The economic development in Libya is strongly influenced
by the effects of the 2011 war. It caused material
destruction, especially on the country's infrastructure, but
most of all, to the point that central, state functions
ceased to exist. In addition, the war and regime change
resulted in a persistent absence of security and stability,
which are prerequisites for planned economic activity and a
functional business sector. Since 2011, the country has been
the scene of a power struggle between various groups, with
rival governments in Tripoli in the west and Benghazi in the
COUNTRYAAH, Libya's economy is strongly linked to the extraction of
oil, which in the second half of the last century
transformed Libyan society completely. Before oil recovery
began in the late 1950s, Libya was one of the world's least
developed countries, and then to the highest standard of
living in Africa. Political prioritization of the education
and health sector following the military coup in 1969
contributed to the development, which included significant
industrialization based on petroleum activities. At the same
time, strong urbanization took place.
Muammar al-Gaddafi implemented extensive modernization,
but also pursued an unpredictable policy, which partly
promoted and partly hampered economic development. Among
other things, his radical and anti-imperialist policies,
including support for terrorism, led to conflicts with
several Western countries. The United States, as well as the
EU and the UN, imposed sanctions on Libya in the 1980s, some
of which were not repealed until 2004. The sanctions
prevented a long-awaited modernization of the oil industry
and led to a lack of capital, which made it difficult to
finance development measures. In addition to the sanctions,
the fall in oil prices from the mid-1980s led to virtually
all development projects being put on ice.
The destabilization of Libya as a result of the 2011 war
has led to sharply reduced state revenues, primarily due to
reduced oil recovery, in part because much of this occurs in
the eastern part of the country, which the Tripoli
government lost politically and military control over.
A consequence of the political situation is also that
economic, and other statistics, are deficient. Prior to the
war, Libya had strong economic growth (an estimated 10.6
percent increase in gross domestic product in 2010). The war
led to a sharp decline in 2011 (estimated at minus 62.1 per
cent), ahead of a strong upswing in 2012 (104.5 per cent).
Subsequently, the subsequent civil war has again led to a
Libya until the oil recovery began in the 1950s, and
capped in 1969, a traditionally bound agricultural
community. In Roman times, Libya was a grain chamber. Under
Italian colonial rule in the first half of the 20th century,
immigration from Italy took place, with investment in
agriculture. After World War II, Libya became an independent
monarchy, but King Idris contributed little to
Following the 1969 military coup and the subsequent
revolution led by Muammar al-Gaddafi, Libya pursued a
socialist- oriented policy, with strong state participation
also in economic life, and limited opportunity for private
business. The vital oil industry was nationalized in 1970.
Throughout the 1990s, economic liberalization took place,
which opened up for private ownership, also through the
privatization of state property. In the first half of the
2000s, relations with Western countries, including the
United States, Italy and France, improved, with increased
foreign participation in the Libyan economy as a result.
The Norwegian oil company Saga Petroleum received
licenses in the Libyan oil sector in the 1990s (later
acquired by Norsk Hydro, then Statoil), and in 2009 the
fertilizer company Yara bought into a Libyan mineral
Mining and energy
The petroleum sector has been completely dominant in the
Libyan economy for more than half a century. It has
traditionally accounted for around 95 percent of Libya's
export revenue, but was somewhat lower before the war. The
sector accounts for between 50 and 60 per cent of the
After the war in 2011, oil production has varied greatly,
influenced by the security situation. For example, oil
recovery went from around 500,000 barrels per day in June
2018 to 1.3 million barrels in November of that year. Parts
of the Libyan oil reserves and recovery are located in areas
east and south of the country, which are controlled by
militia groups. This also applies to the Sirtegulfen, which
is the core area for oil extraction and export. Several oil
companies are active in Libya, but the state-owned National
Oil Corporation (NOC) is the dominant player.
Libya has the largest known oil deposits in Africa, and
the 9th largest in the world; in 2017, an estimated 48.4
billion barrels. Libya also has the world's 22nd largest
natural gas presence, with 1500 billion cubic meters in
proven reserves (OPEC).
