Tayvis Dunnahoe
Exploration Editor
Despite Lebanon's intent to award four of five blocks in its inaugural offshore bid round, Energy and Water Minister Cesar Abi Khalil said the round had received two bids to operate the offshore gas blocks, according to the Lebanese local press, The Daily Star.
Early reports said Khalil declined to disclose the names of the companies involved in the consortium, but according to a graphic posted on Lebanese Petroleum Administration's (LPA) web site, Total SA, Eni SPA, and OAO Novatek have submitted their bids for Blocks 4 and 9.
Block 9 lies to the south adjoining the boundary with Israel, and the block is believed to contain biogenic gas-filled reservoirs with possible migration of hydrocarbon from deep thermogenic source rocks. In July, LPA head of geology and geophysics Wissam Chbat noted at an industry event in Houston that oil seeps are above two structures very similar to the nearby Karish field (OGJ Online, Oct. 2, 2017). The Karish discovery is 6 km from Lebanon's Block 9 maritime boundary and the Israeli Petroleum Commission approved Energean Oil & Gas SA's field development plan in August (OGJ Online, Aug. 30, 2017).
The results of Lebanon's bid round are lower than expected as 51 companies were qualified to bid. The 2013 round prequalified 12 operators to bid along with 34 nonoperating companies, and the Energy Ministry had extended the deadline for its bid round to Oct. 12 from its original Sept. 15 deadline to potentially increase the total number of bids.
Lebanon's Daily Star noted that no US companies submitted offers to explore offshore Lebanon. Both ExxonMobil Corp. and Chevron Corp. were prequalified for the 2013 round, which was canceled due to political disputes and the absence of a petroleum law. Continued insecurity in the region's ability to foster consistent exploration and development efforts may have caused the lack of response from independent operating companies.
Additionally, the oil price was better suited to frontier exploration in 2013, and Khalil noted to the local press that oil price has more effect on exploration budgets than on the state's share in production.
Despite the current outcome, opportunity exists offshore Lebanon. The government intended to award contracts before yearend with exploration beginning in 2018. The Energy Ministry gave no details on the offers made for Blocks 4 and 9, and reported that it would soon announce whether the offers would be accepted. If approved, this would mark Lebanon's first offshore exploration project.
The minister will submit the results of the full evaluation process to the Council of Ministers to take the final decision with respect to awarding blocks and signing the exploration and production (EPA) agreement with the winning consortium.
The exploration phase would begin with the signing of the EPA and would last as long as 5 years with the possibility of a 1-year extension.
