After years of domestic political hurdles, the Lebanese oil and gas sector is set to gain momentum soon.
Two prominent political figures - Parliament Speaker Nabih Berri and Foreign Minister Gibran Basil - have recently come to an understanding and the government is apparently geared to set in motion the long-awaited and necessary measures.
Berri convinced Basil, a former energy minister, to drop his objections against offering all 10 blocks to interested companies. The latter had been insisting for the past three years that Lebanon should only offer five blocks.
The pace at which the new understanding happened surprised observers who wondered what really had changed in the equations between the two political rivals.
Lebanon’s economy is weighed down from a mounting public debt which has touched $72 billion mark, about 138 per cent of the country’s GDP.
Lebanon has gas and oil reserves estimated at 96 trillion cubic feet of gas and 865 million barrels of oil currently. A couple of years ago when prices were higher, the total reserves amounted to more than $600 billion.
The Britain-based company Spectrum had estimated the gas reserves in an area of just 3,000 square kilometers off the southern coast at 25 trillion cubic feet based on 3-D seismic surveys carried out in 2012.
“The Lebanese side has received new information which confirmed the existence of substantial amount of oil and gas in the southern offshore fields,” according to Rabih Yaghi, a Lebanese oil and gas expert.
“A detailed seismic study done by TGS, a Norwegian American company, showed these fields were shared with Israel, and since the latter has outpaced Lebanon in using their natural resources, the officials here decided to start doing their job despite being late”.
The TGS report cautioned that Israel could drill for gas that might be in reserves spanning the maritime border. It also showed that Lebanon and Israel could share gas reserves in the south.
“After the cabinet passes the two decrees, the first licensing round shall be launched to which 46 companies have been already qualified. Some believe this should be done within three to six months, but the sooner the better. We can’t lose additional time,” Yaghi told Al Arabiya.
According to Yaghi, Lebanon could have gotten larger benefits if the two decrees were approved three years ago, when dozens of foreign oil companies were keen to start drilling off the Lebanese coast.
Energy minister Arthur Nazarian stated that new companies, which did not take part in the prequalification round a few years ago, are also now interested in getting a foothold in Lebanon.
In April 2013, around 46 oil giants including Chevron, Total, ExxonMobil, Gazprom and Shell had qualified to enter the first round of licensing.
A ministerial committee is expected to meet to formulate the two decrees and amend them before the government vote to pass them. But Prime Minister Tammam Salam has not asked the committee to meet as yet. “We are always afraid of the paralyzed governmental rhythm,” Yaghi said.
“This file is so important for Lebanon because it is the last hope to solve the country’s economic and financial problems. Therefore, it is a priority although other sectors are priorities as well,” he added.
Salam’s reluctance may reflect his objection to the Berri -Basil understanding which has basically sidelined him. The premier told As-Safir newspaper on Monday that he is waiting for things to be ready before he could call for the committee to meet, without providing clarifications.
Yaghi believed that oil and gas companies were always on the search for new reserves in unexplored areas. “The East Mediterranean is a very promising region. But every country is a stand-alone case, that’s why we see interest in countries which are able to maintain levels of security for investors such as Israel or Egypt, especially that offshore oil and gas exploration is a very expensive process,” he said.