Matt Nash

One step closer?

Lebanon should appoint the six-member Petroleum Administration (PA) board – which oversees exploring for and potentially extracting offshore oil and gas – next month, Energy Minister Gebran Bassil told NOW Lebanon Friday.

Staffing the PA is necessary before Lebanon can move forward with contracting companies to eventually tap any offshore energy resources that may lie beneath the Mediterranean. In January, one of Bassil’s advisors told NOW he expected the board to be named within a month, and the minister told Reuters he expected contracting to begin “within three months.”

Speaking on the sidelines of a conference on the role of natural gas in the Lebanese energy sector, Bassil told NOW, “I hope next month” members of the administration will be named and approved by the cabinet. During a talk at the conference, he said applications for potential board members were due on April 24.

Bassil told NOW “so many” people have applied, but he refused to provide a specific number. “I can’t reveal it now,” he said when pressed.

While speaking at the conference – hosted by the American University of Beirut – Bassil also said 19 international companies have been pre-approved by the ministry to build a 173-kilometer (107-mile) pipeline that would like the Deir al-Ammar power plant in the north to the Zahrani plant in the south.

The pipeline is important if Lebanon begins importing natural gas to fuel the two plants – which would be cheaper than the oil the plants currently use to produce electricity – and it would also be useful should the country ever begin producing natural gas from below the seabed.

Bassil noted that of the companies that have been pre-approved to construct it, “many showed interest in funding it.” However, contracting a company to do so would need the approval of cabinet, and Bassil did not give a timeframe for when that might happen.

Several surveys already conducted off Lebanon’s coast suggest the country has possibly both oil and natural gas reserves nearby. However, two experts at the conference stressed that Beirut’s hope of becoming an energy producer could yet be dashed.

Farouk al-Kasim, president of the resource management constancy Petroteam a.s, noted in a presentation that the waters of the Mediterranean are quite deep, meaning that oil and gas drilling companies will only try to extract resources if they are in “giant” fields.

Samia Nehme, senior business development manager for the UK-based gas company Shell, told NOW Lebanon “nobody knows” for sure if Lebanon will ever be able to end its dependence on energy imports. She and Kasim noted that deep-water drilling is very technically difficult and, therefore, also very expensive.

Nehme also said that, in the best-case scenario, it would take seven to 10 years for any potential resources to be extracted. She refused to say whether or not Shell – which has experience in deep-water drilling – would bid to work off Lebanon’s coast when the contracting process eventually begins.

In the past, the ministry has said that numerous companies have purchased the results of seismic surveys and expressed interest in bidding for licenses to drill, though officials have repeatedly refused to either cite a specific number of companies or name them.

Lebanon has been slow compared to its Mediterranean neighbors in working to exploit potential undersea energy resources. Parliament first passed a law to allow for drilling in 2010, but it required further legislation before attempts to extract possible resources could begin.

Appointing the PA board would move the country a step closer to exploring and possibly drilling, but the PA will still have some work to do before it can begin accepting bids from international companies, such as dividing Lebanon’s offshore waters into blocks.

Lebanon is also currently in a dispute with its southern neighbor, Israel, over an 860 square kilometer chunk of sea. While both Beirut and Tel Aviv have issued bellicose statements about defending their maritime rights, the argument should not prevent exploration or drilling in undisputed waters.

Energy policy, however, has been a major bone of contention in cabinet in the past few months, so it remains to be seen how quickly the government will move in naming members to the PA board. It is likely that the political and religious affiliations of PA board members could be a stumbling block in appointing them.

  • Nabil Ghandour

    I guess the petroleum administration will not see the light of day. Knowing how Lebanon works, the 'zaims' of our government, would be asking the question "so what's in it for ME?" and, ""how are we going to divide all this money?" Yeah, like the country and it's resources actually do belong to them.

    April 28, 2012