent corporate entities with their own balance sheets and governance structures, enabling them to raise capital through commercial means. This transformation would create a more efficient, transparent, and sustainable oil sector, reduce pressure on public finances, and attract investments, allowing the sector to finance its own growth.

Elbouri emphasizes that this is not about privatization, as ownership of Libya's natural resources would remain with the state, but rather about modernizing the sector's governance and financial structure.