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Abu Dhabi, UAEMonday 10 December 2018

Lebanon approves offshore energy exploration bids

Beirut hopes potential gas discoveries can help meet domestic power demands and ease huge import bills

Lebanon's Oil Minister Cesar Abi Khalil is seen at the presidential palace in Baabda, Lebanon December 14, 2017. REUTERS/Mohamed Azakir
Lebanon's Oil Minister Cesar Abi Khalil is seen at the presidential palace in Baabda, Lebanon December 14, 2017. REUTERS/Mohamed Azakir

Lebanon's cabinet approved offshore energy exploration bids for two blocks by a Total-led consortium, according to a notice on the website of the Lebanese Petroleum Administration (LPA), as the energy-deficit country hopes to become an energy producer for the first time.

The council of ministers on Thursday approved the awards of exclusive petroleum licences for exploration and production for the two blocks to the consortium, which also includes Italy’s Eni and Russia’s Novatek.

“Congratulations to the Lebanese people on the adoption of the oil decree and on Lebanon joining the club of oil countries,” Lebanese energy and water minister Cesar Abi Khalil tweeted on Thursday.

The National reported last month that the LPA, the body that governs upstream oil and gas operations in the country, would hold discussions with the consortium, which submitted the sole bids for the two blocks in October.

High-profile discoveries offshore the Mediterranean in Egypt and Cyprus have raised Lebanon’s hopes of finding hydrocarbon reserves to help mitigate its huge energy import bills, which have added to the country's rising budget deficit.

The country currently burns environmentally inefficient fuel oil, of which 90 per cent is imported, to keep its power stations running. A population surge from refugees fleeing the civil war in neighbouring Syria has added to rising power demand.

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According to some Lebanese government estimates, the territorial waters of the country could hold as much as 96 trillion cubic feet of natural gas and 850 million barrels of oil, which could translate into huge savings for its economy and end its dependence on fuel imports.

Lebanon's hopes for energy independence revived last year following the formation of the new government. In January, the energy ministry passed two decrees to kickstart a stalled tender process for nine offshore blocks.

The Lebanese government had also passed the much-awaited petroleum tax law in September, just ahead of the October deadline for companies to form consortia of three to submit bids.

One of the blocks, which the Total-led consortium will now conduct studies in, lies in disputed territory with Israel, which remains at war with Lebanon and has threatened arbitration should Beirut sanction exploration work in the area.