French oil company Total is expected to specify within six weeks the location of the well to be drilled by its subcontractors in Block 9 of Lebanon’s waters, Wissam Chbat, board member at the Lebanese Petroleum Administration (LPA) and head of LPA’s Geology and Geophysics Unit, told the Chinese news agency Xinhua.
“Total will keep in mind that it should complete its drilling of the well in Block 9 before the end of May 2021,” Chbat said.
Total drilled a well in Block 4 earlier this year but it did not find sandstone reservoirs such as those found in Palestine and Cyprus.
“The lithology Total found in block 4 exploration well had carbonated formation which could be a reservoir rock but these types of rocks need to be further evaluated since the drilling focused only on sandstone reservoirs,” Chbat said.
Chbat said that commercial hydrocarbon accumulations may be present in Block 4 but in different locations of the block.
“The block’s size is around 1,900 square km while the drilling targeted an anticlinal trap about 35 square km to find that there is no sandstone reservoir. But if we drill in other areas of the same block or if we go deeper in the same well location we may find both sandstone and carbonate reservoirs that have similar geologic age encountered in Tamar gas field,” he said.
A consortium comprising the energy companies Total, Eni and Novatek was awarded contracts to drill in Block 4 and Block 9 by the Ministry of Energy and Water (MoEW) in 2018.
Chbat said that the first oil and gas exploration period extends from 2018 to 2021 for both blocks 4 and 9, and that Lebanon is working according to the approved exploration plan.
He said that Total intends to continue its exploration activities in Lebanon for the time being and is preparing for drilling in Block 9.
“The company will finish its environmental impact assessment which will require an approval by the LPA, the Ministry of Environment and the MoEW while completing other required procedures and meeting with the energy ministry’s officials and LPA representatives,” he said.
He said that subcontractors working with Total may demobilize their equipment and personnel for the time being since they may have to work in other fields until the time for drilling in Block 9 arrives.
“Total may want to re-tender some of the services to save money due to the difficult economic situation worldwide or it may convince its current subcontractors to lower their prices,” he said.
Chbat said that Total has placed a bank guarantee for the minimum work commitment (drilling one well) valued at $40 million for each block which means that if they fail to complete the minimum work commitment, the MoEW has the right to call the guarantee.
He said that Total may chose to relinquish part or all the acreage of any of the two blocks at the end of the first exploration period (ending May 2021) after drilling the two wells or they may wish to continue drilling other wells in the same blocks by issuing another bank guarantee to cover the minimum work commitment for the second exploration period (three years) in each block.
In February 2018, Lebanon signed its first offshore oil and gas exploration and production contracts for blocks 4 and 9 and began drilling for oil and gas in its territorial waters on February 26, 2020.
The country launched in April 2019 the second licensing round for offshore oil and gas exploration in five blocks. However, it postponed on May 31 the deadline for submitting offers for the second licensing round amid the COVID-19 outbreak.
The outbreak of COVID-19 all over the world has devastating effects on the petroleum sector, leading to low demand for oil and gas and a sharp decline in the prices of these two commodities prompting oil-mining companies, to reduce their investments in such projects.