Friedman Institute warns of Italy's critical role in Mediterranean energy crisis

In a recent report released on December 9, 2024, the Friedman Institute analyzed Italy's strategic energy position in the Mediterranean and its reliance on Libyan oil and gas resources. Libya, a country plagued by ongoing instability, has approximately 70% of its territory unexplored for oil and gas, suggesting significant potential for growth in the energy sector. Despite this instability, Italy is one of the primary international stakeholders in Libyan energy, securing substantial imports crucial to its energy supply. The report highlights a controversial energy deal made in 2023 between Italy and Libya worth $8 billion, which has faced criticism for its legality and long-term implications. The Italian government is determined to maintain its energy relationship with Libya, navigating the complexities that arise from a volatile political environment and various disputes among Libyan factions, particularly concerning the control of the Central Bank of Libya. Militia responses to Italian exploration activities in the Hamada oil and gas field underscore heightened risks for foreign investments in the region. Italy's strategic ambitions include enhancing its role as a central energy hub, particularly in the context of Europe's need to diversify energy sources amid the ongoing energy crisis exacerbated by the war in Ukraine. Italy currently imports gas through major pipelines from Azerbaijan, Libya, and Algeria, with plans to further expand via additional floating storage and regasification units. This positioning not only serves Italy's energy needs but also bolsters its geopolitical influence in Mediterranean energy markets, especially if other European nations, such as Germany, decide to increase imports from Mediterranean producers. Overall, the Friedman Institute's analysis illustrates the intersection of opportunity and risk in Libya's energy landscape and Italy's ongoing commitment to harness these resources for its strategic objectives. While Italy seeks to capitalize on the potential rewards from Libya's untapped energy reserves, the challenges posed by instability and security concerns remain significant in shaping the future of this crucial energy partnership.