Libya Sharpens Upstream Offering as Regional Bid Rounds Intensify in 2025–26
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With North Africa and the wider Mediterranean launching new acreage and courting upstream capital, Libya’s 2025 Licensing Round has emerged as one of the region’s most competitively structured offerings. The round – the country’s first in nearly two decades – showcases an upgraded fiscal and contractual framework that compares favorably with its peers and signals Libya’s intent to regain ground in the investment landscape ahead of the 2026 Libya Energy & Economic Summit.
What Libya’s 2025 Round Offers
Launched in March 2025, the round includes 22 blocks across the Sirte, Murzuq and Ghadames basins, as well as prospective offshore zones in the Mediterranean. At its center is the “fifth-generation” EPSA V, which replaces the older EPSA-IV model and significantly improves contractor economics.
Under EPSA V, contractor internal rates of return (IRRs) rise to as high as 35.8%, compared with approximately 2.5% under the previous regime. The restructuring removes the restrictive ‘B-Factor’ mechanism and introduces a more predictable sliding R-Factor tied to the A-Factor profitability range. Cost recovery is streamlined through a “two-bucket” system that accelerates payback, while NOC’s assumption of tax payments reduces fiscal complexity and administrative overhead. Taken together, these changes create a more transparent and commercially compelling environment for upstream investment.
How Libya Compares with Regional Peers
Algeria’s upstream regime under the 2019 Hydrocarbon Law, as applied in the 2024 bid round, offers a mix of participation contracts, PSCs and risk service contracts. Projects are subject to multiple fiscal layers, including a hydrocarbon royalty (typically 10%), a hydrocarbon‑revenue tax (ranging from 10–50% depending on project profitability), a 30% corporate income tax and a 30% tax on contractor remuneration under PSCs or RSCs. While flexibility exists – such as reduced rates for technically challenging or high-cost projects – the layered nature of royalties, taxes and fees means net returns to contractors vary considerably by project, and fiscal complexity can be a constraint.
For other regional peers such as Egypt, which launched new offshore acreage as recently as last month, some concession agreements have been renegotiated to enhance commercial terms, including higher cost‑recovery allocations and longer license durations, with certain deals offering up to 40% cost‑oil allocations and profit‑oil shares in the high-20% range. However, many agreements continue to operate under traditional PSA terms with tiered profit splits and more rigid cost‑recovery rules than Libya’s updated EPSA V.
Implications for 2026
Libya’s higher IRRs, transparent fiscal terms and accelerated cost recovery materially strengthen its competitiveness at a time when investors are weighing opportunities across the Mediterranean and North Africa. The country’s existing midstream and export infrastructure, combined with proximity to European markets, further enhances project viability and development timelines.
Against this backdrop, the 2026 Libya Energy & Economic Summit (January 24–26, Tripoli) is set to play an important role. The event will convene investors, government leaders, the NOC and service providers to translate Libya’s fiscal and contractual advantages into actionable partnerships and development strategies. For international oil companies assessing multi-country portfolios, the summit represents a key moment to evaluate how Libya’s updated terms compare regionally and how its upstream offering aligns with corporate investment priorities.