Lebanon approves two licenses for oil and gas exploration

The government’s awarding of gas exploration license to a consortium of companies could put Lebanon on the map of oil producing countries provided that the findings are to expectations. “This is a major step by the Lebanese government but we should not prematurely raise expectations until the oil companies extract gas off the Lebanese coast and then we can find out if the discovery is commercial or not,” Mona Sukkarieh, the cofounder of Middle East Strategic Perspectives, told The Daily Star after the Cabinet approved the award two exclusive petroleum licenses for exploration and production in blocks 4 and 9 to the consortium comprise of Total S.A, Eni International BV and JSC Novatek.

Walid Nasr, the chairman of the Lebanese Petroleum Administration, revealed that Total would be the main operator of the consortium in the two blocks.

“The actual drilling is supposed to start in 2019. But in 2018 the companies will make further studies and surveys and of course open offices in Lebanon,” Nasr told The Daily Star.

He added that the consortium would drill two wells in each of the two blocks for the next five years.

Nasr declined to share more details about the licenses or the states’s share from the exploration.

He said Water and Energy Minister Cesar Abi Khalil would hold a news conference Friday to disclose the government’s share and other technical details.

On Nov. 29, Abi Khalil together with the LPA’s board members concluded a three-day technical negotiations process with the consortium formed of Total, Eni and Novatek.

“On Oct. 12, 2017, the consortium had presented two offers on blocks 4 and 9 in Lebanon’s Exclusive Economic Zone. The technical negotiations tackled clarifications on the work program in the goal to ensure a successful exploration phase while safeguarding Lebanon’s national interests,” according to the official website of LPA.

Lebanon is pinning high hopes on the discovery of substantial gas off the coast to bail out the economy, create more jobs and invest heavily on the infrastructure.

Bur experts stress that the actual exploration will need five to six years at least.

They also advised the Lebanese not to get carried away with some reports that the country is sitting on $600 billion worth of gas.

“It is true that companies have conducted 2d and 3d seismic survey of the Lebanese coast, but these surveys are still not enough until the companies start extracting gas from the wells and only then can we have an idea about whether these discoveries are sufficient to export them to other countries,” Sukkarieh said.

She added that Abi Khalil was supposed to sign the contracts with companies in few weeks.

“The companies who have won the contracts will probably conduct more surveys in blocks 4 and 9 to determine the best location to drill,” Sukkarieh said.

But Nasr explained that the firms seem to have a good idea where to drill based on the hydrocarbon data they acquired from Lebanon.

Sukkarieh said the companies would recruit staff once they open offices in Lebanon.

The law stipulates that at least 80 percent of the staff must be Lebanese nationals.

But Sukkarieh said at one point the companies would be compelled to employ foreign experts in the first stage in case they could not find qualified Lebanese in the field of oil.

“But these companies will start training the Lebanese staff once the offices are open to acquaint them with the nature of work oil companies do,” she added.

The exploration phase will start upon the signature of the Exploration and Production Agreements and will last up to five years with the possibility of having a one-year extension.

Source: The Daily Star