Lebanon’s oil & gas sector is stepping into the implementation phase

The Ministry of Energy and Water published the full text of the exploration and production contracts signed with the consortium made up of Total, Eni and Novatek. Lebanon is the first country in the Eastern Mediterranean to disclose signed agreements, and – regardless of the provisions in this agreement – this is a welcome move that deserves to be highlighted. Click here for Block 4’s EPA, and here for Block 9’s EPA.

There were indications that the LPA and Ministry of Energy intended to disclose the contracts, but it’s all in the timing: It’s one thing to make them available at the beginning of the process and another thing to disclose them further down the road. As we have said in our roadmap:

if Lebanon wants to send a positive and symbolic signal early in the year, a good starting point would be to publish the two contracts that were signed at the end of January with the Total-Eni-Novatek consortium. Failure to publish the contracts would undermine efforts to build a clean and transparent Lebanese oil and gas industry.

Another positive development is the submission, end of March, of the initial exploration plan by the consortium to the energy minister and the LPA. If it meets all the criteria specified in the EPA, the plan should be approved within a maximum period of 60 days. As the country is currently in election mode, there’s no doubt that officials at the Ministry of Energy would prefer to approve the plan ahead of elections to avoid a possible deadlock afterwards. During the first exploration period (which extends over a period of three years), the consortium will, at a minimum, drill one exploration well at a minimum depth of 4,400m in Block 4 and another one in Block 9 (in the northern part of the block to avoid complications arising from the maritime border dispute).

On the day it is approved, the exploration phase will have officially started, and the nascent sector will move to an early phase of implementation. That is when the governance structure will be put to test. The process has so far exhibited similar dynamics and obstacles that one expects a potentially promising sector – one that is also perceived as lucrative – would face in Lebanon. Positive and symbolic signals, like the decision to disclose the contracts, are welcome but will not be enough on their own. Ideally, we would all like things to proceed smoothly over the coming phase, without obstacles or delays. We will be holding our breath after the May 6 parliamentary elections hoping that the cabinet formation will not take too long this time. And again as we approach the December 4 deadline and the expiry of the LPA’s board mandate.

These and other topics will be discussed at this year’s Lebanon International Oil & Gas Summit (LIOG 2018), which will be held in Beirut on 24 and 25 April. MESP is once again a partner in this event organized by Global Events Partners and Lebanon’s Planners and Partners and held under the auspices of the Ministry of Energy and Water. Beirut Energy Club members and MESP subscribers are entitled to a 10% discount on delegate rates when booking through MESP.

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