India resets Libya priority: Security forces return to embassy, eyes on oil and strategic depth

First Post

28-07-2025

With oil prices volatile and supply chains under strain, India eyes Libya as a critical addition to its long-term energy security strategy read more
India's decision to deploy security forces at its embassy in the Libyan capital, Tripoli, appears as a calculated strategic move, far beyond a simple signal amid a still chaotic situation in the North African nation. The embassy was reopened in July 2024, five years after India closed its mission there in April 2019 amid growing security concerns, prompting a full evacuation of both civilian and security personnel.
Now, with shifting geopolitical dynamics and looming energy uncertainties, India's return to Tripoli carries critical economic and diplomatic significance. On Sunday, CRPF director general GP Singh said that the paramilitary force will soon send its personnel to Libya to secure the embassy.
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Libya's decade of instability
Libya has remained deeply unstable since the 2011 overthrow of Muammar Gaddafi. Rival factions have continued to control separate territories in the east and west, hindering national unification efforts.
In 2014, India repatriated approximately 3,800 of its nationals from Libya, including six who had been abducted by the Islamic State. Persistent insecurity over the years kept India and other nations at bay, but current developments suggest a potential turning point in Libya's political and economic environment.
An opportune return amid oil import turbulence
India's diplomatic reengagement with Libya comes at a time of mounting uncertainty in its oil supply chain. With potential secondary sanctions from the United States and the European Union threatening India's heavy reliance on Russian crude, securing alternative energy partners has become urgent.
For a country that imports nearly 85 per cent of its energy needs, diversification is not just a policy option—it is an economic necessity. The timing of the embassy reopening is strategic, allowing India to explore new trade avenues in Libya's underutilised oil sector.
Recently, India's Petroleum Minister Hardeep Singh Puri also allayed fears of likely impact on India if Russian oil supply is choked through secondary tariffs at a recent Firstpost event.
Why Libya's energy resources is a natural fit for India
Libya is well-positioned to help fill India's supply gap. In 2023, Libya exported $31.3 billion worth of crude petroleum, making it the 14th largest exporter of crude globally. Crude oil remains its most valuable export.
Italy, Germany, Spain, France and China are Libya's largest buyers, with exports to Germany and France experiencing notable year-on-year growth. Given India's status as the world's third-largest oil importer, both countries stand to benefit — Libya gains a massive buyer and India secures a fresh energy source amid global supply constraints.
India in Libya's energy sector
India's ties with Libya's energy sector are not new. According to a report in the Libya Tribune, ONGC Videsh and Oil India Limited have expressed renewed interest in operating in Libya, responding to Tripoli's calls to rebuild the nation's vital oil and gas infrastructure.
These companies exited Libya in 2011 due to civil unrest, but prior to that, ONGC Videsh and Oil India, along with Indian Oil Corporation, had been involved in exploration projects in Libya's Ghadames and Sirte basins. This previous involvement may provide Indian firms with a head start as Libya opens its energy sector once again to foreign participation.
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Reopening Libya's oil and gas sector
Libya's National Oil Corporation (NOC) is preparing to launch its first oil and gas licensing round in 17 years. The move is seen as a strong signal of the country's intent to revitalise its hydrocarbons industry.
Speaking in Tripoli earlier this year, Libya's Oil and Gas Minister Mohamed Oun emphasised that the country welcomes international companies, but expects them to focus on exploration rather than merely tapping into already discovered fields.
He also noted that about 30 per cent of Libya's oil-rich territory remains unexplored, hinting at significant untapped potential. If successful, these reforms could help Libya regain its footing as a major energy exporter and offer India new energy opportunities.
Economic partnership beyond oil
India and Libya have shared long-standing diplomatic and economic relations. India established its diplomatic mission in Tripoli in 1969. In 1978, both countries signed a framework agreement titled the 'Protocol on Industrial, Economic and Scientific Cooperation,' which laid the groundwork for the Indo-Libyan Joint Commission.
