Lebanon: tired of waiting
The country has postponed its offshore bid round deadline amid continuing domestic and geopolitical uncertainties
When exactly Lebanon will join the Eastern Mediterranean party still isn't clear. Egypt and Israel have made huge natural gas discoveries in their waters and Cyprus is hoping soon to follow suit. Lebanon, by contrast, hasn't yet reached the starting line.
Back in 2013, the signs looked so promising. No fewer than 46 IOCs were prequalified for a process that would eventually see some of them tapping the estimated 95 trillion cubic feet of gas under Lebanese waters. But then politics put a hammer in the works. For 30 months Lebanon had no president and no effective government.
Early this year, with the political system back on track, the energy ministry announced that the bid round would proceed, with the original 46 firms still able to compete. A 15 September deadline was set. But, to the government's disappointment, no more than about a quarter of the IOCs decided to remain in the competition.
According to energy sources in Beirut, only two consortia have thus far submitted bids, one led by Eni/Total and the other by India's Oil and Natural Gas Corporation. Now, the deadline has been pushed back to 12 October, partly in the hope of more companies submitting bids and partly to enable parliament to complete the approval of energy sector legislation.
At first sight it's hard to see which of the five blocks on offer the interested consortia will bid for. Block 1 in the far north of Lebanon's economic exclusion zone borders Syrian waters and the boundary is contested by the Damascus government. Blocks 8, 9 and 10 in the south are situated next to Israeli waters and the delineation of the common boundary is disputed by both Lebanon and Israel. That leaves just Block 4, close to the Lebanese shore as the only one on offer that's not subject to a dispute.
The likelihood is that those still in the bid round are playing the long game-putting down a marker and hoping that a day will come when Lebanon's domestic and regional complexities are resolved. But that day seems far off. Rival Lebanese political and ethnic groups are already vying to secure a slice of any energy cake that might emerge. There are suggestions, for example, that the Iranian-supported Shia group, Hizbollah, would insist on a share of revenue from blocks in the south, close territory it controls.
Then there's the ever-present possibility of a new conflict between Hizbollah and Israel. In other words it's too early for Lebanon to start feeling in the party mood.
Source: Petroleum Economist