Lebanon to auction energy rights in area contested by Israel

Dana Khraiche January 27, 2017

BEIRUT (Bloomberg) -- Lebanon wants to auction energy rights to areas in the Mediterranean Sea contested by neighboring Israel and will invite more companies to qualify for bidding next month.

The new bidders can apply Feb. 2 to March 31, Energy Minister Cesar Abi Khalil told reporters at his office in Beirut. The ministry will select license winners by Nov. 15, he said. Lebanon’s cabinet approved two decrees earlier this month allowing the Middle Eastern nation to move ahead with development of its energy assets, ending three years of delays.

Five blocks will be available for exploration and development, including areas that lie in waters disputed by Israel. “This is our natural and sovereign right,” Khalil said Thursday.

Lebanon has lagged behind Cyprus, Egypt and Israel in developing oil and gas deposits that may lie beneath its share of the Mediterranean. Earlier seismic surveys show the country could hold at least 96 Tcf of gas and 850 MMbbl of oil. Lebanon, which is struggling with power shortages and hosting more than a million refugees, needs revenue to reduce its public debt, the highest as a share of annual economic output among Arab states.

Israel is following the developments closely, Foreign Ministry spokesman Emmanuel Nachshon said by text message.

“Israel has already made clear its position on its northern maritime delimitation,” he said. “The Government of Israel is committed to ensuring that its rights are protected on maritime areas in which Israel asserts sovereign rights or jurisdiction.”

Exxon Mobil Corp. and Eni SpA are on a list of 46 companies that qualified in 2013 to bid as operators to explore off Lebanon’s coast. Suncor Energy Inc. and Rosneft Oil Co. are among 34 companies already qualified to bid as non-operators, according to government data. They will all still be permitted to bid in upcoming auctions, Khalil said.

The energy ministry will announce the newly qualified bidders on April 13, and bids must be submitted before Sept. 15, Khalil said. Qualified companies will have to agree among themselves to form a group, with at least one company serving as operator, Wissam Chbat, head of the Lebanese Petroleum Administration, said in an interview. These companies will have to apply jointly for each block they wish to develop, he said.

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