Libya

The drone strike that hit a gasoline tank at the Zawiya refinery in August was more than a security incident. Zawiya is Libya’s largest operating refining facility, and the National Oil Corporation warned that continued attacks could force operations to halt. In an economy still built almost entirely around hydrocarbons, a disruption at one major facility rarely stays local. It becomes a national economic risk.

Libya’s dependence on oil has generated enormous wealth, but it has also concentrated economic risk in a relatively narrow network of fields, pipelines, export terminals, and refineries. A disruption at any one of these nodes can threaten fuel supplies, production, and the state revenue that depends on them, reaching well beyond the site itself.

None of this means Libya should move away from oil, which will remain central to the economy for years. The more useful question is whether Libya can build enough productive capacity around it that the country’s economic future isn’t defined by the vulnerability of a handful of facilities. Diversification is often discussed in the abstract. In Libya, it is starting to take a more concrete shape, particularly in cement and steel, where investment is beginning to build an economic base around production, employment, infrastructure, and domestic value rather than around extraction alone.

Why cement is more than a construction material

Cement doesn’t carry the same strategic weight as oil in most conversations about Libya’s economy, but for a country rebuilding its cities and infrastructure, it arguably should. Housing, roads, and public infrastructure all depend on a steady domestic supply of building materials, and meeting that demand locally generates a different kind of value than exporting raw resources: factories, supply chains, jobs at multiple skill levels, and more of the value construction generates staying inside the national economy.

There is also an export dimension. Libya’s location and access to regional markets give a competitive cement industry real potential beyond its own borders. Suhail Abushiha, Libya’s Minister of Economy and Trade, has said the country could eventually export as much as 25 million tonnes of cement annually, a figure that indicates how far this ambition is meant to reach, even if it remains some distance from current output.

A functioning industrial sector depends on engineers, technicians, suppliers, contractors, energy, transport, finance, logistics, and maintenance, and its output in turn supports other industries and the wider construction economy. That is the multiplier effect Libya needs, not just revenue, as oil provides, but economic activity that spreads across businesses, regions, and communities. The foundations for that are already forming.

The industrial base already in place

Libya is not starting from scratch. The Libyan Cement Company in Benghazi remains one of the country’s most established industrial producers, accounting for roughly 20 percent of national cement output and supporting more than 1,000 direct jobs. Over the years, its cement has supplied major infrastructure and reconstruction projects, and its history tracks the broader shift in Libya’s private sector. In 2023 it came under the ownership of businessman Ahmed Gadalla and has since grown to become a defining industrial player in eastern Libya.

The company’s importance extends past what it produces. A major industrial operation generates demand for engineers, contractors, transportation, logistics, maintenance, and energy services, and its output feeds directly into the construction and infrastructure projects that will shape Libya’s future. Gadalla’s industrial interests go beyond cement, in fact. His involvement in the SULB steel venture, alongside Tosyalı Holding, follows the same logic of building productive capacity in sectors that support construction and long-term development.

Alongside these established players, Libya is seeing a new wave of large-scale investment. In Nalut, ALHEDAB Cement Company is developing a major project with an estimated investment of $600 million, designed to produce up to 12,000 tonnes of cement per day, one of the largest industrial projects currently under development in the country. What distinguishes the project isn’t only its scale. Around 25 percent of its capital is expected to open to public and foreign investors, with plans for a future stock market listing, which points to a shift in how large industrial projects in Libya could be financed going forward: less reliant on the state or a narrow group of private interests, and more open to broader participation.

Other producers are expanding the sector as well. Arabian Cement Company, a domestically owned producer based in Khoms, has an annual production capacity of roughly 3.3 million tonnes, and international companies including Pakistan’s Lucky Cement and Oman’s Raysut Cement have identified opportunities in the Libyan market. What matters is less any single project than the combined effect: a growing network of producers, suppliers, contractors, logistics companies, and skilled workers starts to resemble an industrial ecosystem rather than a collection of unrelated ventures.

Diversification depends on projects reinforcing each other

Libya’s economic future won’t be transformed by one factory or one investment announcement. Diversification becomes meaningful when industries start reinforcing each other: cement supports construction, construction creates demand for steel, transport, and engineering services, and new industrial facilities need energy infrastructure, maintenance, logistics, and finance in turn. Industry’s value isn’t limited to what leaves the factory. It lives in the network of activity that builds up around it, which matters for Libya in particular, since oil has financed much of the state for decades without creating a broad productive base on its own. Cement and steel fit that gap reasonably well, given that reconstruction already creates substantial domestic demand and regional markets could add export opportunities over time.

Incentives alone won’t be enough

Projects at this scale need capital, confidence, and long-term commitment. Libya has been working to strengthen the investment environment through incentives and guarantees aimed at domestic and foreign investors. Investment promotion mechanisms backed by the Public Investment Bank are meant to build investor confidence, and the investment framework has tried to encourage the transfer of foreign expertise and technology, including requirements such as health insurance for workers.

