Lebanon has launched its first oil and gas licensing bidding round for 10 offshore drilling and exploration blocks in the east Mediterranean region
Gebran Bassil, Lebanon’s energy minister, said, “The decrees demarcating the maritime exploration blocks and establishing a revenue-sharing model must be passed by the Cabinet before any contracts can be awarded.”
A total of 46 international energy firms pre-qualified last month to bid for offshore hydrocarbon exploration contracts in Lebanon.
Bassil added that there would be a consultation phase up until September 2013, whereby the companies and the governmet will discuss the work on the exploration blocks.
During the first phase, all of the 10 blocks will be open for bidding before the number dropping down to four, according to Lebanese newspaper The Daily Star.
Assem Abou Ibrahim, head of Lebanon's Petroleum Administration, said, “Limiting the first round to four blocks is aimed at improving the country’s position in future negotiations with oil and gas firms.
“While the first round will carry high risks because the geology is not fully known to oil and gas companies and discoveries are not yet substantiated, risks will gradually decrease once discoveries are made, improving the state’s share of revenues.”
Rudi Baroudi, an independent energy expert based in Lebanon, said, “The existence of oil and gas needs to be verified. Drilling offshore exploratory wells is the only way to test hydrocarbon potential in the Lebanese Basin.
“Several identified prospects could be small in size, in deep water locations, and would be uneconomic to drill and operate unless production from several nearby fields is combined.”
Pointing to exploration successes in neighbouring regions, Baroudi said the exploration success rate in the offshore Nile delta of Egypt stood at about 85 per cent.
Bassil said that seismic surveys were increasingly showing high prospects of oil discoveries off Lebanon’s coast, in addition to natural gas, and cited an initial estimate of around 145mn barrels of oil.
The Lebanese government’s net share of oil revenues from the block is expected to stand at between 50-60 per cent.
