Return of Libya's Oil Minister highlights oil sector governance challenges

Mohamed Aoun, Libya's Minister of Oil and Gas, returned to his post on May 28 after a two-month suspension by the Administrative Oversight Authority. Aoun's reinstatement highlights the governance challenges facing Libya's oil and sector and raises questions about transparency, especially as the country prepares for its first major licensing round in over a quarter-century.

The Minister's suspension stemmed from allegations of "legal violations and irregularities" tied to Case No. 178, details of which remain scarce and shrouded in secrecy as is often the case with such cases in Libya. Sources suggest the case relates to Aoun's role in securing fuel shipments during the 2011 uprising, a period defined by shifting loyalties and complex developments as the country went through a civil war and regime change.

Further muddying the waters are accusations by Minister Aoun's supporters that his suspension was politically motivated, linked to his opposition to the NC7 oil exploration agreement with Italian oil major ENI. These accusations were denied by the Administrative Oversight Authority and some observers have noted that despite the Minister's opposition to the current deal, Aoun had negotiated similar terms with ENI in the past.

This episode highlights a broader struggle within Libya's oil sector. Aoun's clashes with the National Oil Corporation (NOC) chairman, Farhat Bengdara, point to a lack of institutional cohesion. Government of National Unity (GNU) Prime Minister Abdulhamid Dabaiba, seemingly caught between Aoun's powerful Zawiya backers and his own need for political balance, appears unable to enforce decisive leadership.

The return of a potentially disruptive minister casts a long shadow over Libya's upcoming licensing round. Investors are likely to be wary of a sector plagued by opaque decision-making and potential conflicts of interest. Unless Libya addresses these issues head-on, its aspirations to regain its former stature as a major energy player on the global state risk being dashed.