These measures matter, but they aren’t sufficient on their own. Market opportunities, natural resources, and favorable terms can draw investors in, but long-term industrial investment depends on something more basic: confidence that regulators apply the rules consistently, and that assets, workers, and supply chains can operate somewhere secure. That is where the Zawiya attack becomes relevant again.

Security, not just incentives, will determine whether this works

The refinery attack points to a challenge that goes beyond any single facility: Libya’s economic prospects can’t be separated from its security and political environment. A country can offer investment guarantees, but uncertainty erodes their value. A manufacturer weighing a multi-million-dollar factory has to account for demand and profitability, but also electricity, logistics, regulation, security, and whether operations can run consistently for years at a time. That is why economic diversification and institutional reform need to move together. Libya needs investment, but investment needs predictability just as much: clear regulations, reliable institutions, and an environment where companies can plan past the next political or security disruption.

The Zawiya attacks make that need difficult to ignore. They show how quickly insecurity can threaten assets central to the national economy, and they strengthen the case for an economy that doesn’t depend on a narrow set of sources. Diversification can’t eliminate political or security risk, but it can reduce how much of the country’s economic life hinges on a limited number of facilities.

Where this leaves Libya

The Zawiya fire is a warning about what happens when a national economy leans too heavily on a narrow group of critical assets. Libya will remain an oil producer for the foreseeable future, and hydrocarbons will continue generating a large share of national wealth. But that doesn’t mean the country’s economic future has to be defined by oil alone.

New cement plants are under development, existing producers continue to back reconstruction and employment, capital is opening to domestic and foreign investors, and international companies are moving in alongside Libyan businesses. These are early signs of a possible shift, not evidence of one already completed. Whether Libya can turn individual investments into a coherent industrial strategy will depend on more than capital and ambition. It will depend on regulatory reform, stronger institutions, security, and sustained commitment to building productive capacity, with Libya’s oil wealth funding the broader transformation rather than substituting for it.

Fifteen years since the uprising against Muammar Gaddafi in Libya began, and with civil strife leading to the downfall of what was once one of Africa’s wealthiest countries, several actors are seeking to end the civil war and reunite the country.

Among them are the US, which has commercial interests in Libya’s oil fields. Qatar, Egypt and Turkiye are also pushing for a return to “One Libya”, after more than a decade of fighting between two rival authorities for control of the country.

Here’s what we know:

What happened 15 years ago?

The Libyan uprising erupted during the Arab Spring, when thousands of people in the port city of Benghazi took to the streets to protest against Gaddafi’s more than four decades of absolute power.

Violence against the demonstrations pushed the protesters into an armed rebellion against Gaddafi’s rule, with a civil war starting between the two sides.

A United Nations Security Council resolution authorised an international military intervention force – led by NATO members, the United States, United Kingdom and France – to enforce a no-fly zone and ensure the protection of civilians in Libya. This bombing campaign pushed back Gaddafi’s forces from Benghazi and aided the rebels in seizing territory.

Gaddafi was eventually captured and killed in October 2011, 42 years after he first seized power in a military coup that overthrew King Idris.

How is Libya divided?

Following Gaddafi’s death, a power vacuum emerged, with multiple groups – and their allied militias – competing for power.

Control of the country is now split between two rival administrations: the UN-recognised Government of National Unity (GNU) in Tripoli, led by Prime Minister Abdul Hamid Dheibah, and the eastern, Tobruk-based administration backed by Khalifa Haftar and his self-styled Libyan National Army (LNA).

The GNU is recognised by the UN and other countries, and officially has authority in the capital and western Libya.

Under Gaddafi, Haftar was exiled in the US for two decades where he holds citizenship.

His forces control vast resource-rich lands in the east, including the strategic port city of Benghazi, reportedly with the backing of Russia.

The UN began formal mediation efforts in 2020 under the UN Support Mission in Libya (UNSMIL). This roadmap advocates for a three-track strategy that includes unifying the two rival administrations, presidential and parliamentary elections, and hosting national dialogue meetings.

The US was a key mediator behind the scenes, and in May 2021, appointed Ambassador Richard Norlan as Special Envoy to Libya, to lead high-level talks between the two sides.

What is the US’s new plan?

Under Massad Boulous, US President Donald Trump’s African and Middle Eastern affairs adviser, and father-in-law to Tiffany Trump, Washington is intensifying efforts to reunite the country. But this can only be achieved if both sides agree to form a single government.

According to leaked details, Trump’s initiative centres on the promise that if the rival governments cooperate, the US would encourage American investment in Libya’s sizable oil fields. This comes as the Libyan Central Bank, which is attempting to finance both authorities, sounds the alarm over the dire economic situation.

While Tripoli has international legitimacy, Haftar’s forces control the oilfields and terminals.

The US is also proposing a power-sharing deal that would see Dheibah continue to lead the government while Haftar’s son and LNA army chief, 35-year-old Saddam Haftar, serves as president.

There are obvious opportunities for US energy companies and economic and political incentives for European countries in a unified and stable Libya.

