Oil & Gas Middle East – November 2018

(Jacob Rumans) #1

18


LEBANON FOCUS

NOVEMBER 2018 oilandgasmiddleeast.com

Since then, Lebanon has surveyed the acreage for
its 10 blocks, and in early 2018 awarded exploration
licenses for blocks four and nine to a consortium led
by Total, Eni and Novatek.
Chbat says each round has its own objectives. For
the first licensing round, a main concern was strik-
ing a commercial discovery—Chbat believes they
achieved this goal by awarding block four, which,
based on studies, has the highest chance of com-
mercial success of the blocks that were open in the
first licensing round.
He notes that the LPA ranks blocks based on ‘at-
tractiveness,’ in line with the goals for that licens-
ing round, and that finding companies with shared
goals is a key concern for them. Now, the LPA is
working on its second licensing round, which will
launch by the end of the year.
For the second licensing round, the LPA aims
to accelerate exploration activity while diversify-
ing the play types in which they award blocks. One
strategy: learn from the successes of neighbouring
countries, like Cyprus, which he admits is “three or
four years ahead of [Lebanon]” in its oil and gas ac-

tivities. After studying successful blocks in Cyprus,
the LPA might consider opening blocks with similar
geological systems to attract companies to bid.
Prequalification for the second licensing round
is expected to open in January 2019, and Chbat
says that by April 2019, they should be prepared to
announce the prequalified companies and open the
six-month bidding period, which will close towards
the end of 2019. The LPA plans to award contracts
every two years.
Since signing its first exploration license with
Total, Eni and Novatek, LPA has approved explora-
tion plans for the next three years.
“The consortium has started to scan the Lebanese
coast to see which location is best to launch opera-
tions from,” Chbat says. “Also, the preparation for
environmental studies and the sampling of water
and samples on the drilling site are going to start.”
The consortium has also committed to hiring
80% Lebanese employees. Given that Lebanon’s oil
and gas sector is virtually non-existent, Chbat con-
cedes that this will have to be gradually achieved.
Early next year, the consortium will tender sub-
contractors, who will also be held to this rule.
Exploration is still in its early days, and there is
no guarantee that development will yield the results
that Lebanon needs. But part of the LPA’s job is to
plan for development even if it is not certain.
“The Lebanese market would require, in the first
estimate, 0.2 trillion cubic feet [of gas] to fire the

Diesel-fuelled gen-
erators contribute
to air pollution and
harm the govern-
ment’s generation
capacity

“THE AVERAGE PRODUCTION COST
FOR EVERY [KILOWATT HOUR] IS 14-
15 CENTS, DEPENDING ON THE FUEL
PRICE, AND WE SELL IT FOR 9 CENTS TO
THE CONSUMER.”
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