While depositors in Lebanon were demonstrating in front of the home of caretaker Prime Minister Najib Mikati to demand their unaccounted-for rights, the Minister of Energy in this government, Walid Fayyad, was promising the Lebanese that oil and gas exploration off the Lebanese coast would begin next September.
Speaking on the sidelines of the World Utilities Congress in Abu Dhabi, Fayyad said there was reason for optimism after the CEOs of Total Energies and Eni expressed optimism about Lebanon’s Block 9.
Lebanon will know before the end of this year whether there are scalable offshore oil and gas reserves, he said.
The minister said he hoped any discovery would open the door to further investment in Lebanon’s offshore oil and gas sector.
He said the potential discovery could determine whether a deadline for receiving applications for exploration in eight other offshore areas would be extended again beyond June.
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“I heard from field participants that they are keen to reach a conclusion to drilling in Block Nine before they make decisions on further investments or commitments in Lebanon,” he told reporters.
“In the end, if we don’t have enough interest and participants, we have to adapt,” Fayyad added.
That means that so far nothing is settled about certain amounts of oil and gas, which analysts throw random figures on expected revenues from this sector that could support the collapsing economy.
Even if quantities of gas are discovered, the process of getting the material to market can take more than five years from the moment exploration begins.
It will take several years to reach peak production of one billion to two billion dollars a year, which means that these amounts will not be a lifejacket for the economy as financial losses are estimated at around $80 billion.
In early May, France’s Total Energy, in agreement with its partners Eni and Qatar Energy, announced the signing of a contract with Transocean, the world’s second-largest offshore drilling contractor, to lease an excavator that will drill an exploratory well in Block 9 off the coast of Lebanon as early as 2023.
The Transocean delegation held talks with Lebanese officials to create a dossier on all the administrative, legal, and financial procedures required to start drilling the well in Block 9.
In October, the French oil and gas major reached an agreement with the Lebanese government on the fate of the gas field, as the maritime border agreement with Israel entered into force.
Lebanon’s first licensing round in 2017 saw a consortium of Russia’s Total Energy, Eni, and Novatek win bids to explore blocks 4 and 9.
But Novatek withdrew in September 2022 in the wake of the Russian-Ukrainian war, leaving its 20 percent stake in the hands of the Lebanese government. Qatar Energy later acquired a 30 percent stake in the alliance, with Total Energy and Eni retaining 35 percent each.
And what about electricity?
Fayyad said a World Bank-funded deal to supply electricity from Jordan and natural gas from Egypt via Syria had so far made no progress after the bank requested further reforms before it could be implemented.
But he said Lebanon aimed to increase imports from Iraq by increasing the size of an existing swap deal and through new trade deals.
Lebanon and Iraq renewed an annual agreement allowing Beirut to import one million tons of heavy fuel oil each year. In return, Iraq receives Lebanese healthcare and other services.
“We are talking about hopes of increasing the quantity and we aim to conclude another contract under which we will get fuel from Iraq on a commercial basis on deferred payment terms,” Fayyad said.
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