Lebanon Oil and Gas Sector Ready for the Next Level
08 May, 2019

Lebanon announced on April five offshore blocks to be included in its coming bidding round for energy exploration and production licenses, including four along disputed maritime borders.

Offshore energy development has been a central ambition for successive governments in cash-strapped Lebanon, but political paralysis has caused years of delays.

Blocks 8 and 10 both include waters also claimed by Israel, while blocks 1 and 2 include waters claimed by Syria. One of the two blocks for which licenses were awarded last year, block 9, is also on the disputed maritime border with Israel.

Energy Minister Nada Boustani announced in a conference of the upcoming licensing round, which she had been approved by the cabinet and would have a bid deadline in early 2020.

For this round, it has merged the prequalification process for license bidders into the bidding process.

Pro-transparency group, the Lebanese Oil and Gas Initiative, urged the government to reconsider the decision, saying it might make the process more opaque.
(Check the newsletter of LOGI: https://www.logi-lebanon.org/KeyIssue/lebanon-second-licensing-round)

A consortium of France’s Total, Italy’s Eni and Russia’s Novatek won the first licensing round last year for blocks 4 and 9 and plans to drill its first exploration wells by the end of this year. It has said it will avoid disputed waters.

“We expect greater participation in the second round of licensing,” Boustani said, adding that representatives from Russia’s Lukoil, Spain’s Repsol and Britain’s BP had visited Lebanon in the last few weeks. “For sure Total and Eni are still interested,” she added.

Meanwhile, according to remarks published on his Twitter account, President Michel Aoun invited last week American companies to participate in Lebanon's second bidding round for offshore oil and gas exploration and he asked the U.S. congressional delegation for a better interesting in the sector.

Lebanon is on the Levant Basin in the eastern Mediterranean where a number of big sub-sea gas fields have been discovered since 2009 in waters off Cyprus, Israel and Egypt.

Lebanon tried to launch its first offshore exploration in 2013, but domestic political problems delayed it until 2017 but Beirut has an unresolved maritime border dispute with Israel.

Berri and Lebanese officials have warned on several occasions about Israeli aggressions on potential Lebanese oil and gas reserves in disputed maritime waters. Blocks 8 and 9 in Lebanon’s EEZ are situated along the southern border with Israel. Around 856 square kilometers of disputed water lies in Block 8 - the biggest disputed area of any block. Parts of Block 9 also run through what Israel claims are its EEZ. However, Lebanon says the maritime map it submitted to the U.N. is in line with a set of armistice agreements signed in 1949 following the Arab-Israeli War.

Speaker Nabih Berri said recently that Lebanon would agree to mark its maritime borders with Israel and Exclusive Economic Zone by the same mechanism used to demarcate the Blue Line, under the supervision of the United Nations.

The U.N.-demarcated Blue Line currently separates Lebanon and Israel’s lands with over 200 points, but at least 13 points are disputed by the Lebanese government.

From his side UNIFIL head Del Col said the mechanism used to draw the Blue Line could also be used to resolve the maritime border issue and enhance stability, according to a statement from Berri’s office.

Finally, many efforts in different levels are made to proceed for the next level knowing that the challenges are just starting to take shape when the road to joining the ‘club of oil producers’ is hard and long in a complicated country that the complete exploration and production need a miracle.

Sources: Chatham House - Daily Star LB - Reuters

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