The first major discoveries of oil in Libya were made in
1956, and then exports started in 1961. With the closure of
the Suez Canal in 1967, the country's oil became attractive
through lower transport costs than from the Gulf, which is
still an advantage. At the same time, Libya's oil is
affordable to produce and of good quality, which has made
the country's deposits attractive to both production
companies and importers.
After the major oil fields, especially at Amal and
Zelten, were found from 1959, production and exports
increased rapidly. Prior to the 1969 revolution, Libya was
the world's fourth largest exporter of crude oil. The policy
that was then pursued, with nationalizations in 1970, led to
a decline in investment and gradually in production. From a
daily production of 3.3 million barrels at most (1970), it
was reduced to 1.5 million barrels in 1975.
Around 90 per cent of the oil is sold to European
countries, most to Italy, Germany and Spain. Gas is exported
to Italy: A subsea pipeline to Sicily was opened in 2004 as
a gateway to the European market. Libya was one of the first
countries in the world to start liquefied natural gas (LNG)
exports in 1971. The plant for LNG production was destroyed
during the war in 2011, and exports ceased.
Libya has few known viable deposits of other minerals.
Commercial extraction of iron ore in the south of the
country, estimated at 700 million tonnes, requires the
construction of a capital-intensive, 900-kilometer long
railway to the coast.
The electricity supply infrastructure was hit hard by the
war in 2011. Both power plants and parts of the electricity
grid were destroyed. Available production capacity was 4.9
GW in 2017, while demand is estimated at 6.5 GW.
In 2016, the consumption of electrical energy was 29.5
TWh. Around 49 per cent of the power is produced in combined
power plants, while gas turbine plants account for 40 per
cent. 11 per cent comes from ordinary thermal power plants,
which use oil as fuel.
Until oil recovery became the dominant economic sector
from around 1960, agriculture was the basis of the Libyan
economy. As late as 1970, nearly half of the working
population in this sector worked, many as nomads. At the end
of the millennium, the proportion had dropped to about 15
Most of the land area is desert, and the remainder can
only be used for grazing. Only about 1.4 percent is
cultivable, and about one percent is cultivated. Of this,
about a tenth becomes the artificial water. The authorities
gave high priority to agriculture before the war, and a
number of irrigation projects were initiated. The largest of
these was aimed at pumping six million cubic meters of water
per day from sub-Saharan wells to the coastal agricultural
areas, through a 2000 km long pipeline network, in a project
that has not been completed.
Animal husbandry is still an important source of income
for many farmers, especially in Kyrenaika. Sheep, goats,
camels and cattle, as well as horses, donkeys and mules -
are kept especially for the production of milk and meat, as
well as for transport. The dominant crops in agriculture are
wheat and barley, but olives, peanuts, citrus fruits,
almonds, potatoes and vegetables are also produced, which
are mostly grown in the coastal oases. Dates are grown in
the coastal oases and in Fezzan; tobacco in Tripolitania.
There are significant offshore fisheries, but the fishing
is mainly operated by Greek, Maltese and Italian boats,
under license and for export.
Libya depends on importing food. Domestic production
normally accounts for only a quarter of total needs.
Libya's industrial development is linked to oil and gas
extraction, including three oil refineries. In addition,
other petrochemical industries were also established. Steel
mills and cement mills were also established. During the
sanctions in the 1990s, a number of new industrial companies
were started, primarily in Tripoli and Benghazi. The
industry is dominated by food products.
The state of the industrial sector is variable as a
result of the war and the security situation, and a number
of enterprises have been destroyed or are producing with
Transport and Communications
The road network is best developed in the coastal areas,
with an 1170 kilometer long main road along the coast,
towards the borders of Egypt and Tunisia, through Tripoli
and Benghazi. There has been no railroad in Libya since the
line between Benghazi and Barce was closed in 1954.
Construction of links east to Egypt and west to Tunisia, as
well as south of the country, has been planned.
International airports can be found at Tripoli (Ben Gashir)
and Benghazi (Benina). Tripoli is the largest port city.
Other important port cities are Benghazi, as-Sider, Port
Brega (Marsa al-Brega) and Misurata.
Oil exports have given Libya large profits in foreign
trade, although revenues have fluctuated strongly with
production volumes and market prices. Crude oil sales
normally account for around 95 per cent of foreign exchange
revenues. The main trading partners are Italy, Germany and