This article was published in LOGI's April 2020 newsletter in partnership with Kulluna Irada. 

Oil companies contracted to undertake exploratory drilling in Lebanon’s southern Block 9 may postpone drilling due to instability resulting from the COVID-19 pandemic, Energy Minister Raymond Ghajar said during a press conference. 

“They may delay, and we may accept or not, we will coordinate with them,” Ghajar said. 

Drilling was scheduled to take place before the end of 2020. “Everyone has been affected by the virus,” he said, noting that drilling in Cyprus scheduled for mid 2020 had been cancelled due to the fallout from COVID-19 and low oil prices. 

Ghajar said that the international consortium was contractually obliged to drill in Block 9 by March of 2021. 

If it fails to meet its obligations, Lana Fayad of Kouatly & Associates told LOGI that the consortium would be obliged to pay a $40 million penalty, with a potential deduction for recoverable costs. 

She said the Cabinet could legally choose to extend the exploration deadline. Meanwhile, the consortium may be able to claim Force Majeure due to the COVID-19 pandemic, in which case it could ask for an extension equal to the amount of time that its works were interrupted by the prevailing circumstances.

Image Source: The Daily Star