Lebanon is advanced very slowly to exploit its maritime resources compared with other eastern Mediterranean countries; Israel, Cyprus and Turkey are all much more advanced in drilling for oil and gas.
Slowed by a political gridlock and unresolved boundary disputes, Lebanon has stood on the sidelines watching massive natural gas discoveries such as Leviathan, Aphrodite and Karish sprout from deepwater Mediterranean areas in its neighbors’ jurisdictions.
Lebanese officials reported on plans to award four offshore blocks by November 15 in the country’s first attempt at establishing its domestic oil and gas resources.
Citing the 150-year history of oil and gas operations worldwide, Minister of Energy and Water Cesar Abi Khalil said, “We’re coming a bit late.” His remarks were made at a roadshow hosted by law firm Mayer Brown on July 6 in Houston.
According to the ministry, 51 companies to date have been qualified to bid in the 2017 round. The 2013 round had prequalified 12 operators to bid along with 34 non-operating companies. Khalil told the Houston audience that prequalified companies in 2013 would be eligible to participate in the current round provided they still meet the country’s criteria and submit financial statements for 2014-15 (audited) and 2016 (unaudited).
Lebanese energy officials hope its domestic gas demand; proximity to European markets with export options via the Arab Gas Pipeline, an offshore shallow-water pipeline and resource potential will attract investors. But they acknowledge challenges that could give investors pause—no exploratory drilling has occurred in offshore blocks, though wells have been drilled onshore; there is insufficient infrastructure offshore; political factors exist; and lower commodity prices remain.
Indian ONGC Videsh (OVL), the overseas arm of state owned oil and gas company ONGC, will participate in the upcoming bid round for offshore gas fields in Lebanon, Indian oil Minister Dharmendra Pradhan said on July in Istanbul. Pradhan held a bilateral meeting with Cesar Abi Khalil, energy and water minister of Lebanon on the sidelines of the World Petroleum Congress.
On the other side, the unstable relations between the eastern Mediterranean countries threaten to make long-term gas deals impossible – even if there is enough gas to make them worthwhile.
The Gas industry in the East Med has seen a lot of change in the last 2 years.
Chief among the shifts have been:
- Egypt, which has experienced a severe shortage of natural gas and has become an LNG importer, is returning to self-sufficiency in two or three years.
- Israel, which has discovered two offshore large gas fields, Tamar and Leviathan, and hopes to become an exporter, is unable to find enough customers for its gas.
- Cyprus, whose energy needs are relatively small, will become an export powerhouse if the majors such as ExxonMobil, Total and Statoil, find gas off its shores.
- Lebanon has launched a new licensing round that brought it into a dispute over maritime areas with Israel
- Egypt and Israel have yet to settle their dispute over the $2bn compensation awarded in international arbitration for the Israel Electric Corporation (IEC) a dispute which must be resolved if gas relations between the two countries are to advance
- Israel, which has blocked the natural candidates from bidding on the grounds they already have enough market power, was in late June forced to delay once again its licensing round, owing to a lack of interest from foreign companies.
Finally, a new economic political strategy should be created to issue the entire problem to go forward with the creation of the new EAST MED GAS ERA.