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

Lebanon has extended a deadline for the submission of bids for its second offshore oil and gas exploration licensing round until June 1, citing the fallout from the worldwide COVID-19 pandemic.

The deadline was initially set at January 31st, and then postponed till April 30, before Energy Minister Raymond Ghajar again postponed it till June 1. 

Lana Fayad of Kouatly & Associates told LOGI that the decision was in compliance with Decree 4918/2019 that allows the minister to alter the course of the licensing round with the agreement of Cabinet.  “From a legal point of view and ipso facto they can postpone the second licensing round especially that there was a Force Majeure situation,” she said.

The minister can end or re-launch the licensing round if the number and/or quantity of applications submitted did not serve the objectives of the licensing round. “Compelling circumstances here can be read broadly such as force majeure or any major domestic conflicts that might affect the whole process,” Fayad said.

Additionally, Tonje Gormley, an international oil and gas expert, said that the decision to postpone was “a sensible resource management position,” given the COVID-19 pandemic and the low price of oil

“Basically it's like an auction: you’re trying to get the best price,” Gormley told LOGI. 

“I think every company would now be in the process of reassessing its strategic investment, so for somebody like the Lebanese state who’s out there trying to get the best possible bidder and deal, it's not the best time to progress. I’d say they’ve taken a sensible resource management position.”

Gormley added: “These contracts are long-term so you want to make sure you have the best competition before you close a deal.”

Photo Source: Offshore Technology