Lebanon: The Oil & Gas Report, June 02, 2014

Lebanon: Will it be possible to avoid another tender delay?

Despite the political deadlock, the Petroleum Administration is pursuing its efforts to push for the adoption of the two missing decrees that are required to move forward with the first licensing round. The ministerial committee tasked with studying the decrees has yet to complete its work and submit its findings to the government. When the deadline to submit bids was last postponed on April 07, ministry officials, including Energy Minister Arthur Nazarian, maintained that if the two decrees are approved during the month of May, the tender could be held on time. It is unclear how “extendable” this self-imposed May deadline is. If the decrees are not approved early enough in June, the tender may be facing another delay.

Cypriot Energy Minister
Giorgos Lakkotrypis in Beirut

The Ministry of Foreign Affairs and Emigrants is also doing its part in promoting Lebanon’s offshore potential, as we have expected Foreign Affairs Minister Gebran Bassil (former Minister of Energy) to do when he was first appointed at this position. The Ministry organized the Lebanese Diaspora Energy forum on May 30-June 1 in Beirut to promote links between Lebanon and its vast diaspora communities around the world. Bassil invited the diaspora to invest in the Lebanese energy sector.

It is interesting to highlight the presence of Cypriot Energy Minister Giorgos Lakkotrypis at the forum. The fact that Lakkotrypis is a Maronite Cypriot (a community that originally hails from Lebanon) does not, in itself, explain his presence at the conference. His visit to Beirut comes a few days after the visit of U.S. Vice President Joe Biden to Cyprus, accompanied by Deputy Assistant Secretary of State for Energy Diplomacy Amos Hochstein (who is also attempting to settle the maritime border dispute between Lebanon and Israel), at a time both Lebanon and Cyprus are seeking to contain conflicts that are proving to be an obstacle for the full exploitation of their resources.

Reviving the Petroleum Directorate at the Ministry of Energy

Aurore Feghali assumed her new responsibilities as head of the Petroleum Directorate at the Ministry of Energy and Water on 28/05, a position that has been vacant for the past nine years. Feghali, a Telecom Engineer and former chief of Network Design Department at the Ministry of Telecommunication, was appointed by the cabinet on 09/05, before the end of President Michel Slaiman’s term, as part of a series of administrative appointments.

The Petroleum Directorate, one of three directorates at the Ministry of Energy, focuses on the import and distribution of petroleum products, as well as hydrocarbon exploration. The latter is now assumed by the Petroleum Administration, created pursuant to law 132/2010 on offshore petroleum resources, and whose prerogatives are, for the moment, limited to offshore petroleum activities. With the development of an oil and gas sector, new institutions are expected to emerge. There might be a risk of overlapping interests and prerogatives. Defining the powers of each institution early on is necessary.

Nasser Hoteit outlines the PA’s vision for the sector

The President of the Petroleum Administration, Nasser Hoteit, spoke in details about the emerging oil and gas sector to Le Commerce du Levant, the leading French business magazine in Lebanon, whose oil and gas section is managed by Middle East Strategic Perspectives. It is the first time a member of the PA speaks to the media without condition of anonymity, highlighting a more confident communications strategy, compared to the more prudent approach that has prevailed until recently.

Hoteit details the PA’s plans for 2014, and replies to our questions about the first licensing round and the interest of foreign companies. He talks about the relations with the ministerial commission tasked with studying the two oil and gas decrees, and explains why the offshore area was divided into 10 blocks. The head of the PA responded to criticisms claiming gas royalties are too low and highlighted the importance of exploiting offshore resources, which have the potential to transform the local economy. He insisted on the need to create a sound environment to attract foreign investments and defended the decision requiring companies to recruit up to 80% of their workforce among Lebanese nationals. Hoteit also talked about transparency and the need for civil society to be involved.

Click here to read the interview in French [paywall].

2014 LIPE & AAPG Northern Arabia Geoscience Conference and Exhibition

The third Lebanon International Petroleum Exploration (LIPE) forum was held in Beirut on May 27-29, in conjunction with the AAPG Northern Arabia Geoscience Conference and Exhibition organized by the American Association of Petroleum Geologists-Middle East.

The conference covered the various aspects of petroleum exploration and production, new discoveries encompassing conventional and unconventional reserves in different environments, and upstream potential in the Middle East. This “Lebanese-American” event was sponsored by two French companies, Schlumberger and Total (other companies were also involved in the preparations, including IFP Energies nouvelles, Shell and ENI) and supported by the Ministry of Energy and Water and the Petroleum Administration. Exhibitors included the Ministry of Energy and Water, PGS and Spectrum.

The LIPE & AAPG conference was the third oil and gas event in Lebanon in May (a conference on “Arbitration and ADR in Oil & Gas”, was held on May 8-9 and the “Oil & Gas: Lebanon’s Wealth Forum” on May 9). Despite the political deadlock and repeated tender delays, the Lebanese offshore potential is still attracting considerable attention.


Previous issues:

Lebanon: The Oil & Gas Report, May 19, 2014
Lebanon: The Oil & Gas Report, May 05, 2014
Lebanon: The Oil & Gas Report, April 21, 2014
Lebanon: The Oil & Gas Report, April 07, 2014
Lebanon: The Oil & Gas Report, March 24, 2014

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