Ten sessions of the Joint Commission have been held since then, covering the full spectrum of bilateral economic activities. Over the years, Indian public sector undertakings such as BHEL, NBCC, IOC and Oil India, as well as private firms like Punj Lloyd, Shapoorji Pallonji, Unitech, and NIIT, have undertaken projects in infrastructure, power, IT and healthcare sectors across Libya, the Embassy of India website in Tripoli mentioned.
While many of these ventures were suspended due to conflict, they are likely to resume once conditions stabilise.
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Renewed interest in Libyan oil
India's crude oil imports from Libya were modest in 2024, amounting to $84.8 million, according to the UN COMTRADE database. This is expected to change if India deepens its engagement with Libya's oil sector.
With established diplomatic channels and historic commercial involvement, Indian firms are well-positioned to scale up trade quickly, provided Libya maintains a favourable investment climate.
Pressure mounts on Russian crude
India's heavy reliance on Russian oil, which surged after the Ukraine war, is now facing serious headwinds. The European Union has introduced new sanctions that will require proof of crude origin for any refined oil products imported into the bloc starting January 21, 2026.
The enforcement mechanism adds complexity for Indian refiners who process Russian crude but export finished products globally. Adding to the pressure, US President Donald Trump has threatened to impose 100 per cent secondary tariffs on countries that continue to trade with Russia if no peace deal is reached in Ukraine soon.
In 2019, India halted oil imports from Iran under similar threats. Though China continued buying Iranian crude without repercussions, India chose compliance, demonstrating its vulnerability to external geopolitical pressures.
Russia's share in India's energy mix
Russia emerged as India's top crude oil supplier following the Ukraine invasion in 2022. The share of Russian oil in India's total imports rose dramatically — from just 2.1 per cent in FY22 to 35.1 per cent in FY24–25.
In June 2025 alone, India imported 2.08 million barrels per day of Russian crude, the highest in nearly a year. While overall crude imports fell 6 per cent that month, Russian shipments grew by 8 per cent, highlighting India's ongoing dependence. However, narrowing discounts and geopolitical risk may soon force a course correction.
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Initially, Russian oil was significantly cheaper than global benchmarks, with the Urals grade priced about $12 per barrel below Brent. But by late 2024, that gap had narrowed, making Russian crude only $4 cheaper than oil from Iraq.
Meanwhile, secondary tariffs from the US and new EU rules could make Russian oil imports financially unattractive for Indian refiners. There are worries that supply disruptions could reach 500,000 barrels per day if sanctions fully materialise.
Diversifying energy sources
In response, India is aggressively diversifying its crude suppliers. According to The Economic Times, Crude oil imports from the United States increased by more than 50 per cent in the first half of 2025 compared to the same period in 2024.
Imports from Brazil also saw an 80 per cent jump. These shifts reflect Indian refiners' preference for stable, non-OPEC sources amid rising market volatility. The government has also sought guarantees from key West Asian partners to ensure secure supply lines, especially after tensions escalated in the Strait of Hormuz during the recent Israel-Iran conflict.
According to the US Energy Information Administration, India is expected to add 330,000 barrels per day in new demand this year, driven largely by transportation and household fuel needs. India's oil consumption is poised to surpass China's growth rate in 2025, accounting for roughly 25 per cent of the global increase in oil demand. In 2023, India consumed about 5.3 million barrels per day and demand has only grown since.
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Vulnerability to price shocks
India's economy is particularly sensitive to global crude price fluctuations. A 2023 study by researchers at Vellore Institute of Technology and Pondicherry University found that fuel prices in India respond rapidly to international oil spikes.
The Reserve Bank of India estimates that a $10 increase in crude oil prices could raise India's headline inflation by 0.4 per cent. With this level of sensitivity, securing diversified and cost-effective oil imports is essential for economic stability.
Hence, India's decision to reopen its Tripoli embassy is not merely symbolic. It is a timely and strategic move to tap into Libya's energy potential, reduce dependence on risky suppliers and reinvigorate bilateral relations. As global energy markets realign, India is betting on a more secure, diversified future and Libya could be an important piece of that puzzle.