Lebanon to restart oil, gas licensing round after three-year delay

Lebanon intends to restart its first oil and gas licensing round after a three-year delay, the energy minister said on Thursday, hoping to kick-start the development of a hydrocarbon industry stalled by national political paralysis.

In its first sitting since being formed in December, Lebanon's new cabinet passed two decrees on Wednesday defining the blocks and specifying conditions for production and exploration tenders and contracts.

The country's offshore resources could bring a major economic boost to a country whose financial mainstays including tourism have been hit by conflict in the region and Beirut's own political turmoil. But analysts warn of challenges ahead and that investor confidence has been shaken by the setbacks.

Lebanon will offer five offshore blocks for exploration and production and is to hold another pre-qualification round for companies interested in bidding, Minister of Energy and Water Cesar Abou Khalil told a news conference.

Lebanon, along with Cyprus, Israel and Egypt, sits on the eastern Mediterranean gas field discovered in 2009.

The Lebanese government has estimated with a probability of 50 percent it has 96 trillion cubic feet of natural gas reserves and 865 million barrels of oil offshore, but squabbling between parties has prevented the passage of vital laws needed to develop the sector.

Abou Khalil said if all goes to plan exploration contracts could be signed in nine months and drilling could take place in as little as a year and a half after that because a lot of the necessary mapping and analysis has already been done.



With large debt, stagnant growth and bearing the costs of more than 1 million refugees from neighboring Syria's conflict, Lebanon would benefit from the revenues, job creation and increased economic activity that might accompany a hydrocarbon industry.

But analysts urge caution, saying until drills actually break ground, there is no way of telling how much gas or oil there really is and potential economic impact is a complete unknown.

Sami Atallah, executive director of the Lebanese Center for Policy Studies, said it could take around seven years before revenues start to flow.

"Oil and gas are not the answer," he said. "You don't want it to stall reforms ... to be a disincentive for making changes to the economy."

Industry watchers say Lebanon needs to now produce transparent road maps and regulatory framework for the energy industry. This will boost investor confidence and avoid the accusations of corruption which surround many of Lebanon's public services and industries such as refuse disposal, telecommunications and electricity.

"The oil and gas industry can be a curse or a blessing," said Diana Kaissy, of the Lebanon Oil and Gas Initiative, a non-governmental organization promoting transparency and policy development in the hydrocarbon sector.

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