Libya struggles with rising fuel costs and subsidies as it works to restore industrial capacity, including methanol production at the Sirte refinery.
Libya's fuel costs and subsidies challenge
Libya continues to face a heavy financial burden from importing fuel while also spending a large portion of its budget on fuel subsidies. These costs have grown significantly over recent years, complicating the country's economic recovery.Resuming methanol production in Brega
In Brega, the Sirte Oil and Gas Production Company is working to restore its industrial facilities. On October 25, the National Oil Corporation (NOC), which owns this company, announced that it had restored full operation of two methanol units at its refinery.Efforts to restore production after years of shutdown
This development follows several years of shutdowns and a series of efforts aimed at gradually restoring production capacity. The resumption occurred after a general maintenance operation and the replacement of the control system for the second unit, according to the NOC.Restart after long-term shutdown and upgrades
The second methanol unit had been shut down in 2018 and had only resumed production in October 2025. Its restart followed the installation and testing of a natural gas-powered heating system, a necessary condition for resuming operations.Methanol production differs from fuel production
The resumption of methanol production should not be confused with the restoration of fuel production capacities. On October 15, Agence Ecofin reported that the NOC was preparing to launch a new gasoline production unit at Sirte Oil.Modernizing facilities to boost local supply
This facility represents another aspect of the efforts to strengthen local supply. Its resumption required several interventions, including replacing the catalyst, modernizing control systems, and constructing a new control room, according to the NOC.NOC aims to increase refining capacity
The state company, however, did not specify the production level achieved since the resumption of refinery operations. In January, the NOC announced its intention to increase Libya's refining capacity to 660,000 barrels per day.Current refining capacity and challenges
It estimated that actual operational capacities were around 180,000 barrels per day in January 2026. In this context, the Brega refinery (10,000 barrels per day) and the Sarir refinery (10,000 barrels per day) only represent a small part of the country's nominal refining capacities.Dominance of larger refineries
The country's refining capacities are dominated by Ras Lanouf (220,000 barrels per day) and Zawiya (120,000 barrels per day). This resumption comes in a market still heavily dependent on imports.Rising costs of fuel imports
According to the Libyan Audit Office, the annual cost of fuel imports has risen from an average of $3 billion between 2016 and 2019 to $9 billion in 2024. At the same time, fuel subsidies amounted to approximately 25% of Libya's GDP in 2025, according to the International Monetary Fund (IMF).
