Lebanon is not expected to organise another licensing round of its offshore oil and gas blocks in 2018, and will first evaluate exploration results expected next year from two initial blocks it awarded to a consortium of operators on 14 December 2017.
Lebanon’s government awarded blocks 4 and 9 of a total of 10 in the country’s territorial waters to a consortium comprising France’s Total (40 per cent), Italy’s Eni (40 per cent) and Russia’s Novatek (20 per cent) for exploration.
“They [Lebanese government] will gradually open those other blocks [blocks 1, 2, 3, 5, 6, 7, 8 and 10] for licensing, but I think they are going to take their time," a source told MEED. "I don’t think any more licensing rounds will happen in 2018 – perhaps one in 2019."
Lebanon’s Minister of Energy and Water Cesar Abi Khalil has said that exploration work in the awarded blocks will start next year. The source added that the consortium plans to drill the first well in block 4 in 2019 and the first well from Block 9 in 2020.
The exploration phase will last up to five years with a possible one-year extension, according to the Lebanese Petroleum Administration (LPA), the government body that manages the offshore energy sector.
“We want to see honestly if anything worthy is going to come out of the two blocks awarded," the source said. "We have potentially good seismic surveys, those are good indicators, but you never know unless you drill. We need to drill first to find out, and that’s the wise thing to do now."
Another reason why Lebanon is unlikely to organise another licensing round this year is that the government and authorities will be busy with the general elections due on 6 May, the source added.
Moreover, Lebanon is looking to focus on developing its onshore reserves and lawmakers are working towards drafting a law on onshore upstream activities.
“My sense of that from speaking to key decision-makers is that there is going to be focus on engaging in onshore exploration drilling, and getting that up and running,” the source said.
The source added that Total-Eni-Novatek consortium, the only bidder for blocks 4 and 9, is due to submit its exploration plan for the licensed zone to the LPA in March, as per the terms of the agreement.
The three companies have already set up their local entities in Lebanon and are presently recruiting personnel and setting up infrastructure for the exploration works, according to the source.
Lebanon is currently embroiled in a maritime dispute with Israel over its block 9, a portion of which the latter claims is in Israeli territorial waters. The US is trying to mediate to resolve the standoff between the two neighbours.
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