Business & Economy

LEBANON: Oil & gas tender delayed further

08 August, 2014

Lebanon’s Energy Minister, Arthur Nazarian, announced on Friday that the deadline to submit bids in country’s first licensing round has been postponed from August 14, until “a maximum of six months from the date of the adoption” of the missing decrees, according to a news report.

The tender has been repeatedly delayed due to the absence of two decrees, one defining offshore blocks and their coordinates and another defining the terms of the model exploration and production agreement, the report said.
“Nazarian’s decision, most likely recommended by the Petroleum Administration, could be perceived as a break with past policies,” said the Middle East Strategic Perspectives, a Beirut-based consultancy focusing on energy and regional issues.
“Former Energy Minister Gebran Bassil’s dynamism and determination to meet deadlines – although commendable in many cases – have pushed him to officially launch the first licensing round in May 2013 despite the absence of those two decrees,” MESP wrote on .
“The soundness of this decision has been questioned since. Frequent power vacuums within the executive branch (the country was run by a caretaker cabinet with limited powers for almost a year, from March 2013 until February 2014, and has been without a President since May 25) made it difficult to approve the two decrees. This has forced Lebanon to postpone the tender five times in less than a year, attracting mostly negative comments and reactions from analysts, industry stakeholders and media with each postponement.”
The MESP report concluded that with each postponement, the inevitable question arises: “Are companies losing interest? Interest in the exploitation of Lebanon’s potentially significant offshore resources is high, but with today’s decision to delay the tender until the decrees are approved, attention must be redirected to Lebanese authorities and their own determination (or lack thereof) to proceed with the tender.”
Cyprus recently discovered an offshore gasfield with initial reserves of about 3.5 bln trillion cubic feet (tcf), operated by US-based Noble Energy and minority partners Delek and Avner of Israel. The consortium partners also operate gasfields in the neighbouring Leviathan gasfield offshore Israel and declared last month that a second drilling will take place within their Cyprus Exclusive Economic Zone (EEZ) Block 12.
Italy’s Eni and venture partner Kogas of South Korea, expected to start their first exploratory drilling in two Cyprus EEZ blocks by the end of August, while French Total also plans to start drilling in its own licensed Cyprus offshore blocks in early 2015.
The crisis in Ukraine and the fear of Russia some day shutting off its gas pipelines into western Europe has given greater impetus to recent eastern Mediterranean discoveries and future potential exports.