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Lebanon delays gas tenders, sets up admin

Beirut, April 10, 2012

Lebanon is delaying tenders for offshore exploratory drilling as it sets up an oil and gas oversight committee, but seismic tests suggest increasingly large potential gas reserves, Energy and Water Minister Gebran Bassil said.

Interest in drilling in the eastern Mediterranean has grown since two natural gas fields were discovered off the coast of Israel, Lebanon's southern neighbour. Estimates value those reserves at tens of billions of dollars.

Lebanon had aimed to launch tenders for exploration drilling by the end of March, but oil industry sources recently said the licensing round was expected around mid-year.

Bassil told Reuters in a telephone interview that delays in establishing an administrative state oil body were holding up the plans but did not set a new target date for the licensing round.

'Before we form the committee, we can't talk about tenders,' he said.

Twenty-seven companies have bought seismic surveys of the coastal waters, and several have expressed interest in drilling including British oil explorer Cairn Energy and London-listed Genel, he said.

Cairn's local partner is CC Energy Development S.A.I, an associated company of CCC, a Lebanese private company.

Cove Energy, currently subject to a bid battle between Royal Dutch Shell and Thailand's PTT, has also said it is mulling entering the licensing round with Cairn and CCC.

Analysis of three-dimensional seismic data is continuing and has showed increasingly encouraging prospects, Bassil said.

'We can't talk today about expected (quantities of gas), but every time (we review the data) it gets better,' he said. 'Between the 2-D and the 3-D surveys we confirmed additional quantities three to five times higher in the survey areas.'

'There is a high possibility of very promising commercial quantities of gas,' he said.

Any sizeable gas discovery and production could help Lebanon tackle chronic power shortages, which result in daily power cuts across the country of between three to 10 hours.

Bassil plans to lease two electricity generating boats, possibly from Turkey, to meet some of the shortfall, while the government addresses plans to build new power plants or expand existing ones.

Lebanon remains in dispute with Israel over an 850-square-km stretch of sea off their coast, but Bassil has dismissed concerns over possible delays to drilling because of the disagreement.

The disputed region lies near to a region where U.S. and Israeli firms discovered the two massive natural gas fields.

Lebanon's powerful Hezbollah, a Shi'ite Muslim political party and militant group that fought a war with Israel in 2006, has warned it will defend the country's natural resources, but United Nations officials said last year the two countries were working to avoid conflict. – Reuters




Tags: Gas reserves | lebanon | offshore | Beirut | tenders | Seismic |

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