Italy Wants More Libyan Gas. Libya Needs More Gas First.

In late August, reports emerged that Italian energy group Eni had asked the Mellitah Oil & Gas joint venture to boost Libyan gas exports to Italy by 20 percent ahead of winter. The request purportedly sought to lift annual volumes from approximately 1.4 billion cubic metres (bcm) to 1.68 bcm, raising daily flows through the Greenstream pipeline from 3.84 million to 4.6 million cubic metres.

Eni officially denied making the request days later. Yet whether the 20 percent figure was a formal demand, an internal target, or simply a miscommunication, the episode exposes a hard reality in the Mediterranean energy market. Libyan gas is growing in strategic importance, but the country’s ability to supply it remains tightly constrained.

Italy’s persistent interest reveals a structural tension within the. Tripoli wants to anchor itself as a vital energy supplier to Europe. Domestically, however, electricity demand is already competing fiercely with export commitments. Ultimately, Libya does not have an Italy problem. It has a gas supply and problem.

Why Can’t the Greenstream Pipeline Simply Send More Gas to Italy?

Discussions about Libyan gas exports inevitably center on the Greenstream pipeline, the 520-kilometer subsea link connecting the Mellitah complex on Libya’s western coast to Sicily. The pipeline gives Libya a structural advantage: a direct physical route into the European market, bypassing the need for capital-intensive liquefied natural gas (LNG) terminals.

But the pipeline is not the bottleneck. A pipeline can only move available gas. If domestic power generation absorbs rising output, spare export capacity means little. The central question for investors and policymakers is whether Libya has the upstream production and midstream processing capacity to satisfy both Italy and itself.

How Much of Libya’s Gas is Kept for Domestic Electricity Versus Exported to Europe?

Libyan gas serves two fiercely competing markets. The first is Europe, where geographic proximity and a drive to replace Russian pipeline gas have elevated the strategic value of Mediterranean supplies. For Libya, this offers a generational opportunity to maximize export revenues.

The second market is Libya itself. Gas here is not just an export commodity; it is the primary fuel that keeps the domestic electricity grid running. Growing domestic power demands put immense pressure on available supplies.

Libya’s National Oil Corporation (NOC) has repeatedly pointed to this tension. In July, the NOC noted that gas exports to Italy via Greenstream accounted for no more than 10 percent of Eni’s partner share. The vast majority of the gas was purchased by the NOC and redirected to keep Libya’s own power sector online.

What Infrastructure Does Libya Need to Actually Increase Gas Production?

This domestic absorption explains why Libyan gas exports to Italy fell to roughly 105 million cubic feet per day in 2025 — a 22-year low — even as the NOC set ambitious targets for higher output.

The fix is not to cut exports, but to expand the supply base. Capitalizing on European demand requires across the entire gas value chain: exploration, offshore production, compression, processing, gathering, transmission, and domestic distribution. The true economic opportunity lies in building the heavy infrastructure required to extract and process those molecules in the first place.

What is the Sabratha Compression Project and How Does It Help Libya’s Gas Output?

The Sabratha Compression Project, launched by Eni and the NOC in June, illustrates this infrastructure imperative. Designed to add roughly 800 million cubic metres per year from the mature offshore Bahr Essalam field, the project highlights a key operational reality. As offshore fields age and reservoir pressures decline, compression becomes critical to maintaining production. Boosting Libya’s gas output requires deploying capital to sustain and optimize existing fields, not just discovering new reserves.

Will the $8 Billion Offshore Gas Deal Between Eni and Libya’s NOC Actually Happen?

The broader framework for this expansion is the $8 billion offshore gas development agreement signed between Eni and the NOC in January 2023. Implemented via the Mellitah joint venture, the deal aims to expand production for both local use and European export. Its centerpiece is the development of the Structures A&E offshore fields, which target up to 750 million standard cubic feet per day at plateau.

Investors, however, must distinguish between resource potential and exportable surplus. A larger gas supply requires years of capital deployment, construction, and commissioning. European demand creates a commercial incentive, but execution dictates whether Libya can actually respond.

How Do Local Protests in Libya Affect European Energy Security?

Strategic value does not automatically guarantee reliable supply. In early September, protests at the Mellitah complex temporarily shut down the facility that feeds Greenstream.

The disruption is a stark reminder to European buyers and international investors: a domestic grievance in Libya can instantly become a European risk. The investment calculation goes beyond subsurface reserves. It hinges on whether production can continue uninterrupted, whether infrastructure can withstand local unrest, and whether long-term contracts can survive political volatility. Reliability must be built and protected.

Can Libya Produce Enough Gas to Supply Both Its Own Power Grid and Italy?

The debate is frequently framed as a zero-sum calculation: export gas to Italy, or keep it for Libya’s power grid.

That is the wrong framework. Libya needs to figure out how to expand production enough to serve both markets simultaneously. Reallocating scarce existing gas between domestic power stations and European pipelines simply manages scarcity. Investing in upstream production, compression, and midstream infrastructure expands the economic pie.

Italy’s demand for energy is effectively an external test of Libya’s investment model. Can Tripoli convert its vast subsurface resources into reliable economic value?

What Should Energy Investors Watch for Next in Libya’s Oil and Gas Sector?

As Libya attempts to balance these competing demands, several indicators will signal whether the required infrastructure is advancing:

• Upstream execution: Progress on the Structures A&E offshore development and the production performance of the Bahr Essalam field.

• Infrastructure delivery: The timely completion of the Sabratha Compression Project and the operating continuity of the Greenstream pipeline.

• Domestic energy balance: Electricity-sector demand and shifts in how the NOC allocates gas between domestic power generation and international exports.

• Commercial agreements: New investment announcements from the Eni/NOC partnership and the signing of any new gas development deals.

• Risk factors: Localized protests affecting critical infrastructure like Mellitah or institutional changes impacting international operators.

The Bottom Line: Can Libya Solve Its Domestic Gas Shortage to Supply Europe?

Whether Eni formally requested a 20 percent increase in Greenstream flows or not, the strategic reality is unchanged. Italy has an established energy connection to Libya, Libya holds substantial underdeveloped gas resources, and Europe maintains a deep interest in reliable Mediterranean energy supplies.

Yet Libya cannot sustainably expand its gas exports without first solving its own domestic supply constraints. Italy may want more Libyan gas, but Libya’s real challenge is producing enough to make that possible without leaving its own power system in the dark. The true investment opportunity in Libya is not simply exporting more gas — it is financing, building, and protecting the upstream and midstream infrastructure that allows the country to power its own future while fueling Europe’s.