Lebanon says Russia, Europe eye investment in oil and gas

Fri, 2019-06-14 23:01

BEIRUT: Russian and European firms are considering investments
in Lebanon’s nascent oil and gas sector as it prepares to launch
offshore drilling by the end of 2019, Energy Minister Nada Boustani
“Several big companies have visited Lebanon,” she told AFP in
an interview.
“We are talking about Gazprom (Russia), Lukoil (Russia), and
soon, the BP firm (Britain) is expected to visit,” the
39-year-old minister said in her office in Beirut.
“There is also interest from Total (France), ENI (Italy) and
Novatek (Russia).”
US firms have not yet participated in offshore bidding rounds.
But US State Department official David Satterfield told Boustani on
Wednesday that Washington “has no problem with US firms
participating” in the energy sector, she said, calling this a
“positive step.”
Last year, Lebanon signed its first contract to drill for oil and
gas in its waters.
A consortium comprising energy giants Total, ENI and Novatek took
the first two of its 10 blocks, including one disputed by
neighboring Israel with which Lebanon has fought several wars.
On April 5, Lebanon invited international consortia of at least
three companies to bid for five more blocks by the end of January


 On Thursday, Boustani wrote on Twitter that she had met with
the regional head of BP who said his company was “interested in
the second licensing round.”
Two more of the blocks now up for tender are also adjacent to
Israel’s waters.
Israel and Lebanon are technically at war, although the last
Israeli troops withdrew from southern Lebanon in 2000 after two
decades of occupation.
This has complicated attempts to demarcate land and maritime
borders with Israel, which produces natural gas from reserves off
its coast in the Mediterranean.
In recent weeks, Satterfield has been mediating in indirect
negotiations between the two countries over their disputed maritime
border, whose delimitation could affect offshore exploration.
“If we agree on entering talks with Israel, then in addition to
negotiations over the maritime borders, we will also discuss ways
to divide offshore oil and gas fields,” Boustani said.
Lebanon is set to start drilling in block 4 in December, and later
in the disputed block 9.
Last year, Total said it was aware of the border dispute in less
than eight percent of block 9 and said it would drill away from
that area.
In the wider region, Lebanon is also considering agreements with
other neighbors.
In January, representatives of seven Mediterranean countries —
including Egypt, Cyprus and Israel — agreed on establishing the
East Med Gas Forum, a Cairo-based body that aims to create a
regional gas market to benefit member states.
Lebanon refused to take part in the forum because of the
participation of Israel, but it has since started working on
separate deals.
In April, Lebanon and Cyprus said they were working together toward
a deal over adjacent oil and gas exploration zones in the
“We have made way for negotiations with Cyprus and we are doing
the same with Egypt,” said Boustani, the youngest sitting
minister in Lebanon’s government.
“We can’t be involved where the Israelis are,” she said,
referring to the East Med Gas Forum.
“But nothing prevents us from striking a tripartite agreement”
with Cyprus and Egypt, she added.
Laury Haytayan, a Middle East oil and gas expert, says such a
tripartite deal is one way for Lebanon to secure strategic regional
alliances in the energy sector.
Lebanon may also have to strike a deal with Syria, with which it
also has a maritime border dispute.
Two of the five blocks up for bidding until January 2020 border
Syrian waters, which may complicate drilling.
“There is certainly room for (negotiations) with Syria, and we
need to look into this very soon,” Boustani said. “When the
government agreed to open blocks 1 and 2 for bidding … this means
that it knows a deal will be brokered” with Syria, she said.
But divisions among Lebanon’s political class may complicate such
an agreement.
Prime Minister Saad Hariri and his Future Movement refuse a
normalization with Damascus.
Syrian regime backer Shiite movement Hezbollah and its Lebanese
ally the Free Patriotic Movement, however, are in favor.
Haytayan said that Russia may take the lead in negotiations because
Moscow is interested in conducting exploration works on block 2.
“The Russians could mediate between Lebanon and Syria and
together they will put in place a plan to share resources and
outputs,” she said.
While many hurdles still stand in the way, Boustani says she has
“big hopes for this industry.”

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Source: FS – All-News-Economy
Lebanon says Russia, Europe eye investment in oil and gas