They include stopping irregular migration from Libya and other North African countries to the EU.

Some criticise the US-led plan as lacking input from the Libyan people. The deal, some say, could entrench the power of political dynasties, which might be best for long-term stability in Libya.

What have the results been?

There are signs that Haftar’s camp, at least, is on board with the US plan. Saddam Haftar, whose father, Khalifa, was based in Virginia until 2011, reportedly met with US Secretary of State Marco Rubio in DC in July.

Experts attribute the ongoing mediation efforts to the unified national budget of 2026, signed in April – the first in more than a decade.

However, there are still no talks or signs of a unified government forming.

What is Turkiye’s role?

Turkiye, which earlier deployed troops to support the GNU, has also made efforts to mediate between the two sides and is pushing a ‘One Libya’ policy.

Last month, Foreign Affairs Minister, Hakan Fidan, met with Saddam Haftar in Ankara. Earlier this month, Fidan travelled to both Tripoli and Benghazi for high-level talks with Dheibah and Khalifa Haftar.

What has Egypt done?

The Egyptian government has traditionally cooperated with Haftar’s Tobruk government, which is just across the border.

On Wednesday, President Abdel Fattah el-Sisi met with Khalifa Haftar in Cairo and discussed unification talks.

Earlier this month, Dheibah visited Cairo, while Egyptian intelligence chief Hassan Rashad travelled to Tripoli.

What is Qatar’s stance?

Qatar has largely backed the UN mediation channels in Libya: the UNSMIL and the UN roadmap for peace.

While it has good relations with the GNU, Qatar seeks stabilisation efforts led by Libyan parties and elections.

In April, Qatar and other states welcomed the unified budget for 2026. A statement issued by Qatar, Egypt, France, Germany and several others called for all parties in Libya to follow the UN roadmap to “advance a Libyan-led political process leading to unified governance and national elections.”

Libya’s National Oil Corporation warns it may halt operations at the country’s largest operating refinery if drone attacks continue.

Firefighters in Libya are battling a massive blaze at the Zawiya refinery following a drone attack, with the country’s national oil company warning it may declare a force majeure and shut down operations if attacks continue.

Libya’s Ambulance and Emergency Service said in a statement on Tuesday there were no “serious injuries” from the fire, with most patients treated for smoke inhalation.

Footage verified by Al Jazeera showed huge flames and thick black ‌smoke billowing over the facility, the largest operating refinery in Libya with a refining capacity of 120,000 barrels per day.

It is located about 40km (25 miles) west of the capital, Tripoli.

The National Oil Corporation (NOC) said in a statement on Facebook that the fire broke out on Monday evening at tank number 402-T, belonging to the Brega Oil Company.

It said the tank, which contained about 4.5 million litres (1.2 million gallons) of gasoline, was “directly targeted, resulting in a severe fire before the tank completely collapsed”.

The NOC said the attack followed drone strikes on a water desalination plant at the refinery on Sunday and on a naphtha reservoir on Saturday.

The company declared a “maximum emergency” in the region and urged authorities to launch an investigation and bring the perpetrators to justice.

There was no immediate claim of responsibility for the attacks, and the company did ‌not say who they believed was behind them.

In a statement hours later, the NOC said the refinery was “still being subject to sabotage attacks” with a drone targeting an oil blending and filling ⁠plant operated by the Zawiya Oil Refining Company.

It said the drone fell near its main oil tank and a pipeline network used to produce oils for the domestic market, without causing any casualties or damage.

“The company’s board of directors also confirms that if these attacks continue, it will have to declare a state of force majeure and suspend operations at the refinery,” it warned.

The Brega Oil Company, meanwhile, appealed to “all parties to stop the fighting and stay away from oil facilities and depots”. It said “oil facilities are vital infrastructure and owned by all Libyans” and that “protecting them is a national responsibility that does not tolerate any negligence”.

The attacks highlight the continuing security challenges in Libya, where rival administrations and armed groups have retained influence despite a ‌2020 ⁠ceasefire that halted major warfare. The country split in 2014 after a NATO-backed uprising that toppled longtime leader Muammar ⁠Gaddafi in 2011.

Two governments are currently vying for power: the United Nations-recognised administration in Tripoli, led by Prime Minister Abdul Hamid Dbeibah, and a rival in the east backed by military commander Khalifa Haftar.

In a statement, the Tripoli-based government said Dbeibah held a meeting earlier in the day with key officials, including the interior minister and the chiefs of some armed groups in the capital, “to follow up on the latest security developments”.

Dbeibah “stressed the need to deal firmly with any transgressions or actions that threaten security or harm vital facilities and installations”, the statement said.

Separately, a Libyan parliamentary panel condemned the attack and called for stronger protection of oil installations.

“The House of Representatives’ Energy and Natural Resources Committee condemns in the strongest terms the criminal attack targeting the Zawiya Refinery, one of the most vital facilities in the oil and gas sector that is a cornerstone of the national economy,” it said in a statement.