Energy firms offer bids for blocks four and nine
Demarcation dispute possible source of fewer-than-expected tender submissions
A consortium of three international companies made a bid to explore gas in maritime blocks four and nine which could usher in a new era for Lebanon if the offers are approved by Cabinet.
The announcement by Energy and Water Minister Cesar Abi Khalil came in a statement to the press Friday, after the minister told The Daily Star Thursday that the Lebanese Petroleum Administration has received two bids to explore for gas in two of the five blocks on offer.
The companies which made the offers were Total SA (France), ENI International B.V. (Italy) and JSC NOVATEK (Russia).
“The LPA submitted Friday to the Energy and Water Minister a report about the offers made in the first licensing round which was concluded Thursday,” Abi Khalil said in a statement.
He added that Total SA, ENI International B.V. and JSC NOVATEK have requested a license to operate blocks four and nine off the Lebanese coast.
“In view of the offers, we can say that the results of the first licensing round was very positive and Lebanon was able to draw international companies with wide experience in exploration and development of gas fields and can access the international markets for export,” the minister said.
He added that Israel has postponed its licensing round three times without getting any results.
Abi Khalil stressed that LPA has sent a preliminary report and it will send a second one, which contains more details about the offers made by the companies.
The minister will send the final report about the bidding to the Cabinet to study it carefully before approving it.
“Upon the results of the evaluation process, the Lebanese Petroleum Administration will submit to the energy and water minister an evaluation report no later than of Nov. 13, 2017. Accordingly, the minister will submit the results of the full evaluation process to Cabinet to make the final decision with respect to awarding blocks and signing the Exploration and Production Agreement(s) with the winning consortium(s). The EPA follows a preset model issued in Annex 2 of Decree 43/2017,” a statement by LPA said.
The Energy Ministry said earlier that 51 international companies were prequalified to bid for licenses to explore gas off the Lebanese coast.
But there was no explanation as to why the rest of these firms did not make official offers to operate and develop the potential offshore gas reserves.
A MP told The Daily Star that the offers made by three leading international companies are a major step that could add Lebanon to the international oil producing club.
“We should not question why other firms did not bid for the blocks. Cyprus had a very difficult time to encourage many companies to explore for gas,” he added.
The lawmaker argued that blocks nine and four do not fall within the disputed zone with Israel.
“I don’t think the international oil companies are too keen to Israeli territorial waters for the time being,” he explained.
Israel claims that a stretch of 870 kilometers of blocks eight, nine and 10 belong to it.
But Lebanon has insisted repeatedly that the entire three blocks near the Israeli territorial waters are part of Lebanese waters.
Lebanon has proposed the demarcation of the disputed zone by the United Nations, a request rejected by Israel.
“The ultimate goal of the exploration phase is be to strike a commercial discovery, hence the awarded consortium(s) is (are) committed to implement an exploration program based on the petroleum industry highest standards and practices,” the LPA said.
Abi Khalil told the Daily Star Thursday that the actual extraction of gas would take between five and six years.
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