Lebanese placed further hope on Lebanon’s potential oil and gas wealth.
On December 14 2017, Lebanon’s Cabinet approved the offers of a consortium of international oil companies to explore for natural gas in maritime blocks four and nine.
France’s Total, Italy’s ENI and Russia’s Novatek will conduct extensive studies and surveys in 2018 and start actual exploration in 2019.
Beirut's approval of a bid by a consortium of Russian, French and Italian energy companies will help the Lebanese economy overcome the present difficulties and will contribute to the country's economic development.
The Lebanese government is planning to benefit from its share in production and taxes, which will range from 65 to 71 percent for block 4 and 55 to 63 percent for block 9.
The exploration of the offshore hydrocarbon reserves will begin in about two years and, it will take 3-4 years to build the necessary infrastructure for the extraction.
Citing the International Monetary Fund (IMF), Bloomberg notes that Lebanon's public debt presently amounts to about 150 percent of the country's GDP, adding that the Lebanese economy has also been hit by the refugee crisis prompted by the Syrian civil war.
The Lebanese economists focused attention on the fact that the world's largest energy companies will be involved in the project. They highlighted that Total is one of the five largest oil companies in the world, while Eni is the largest company engaged in the exploration of oil fields in the eastern Mediterranean, adding that it also works with Egypt and Cyprus.
The main issue for the Lebanese people is the hope of the sector and effectively when the Energy minister guarantee that 80% of the workforce in any future oil sector must be Lebanese, hopefully this will be the beginning of a new age, a new oil age for Lebanon.
The petroleum big companies investments will help to create local SME and to generate jobs either for operations led by companies that shall hire more than 80% of Lebanese in their staff or through SME created in Lebanon.
An exploration well in deep offshore costs 120 MUS$ to 180 MUS$. Several wells can be planned to be drilled in awarded block. Associated activities embrace drilling, casing, cementing, cementing, logistics, sea and air transport, catering and other services.
80% of 100 to 200 jobs created per well shall be done by Lebanese technicians and engineers as stated in the EPA. Lebanese SME can benefit from at least 50 % of money invested. Investments for appraisal will grow to reach several hundred of MUS$ owing to the increase of the number of wells to be drilled and the complexity of technics applied to conduct tests and experiments.
Here also, half of money invested will be collected by Lebanese SME and several hundred of jobs can be created. Investment linked to subsea field development and the construction of above sea process facilities will be considerable to reach several billion US$ encompassing engineering, drilling of several production wells, installation of seafloor pipes, construction of complex facilities for storage, transport and processing.
Around 50 to 60% of this money can be collected by Lebanese engineering firms, Lebanese construction enterprises and services SME. In parallel, several thousands of jobs for technicians and engineers can be created.
Once, the construction of facilities is achieved, production will begin, the number of jobs created will decrease to several hundred only to take in charge production operations. But the government starts collecting petroleum profit part of it will be flowed to sovereign wealth fund structure of which is not yet defined.
Briefly speaking, the development of petroleum fields will bring considerable investment and create hundreds of jobs but for a limited period of time of 3 to 5 years. Despite this limited profit, new trades will be created and Lebanese citizens and SME involved in exploration activities will be able to export their expertise to regional market and south Europe.
On the other hand, upstream industry will open the path to place Lebanon on the global map of scientific research in geosciences, modeling, chemistry and economy.
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