On 4 March 2013, The Times reported that the recently discovered deposits of oil and gas in Lebanon have drawn a “stampede” of global energy companies looking to acquire exploration licenses. The newly discovered offshore reserves could potentially make the country one of the biggest natural gas producers in the Mediterranean and are seen as a potential way for Lebanon to make significant inroads into paying off its public debt.
British surveyor identifies Lebanon gas deposits
The Times reported that the British surveyor Spectrum Geo, a unit of the Norwegian seismic service provider Spectrum ASA, had identified offshore gas deposits and is now mapping Bekaa Valley, a mountainous area in the northeast of Lebanon. The Times quoted Spectrum’s chief executive David Rowlands as saying that the company had found the potential for at least 25 trillion cubic feet of natural gas reserves in a 3,000 sq km area off the southern coast of Lebanon, which could be the largest offshore gas find in the eastern Mediterranean.
“We’ve seen 120 oil companies showing interest so far,” added Mr Rowlands. “There’s a stampede; I haven’t seen as much interest since Libya opened up in 2004.”
Licensing round attracting mainly US companies
In February, Bloomberg quoted Lebanon’s Energy Minister Gebran Bassil as saying that Lebanon’s oil and gas licensing round had attracted more companies from the US than anywhere else, with 29 US companies having purchased geophysical data covering the exploration area in the eastern Mediterranean. “Around 25 percent of the data bought is by US companies,” Mr Bassil noted, without identifying any particular companies.
The Times reported that among the companies known to have expressed interest in acquiring exploration licenses are Cove Energy (LON:COV) and Marathon Oil in partnership with Cairn Energy (LON:CNE). Royal Dutch Shell (LON:RDSA, LON:RDSB, NYSE:RDS.A, NYSE:RDS.B) is also reported as being interested.
As noted on Spectrum ASA’s website, Lebanon’s Petroleum Administration launched the opening of pre-qualification to the first offshore Lebanon licensing round on February 15, with the pre-qualification stage ending March 28. Bloomberg quoted Lebanon’s Energy Minister as saying that eligible companies would be notified by April 18.
Bidding is scheduled to start in May and continue for six months, with the first exploration and production agreement signed next February. As reported by The Times, the Lebanese Ministry of Energy and Water estimates that it could start exporting gas and pumping over 90,000 of oil per day by the end of the decade.
Reviving the Lebanese economy
The Times quoted Charles Gurdon, managing director of the risk consultant Menas Associates, as commenting that Lebanon’s oil and gas resources could help rejuvenate the country’s economy. “The first priority is going to be internal demand for power. At the moment large areas of Lebanon have regular power cuts because there’s not enough fuel,” he noted. “Then it will look at a way of exporting gas, and given the proximity, that would most probably be going through Turkey.”
As reported by Bloomberg, the energy deposits could also help Lebanon reduce its $56 billion (£37.2 billion) public debt, the most in the Arab world at 135 percent of annual economic output.