Total is the lead company in a consortium that won contracts in 2017 to explore for oil and gas in Lebanon’s maritime block’s 4 and 9. The other two companies are ENI and Novatek.
The consortium is contractually obliged to drill a minimum of two exploratory wells per block, starting with Block 4, where the first drill location has been set off the coast of Beirut.
What are the chances of drilling before the end of 2019?
Total told LOGI and Kulluna Irada that it had done its best to squeeze a process that usually takes between one and two years into a period of less than one year, without cutting any corners in safety of operations and protection of the environment.
The company said that, for good reasons, it was under pressure from Lebanese authorities to start a well December. “We are being pushed. And we accept that push,” they said.
After presenting their exploration plans to authorities in summer 2018 (showing a well start-up around December 2019) Total said the seismic study proved more complex than they expected. This shifted the planned dates by a few months. “Authorities acknowledged this delay in the studies but insisted we stick to our original commitment to start drilling in December.”
Total is currently in the process of concluding tenders for vital infrastructure, services and equipment that they require in order to drill later this year.
The company still needs a series of permits, visas, exemptions from customs duties and health, safety and environment authorizations from the Lebanese authorities.
“It is realistic to start a well by the end of the year,” Total said.
What do we expect to find on the first drill?
There is a 20% to 25% chance of hitting a commercially viable natural gas discovery on the first drill in Block 4, off the coast of Beirut.
While seismic tests have been promising, thick salt deposits in the Mediterranean make it difficult to predict the type of find that could be made. Drilling is the only way to know for sure.
If hydrocarbons are found, they will likely be in sand and shale, similar to the Tamar gas field in Israel, rather than a carbonate play as is the case with Egypt’s Zohr gas field.
At what stage is the subcontracting process?
Total is looking to award 25 contracts for equipment and services including marine fuel supplies, vessels, logistic bases and helicopters to complete the two months drilling operations.
The company launched the tender process in May and June, analysed bids in July and August, and has begun awarding contracts,a process which it should conclude by October.
Energy Minister Nada Boustani announced in August that U.S.-based contractor Vantage Drilling would supply the drill ship that will be used to drill Lebanon’s first exploratory well.
Boustani announced that she had approved the results of an “international tender” carried out by Total that had led to the selection of the Tungsten Explorer drillship.
How are companies selected?
First, Total screened Lebanese companies to check if there were any potential suppliers for each of the contracts.
When a contract is up for awarding, they develop a Term Of Reference, post it to pre-screened companies for three to four weeks, and then shortlist and eventually choose companies to award contracts to.
Less than 10 potential Lebanese suppliers were identified and invited to the international tender, which makes it difficult to hit the 80% requirement for local employment.
This is due to the very high specialization of the drilling industry.
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