Libya's state-owned NOC has yet to draw on a $1bn revolving credit facility intended to finance projects that could raise crude production by 250,000-270,000 b/d, a source with direct knowledge of the arrangement told Argus.
Implementation has stalled over how the funding would be provided and the due diligence requirements attached to the facility, the source said.
Under the arrangement agreed in February, state-owned Libyan Foreign Bank (LFB) would issue letters of credit to upstream contractors working on NOC projects and later recover the funding from oil revenues.
But NOC wants part of the facility transferred directly to the company in cash rather than used to issue letters of credit to contractors, the source said.
The proposed projects involve eight NOC affiliates, including Agoco, Waha Oil and Sirte Oil. They could add 250,000-270,000 b/d within 18 months, the source said. This would cover a substantial part of the increase needed to meet NOC's longstanding target of raising crude production to 2mn b/d from around 1.4mn b/d.
Due diligence requirements have also contributed to the delay, according to the source. These include checks on companies and banks involved in the proposed projects.
"They don't want anybody else digging into these companies. They've spent six months trying to manoeuvre around these controls," the source said.
NOC was contacted for comment on the claims concerning its request for direct funding and the due diligence requirements.
NOC chairman Masoud Suleiman met LFB chairman Mohammed Ali Addarrat earlier this month. The meeting focused on financing mechanisms for several proposed NOC projects, including infrastructure development and increased storage capacity, NOC said.
The facility would represent a departure from NOC's usual funding model, under which contractors are paid using funds allocated by Libya's central government. NOC has repeatedly fallen behind on payments, making contractors including SLB and Halliburton reluctant to take on new work until outstanding debts are repaid, according to the source.
The head of a Libyan contracting firm said LFB wanted a clear "paper trail" to ensure the money was spent on the agreed projects.
"NOC has a recent track record of using money in other areas or to pay off debt as it's struggling to keep up with payments to services companies and contractors," he said. If NOC cannot persuade LFB to provide cash directly, it may have to "bite the bullet" and accept the bank's conditions, he added.
Emergency funding
The credit facility could also reduce NOC's reliance on irregular state funding.
Libya's oil export revenues are deposited in an NOC account at LFB before being transferred to the central bank. The central bank, which owns LFB, is responsible for allocate funds to NOC for operating and development expenditure through the state budget.
But years of political division between rival eastern and western authorities have left NOC without a formal budget, forcing it to rely on sporadic emergency funding from the central bank.
"NOC received around something like $12bn from the central bank in emergency funding between 2022 and 2025," said Jalel Harchaoui, a Libya specialist at the UK's Royal United Services Institute. "This is a serious sum, but it is not clear how this money was spent."
Oil revenues deposited at LFB totalled $15.8bn in the first seven months of this year, according to the Libyan Audit Bureau.
NOC periodically transfers most of its dollar revenues to the central bank but retains a working balance at LFB, giving it limited control over part of the proceeds. It draws on that account to pay for oil product imports.
A direct transfer from the credit facility would give NOC greater control over the funding. It would echo a 2024 proposal by former NOC chairman Farhat ben Gudara for the company to draw directly on its oil earnings and set its own budget, bypassing the state budget and central bank funding process.
