Abu Dhabi, UAESunday 26 January 2020

France's Total to begin drilling offshore Lebanon next month

Beirut is keen to kick-start exploration as it looks to reduce its energy import bill

Lebanon's economic crisis has led to nationwide protests over the last two months. The country needs its exploration programme to work to reduce its energy import bill.
Lebanon's economic crisis has led to nationwide protests over the last two months. The country needs its exploration programme to work to reduce its energy import bill.

French energy oil major Total will begin drilling for gas in the eastern Mediterranean waters offshore Lebanon as the country looks to kick-start oil hydrocarbons exploration.

The company, which is part of a consortium consisting of Italy’s Eni and Russia’s Novatek, will drill a well in Block 4, that was awarded in 2017.

“The launch of this licence and handing it over to the consortium of Total, Eni and Novatek is the first step in the discovery of potential oil and gas reserves in Lebanon,” Lebanese Energy Minister Nada Boustani said.

The drilling process could take up to two months, with an additional two months required to evaluate the commercial viability of any potential gas discoveries, she added.

The Total-led consortium won two blocks offshore in Lebanon’s first licensing round held under the government of now caretaker prime minister Saad Hariri.

Lebanon has one of the highest debt to gross domestic product ratios in the world, with public debt reaching $86 billion (Dh325.8bn), equivalent to 150 per cent of GDP. The country’s worsening economic crisis fuelled nationwide protests the past two months. The country’s debt crisis has worsened in recent years, exacerbated by political uncertainty, internal disagreements and the burden of hosting more than a million Syrian refugees, about a quarter of the population.

Revenue from the offshore oil and gas deposits would help the country shore up its finances and be a net positive.

The licensing round and plans for exploration and production are key to lowering the country’s energy import bill. Lebanon imports about 90 per cent of its energy needs, which is environmentally inefficient fuel oil, to keep power stations running. That still does not meet demand and energy cuts through the day range from three to nine hours across the country.

Several high-profile discoveries in the Mediterranean over the past couple of years, notably in Israel, Egypt, and Cyprus, have raised hopes of a similar yield offshore of Lebanon. However, an absent government and political bickering has stalled plans to pursue exploration work in the disputed area, and efforts to tender the blocks.

In 2018, Total chief executive Patrick Pouyanne told The National the consortium would stay clear of waters contested by Israel, which is technically in a state of war with Lebanon.

“We are a commercial company and we do things respecting the laws of the country and in the end, we do not target to drill anything near the Israeli border,” he said.

Israel, which launched a simultaneous licensing round, completed its second round of bid auctions for oil and gas concessions in July. It is currently preparing to start production from Leviathan, its largest natural gas field. The country also plans to export the fuel to Egypt, with plans in the works to deliver gas to neighbouring Jordan.

Updated: December 15, 2019 06:26 PM

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