Lebanon will start its first bidding round for offshore oil and natural-gas exploration licenses this year after approving laws yesterday regulating the process, an energy minister adviser said.
“This shows the seriousness of the government toward commitments made to companies and stakeholders,” Cesar Abi Khalil said in a telephone interview from Beirut today. “If all goes as scheduled, the licensing round will be held this year. The companies will have six months to bid and then the winners will be chosen and exploration will begin.”
Decrees passed by the cabinet yesterday included financial and administrative regulations for the energy industry, Abi Khalil said. A petroleum administrative commission, acting as a consultative body for the energy minister, will be formed within a month to start the process, he said.
The Middle Eastern country is seeking to catch up after Israel since 2009 discovered enough fuel off its northern coast to supply itself and to potentially start exports. Lebanon passed a petroleum law on Aug. 17, 2010, and approved a demarcation line for its exclusive maritime economic zone in September.
Conflict With Israel
Lebanon has asked the UN to adopt measures to prevent a conflict with Israel over energy exploration in areas that may fall within Lebanese territorial waters.
Israel’s Minister of National Infrastructures Uzi Landau said in June 2010 that his government was willing to use force to protect its undersea gas finds and Lebanon’s militant group Hezbollah, which fought a war with Israel in 2006, has repeatedly pledged to protect the country’s offshore resources.
Israel has discovered two gas fields, Tamar and Leviathan, off its Mediterranean coast. Together they hold an estimated 30 trillion cubic feet of gas, according to Houston-based Noble Energy Inc. (NBL) that would be about three times the estimated reserves of the U.K., according to BP Plc statistics. Investors in the sites include Noble Energy and Israeli companies Delek Drilling-LP (DEDRL), Delek Energy Systems Ltd. (DLEN), Avner Oil Exploration-LP (AVNRL) and Ratio Oil Exploration 1992 LP. (RATIL)
Gas production would allow Lebanon to cut power costs. It provides as much as $1.5 billion a year in subsidies to the state electricity company, which supplies more than 90 percent of the power and has suffered regular blackouts since a 15-year civil war ended in 1990. The government also plans to use revenue from any offshore gas finds to finance development projects and repay Lebanon’s public debt, which totaled $52.6 billion at the end of 2010, or about 137 percent of the country’s gross domestic product.
