The Minister Energy and Water, Cezar Abi Khalil, declared on Friday 15 December 2017 that the exploratory drilling will effectively commence in 2019 within the two blocks 4 and 9 located in the north and south of the offshore of Lebanon, respectively. His announcement came after the Cabinet approval for the license for an international consortium englobing three companies: Total, Eni, and Novatek. Thus, he explained the technical and financial parts of the contracts.
He started by identifying the technical aspects that will frame the future steps. The exploration will take place upon two phases: the first 3-years exploration phase will be followed by a second 2-years phase which could be extended to 3-years if needed. He emphasized that one exploratory well per phase will be drilled in each block. This applies on both blocks 4 and 9. Hence, 4 wells will be drilled within a duration of 5-6 years. There is also a possibility to drill an additional well.
Moreover, he straightened out the financial aspects by revealing the government’s share for each of the blocks. These percentages were obtained based on 9 scenarios that considered the size of the reservoir and the prices. The government’s take on block 4 ranges between 65 (as a worst scenario) and 71% (as a best scenario) and that of block 9 being 55-63%.
He also confirmed that oil and gas exploration will create job opportunities (i.e. 80% of the employees should be Lebanese, priority for the Lebanese suppliers and contractors, etc.).
Timeline of activities:
January 2018: Submission of the contracts and necessary documents to be signed by the companies
2018: Signature of the Minister to begin the drilling phase
2018: The necessary studies and preparations will be elaborated.
2019: Drilling will occur in a consecutive manner (block after another). Exploration phase starts.
While the Lebanese Oil and Gas Initiative (LOGI) applauds the step that the ministry has taken, LOGI has several demands as further complementary steps: contract disclosure, correct implementation of contracts, getting public consultation on the new Strategic Environmental Assessment (SEA) and the work being done on it according to LOGI’s recommendations in addition to the publication of Environmental Impact Assessment (EIA).