Lebanon poised to delay gas auction date

A map shows the southwest zones where gas is located.

BEIRUT: International oil companies want the April 10 offshore gas and oil auction to be pushed back at least three months to allow them more time prepare bids, a source said Wednesday.

“The oil companies that showed interest in Lebanon’s gas and oil wealth are not planning to make any investments in oil blocks for the time being,” a Lebanese source familiar with the auction told The Daily Star. “They need to know the number of blocks that will be auctioned off and the conditions for exploration.”

He added that some of the firms had reallocated investments to other countries that had already passed laws and named blocks for auction.

“At present, we are not on the map for investments. These investments will only take place once the decrees have passed and blocks are named,” the source said. “They also need more time to put their resources together.”

Former Energy and Water Minister Gebran Bassil delayed the auction multiple times, after the caretaker Cabinet failed to pass two decrees to establish the number of blocks that would be auctioned and set the revenue mechanism.

The source stressed that even if the decrees were passed by the Cabinet this week, the energy minister had no choice but to set a new date for the auction.

A CEO of an international company involved in the process warned, however, that Lebanon would face stiff competition, considering that several other countries had recently opened up all of their shoreline for drilling and exploration.

“Greece, Croatia and Montenegro have invited the international oil companies to bid for all of the available blocks,” the CEO told The Daily Star. “These countries did not restrict the companies to bid for three or four blocks only as in Lebanon’s case.”

He added that it would be advisable for Lebanon to open all 10 blocks for bidding.

“This way the companies can choose two or three blocks out of the 10 blocks Lebanon has. At the moment, Lebanon is facing competition with countries that have opened up all of their offshore for bidding,” the CEO said.

However, many experts in the oil and gas field have said that Lebanon should only include a limited number of blocks in the first auction.

Commenting on the U.S. efforts to mediate between Lebanon and Israel over the disputed maritime waters, the Lebanese source said that as far as Lebanon was concerned, the entire zone was part of its own territorial waters.

“Lebanon has identified the zone as area 23 or triangle 23. The area is located in the far south, which is close to the Israeli territorial waters. The Americans have offered to draw a line in the border to help both sides explore gas,” the source said.

But he insisted that all 10 blocks, including the disputed area, were up for grabs.

“It is up to the oil companies to apply or not for area 23 which stretches over 860 kilometers off the Lebanese coast,” the source said.

However, the source admitted that international oil companies are hesitantto drill in disputed areas.

“It took Russia and Norway 40 years to reach an agreement over a disputed zone,” he said. “These things happen even between friendly countries.”

Amos J Hochstein, U.S. deputy assistant secretary for energy diplomacy, told The Daily Star earlier that Washington advised Lebanon not drill in the disputed zone until a solution was found.

He also said that Washington had offered to mediate indirectly between Lebanon and Israel to settle the dispute.

A version of this article appeared in the print edition of The Daily Star on April 03, 2014, on page 5.




Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (

comments powered by Disqus



Interested in knowing more about this story?

Click here