Ponticelli pulled its last employees out of the country. It was working as a subcontractor for a joint venture between the country's National Oil Co., French supermajor Total and Norwegian energy company Statoil.
The decision to pull its 43 employees out of the country was because of lingering security concerns following the terrorist attacks on the In Amenas natural gas facility in neighboring Algeria in early 2013, The Libya Herald reports.
Internal security has also handicapped Libya's ability to recover fully from civil war. Clashes at the Dahra oil field and similar incidents in western Libya halted shipments to Italy last month.
Economic Ministry spokesman Ahmed Abdusalam told the Libyan newspaper the government regretted the decision.
"There is no reason for employees from foreign companies to die for Libya," he said. "I cannot force them to stay."
The International Monetary Fund said last month that Libya's post-war economy remains too highly dependent on earnings from oil.