[Oil & Gas Updates]: Weekly Roundup 25/02

Lebanon – Seismic surveys:

British Foreign Secretary William Hague joined Energy Minister Gebran Bassil on 21/02 to announce the launching of 2-D seismic surveys, which will be conducted onshore by British firm Spectrum. The company, which conducted 2-D and 3-D surveys off the Lebanese coast, will now acquire data covering 500 Km, in the Bekaa valley, in an area which was previously explored in the 1940s through the 1960s, with the hope of turning Lebanon into a “regional energy hub,” as the Lebanese minister said.

The presence of the British Foreign Secretary in this event was perhaps even more remarkable than the news of the launching of 2-D surveys onshore [see “FLASH: William Hague in Beirut: Britain seizing the opportunity to play a larger role in Lebanon and Syria”, published on 20/02]. Britain has accompanied Lebanese efforts to explore for offshore resources since the beginning, and intends to remain actively involved, as evident by William Hague’s visit and the British ambassador’s presence during the launching of the pre-qualification round for companies wishing to bid for an offshore exploration license. Two different events that suggest a strong UK backing for the way the government, and the ministry of energy, have been managing the sector so far, regardless of Hezbollah’s presence in the government and its alliance with the party that the Energy Minister belongs to. It is hard not to detect a certain coordination between the British and the Americans on this case, knowing that both are not ready to concede their influence in the region to rival powers. The US ambassador was also present during the launching of the pre-qualification round but the Americans, contrary to their willingness to invest in the Israeli energy sector, have been more reticent in getting actively involved in what could be interpreted as a direct backing for a government which they perceive as being dominated by Hezbollah, an organization they regard as terrorist.

The British, through their Foreign Secretary and a particularly dynamic ambassador, have been the most visible, so far, in promoting their companies [Link in French]. Diplomats from other countries are expected to follow suit, and one way to measure this interest is to monitor high-level diplomatic visits to Beirut during March and April, ahead of the launching of the country’s first licensing round. But, despite their visibility, the British are certainly not alone. Others, such as the Chinese ambassador Wu Zexian, have been lobbying Lebanese officials intensively, albeit more discreetly, and encouraging Lebanese authorities not to stall the licensing process, which China, and Chinese companies, have been waiting for “for over a year” as the ambassador said during a meeting with the Lebanese Minister of Foreign Affairs on 09/07.

Israel – Licensing process:

It was reported on 21/02 that Israel decided to award a license to Genie Energy, an American-Israeli company, to drill for oil in the Golan Heights. Israel captured the Golan from Syria in the 1967 war and annexed it in 1981, in a move that was not recognized by the international community. Israel appears to be taking advantage of the Syrian crisis, and seems to believe there is a possibility the Syrian State will not survive the crisis unharmed. In any case, the drilling, if it ever materializes (Genie Energy still needs to acquire further work permits), will be performed on occupied territory. Reactions to the news, which comes a few weeks ahead of US President Barack Obama’s visit to the region, has so far been timid. Lebanon will be monitoring the reactions of the international community to Tel Aviv’s decision to authorize drilling in an occupied territory, given that Israel still occupies part of its land and claims a segment of its maritime waters, which could also hold gas reserves. It’s worth remembering that Israel was not able to attract any bid for drilling rights in some of the Alon offshore blocks situated along the Lebanese maritime border for fear of repercussions. Israel’s exploitation of the Syrian crisis in order to award drilling rights in the Golan only means that the exploitation of resources in an occupied territory depends largely on the absence of a riposte capability. The international community’s reaction to the Israeli decision will either comfort the Lebanese decision to opt for an asymmetric, but effective, defense strategy, or persuade them that other options might also be worth considering.

Lebanon – Media & civil society:

The hype over the potentially large reserves off the Lebanese coasts is slowly starting to emerge. At the level of civil society we are seeing new initiatives, such as the workshop that will be organized in March by Skeyes Center for Media and Cultural Freedom to train Lebanese journalists on covering news related to the oil and gas sector. Local research centers and event organizers are also acknowledging the need to address the issue. At the level of the media, TV has yet to catch up with printed and online media, already buzzing with articles and analysis on the subject, often reflecting the main political divide in the country. Al-Arabiya, the pan-Arab TV news channel, aired a program on 21/02, on the maritime border dispute between Lebanon and Israel. Lebanese TV channel Al-Jadeed, through its program Al-Fassad (Corruption, in Arabic) is expected to be among those keeping a close eye on the oil and gas sector. Just two weeks after the formation of the Petroleum Administration, it aired an episode on how the emerging sector is being managed and the circumstances surrounding the establishment of the Petroleum Administration. Oil and gas, once entirely absent from the public sphere in Lebanon, are making their way to become a regular feature in the people’s daily life.

Lebanon – Investments:

After failing to award a contract to the Lebanese-Spanish consortium Abener-Butec, winner of the initial bid to build a power plant in Deir Amar, due to disagreements over the cost of the project, the Ministry of Energy relaunched the tender on 02/02. Competition was limited to two companies: China’s Sepco, and Greece’s J&P Avax. The Chinese company objected to the tender and asked for a number of amendments. When rebutted, it withdrew and decided not to send a representative to attend the opening of bids. Some are already contesting the legality of the bidding process since only one company attended the opening of bids. In any case, this is not the last that we will hear about this case. Abener-Butec is filing for compensation from the government, and, more importantly, it might affect potential Spanish investments in the oil and gas sector. The Spanish were said to be interested in the country’s first licensing round for hydrocarbon exploration. The Lebanese are now hoping that the Abener-Butec affair will not make them reconsider.

Scroll to Top