BEIRUT: The April 10 deadline for Lebanon’s offshore gas auction is too soon for bidding oil companies, as experience has shown that firms need two to three months to prepare their offers and examine the geological structure, experts said Monday.
“Even if the Cabinet approves the two decrees involving the gas blocks and revenue sharing today, this bill has to pass to the Parliament for endorsement as well. And even if you obtain all the approvals, it’s nearly impossible to meet the April deadline. The companies need at least two months to prepare their bidding,” Roudi Baroudi, secretary-general of the World Energy Council, told The Daily Star.
Former Energy and Water Minister Gebran Bassil postponed the offshore gas auction until April 10, the second delay in less than two years.
The yet-to-be-approved decrees set the conditions for bidding on the gas blocks and determine how many will be auctioned off.
The new energy minister, Arthur Nazarian, a close ally of Bassil and the Free Patriotic Movement, is not expected to amend the decisions his predecessor made.
But nevertheless, observers believe the current Cabinet may not have enough time to discuss the two decrees because this government’s main duty will be to pave the way for the presidential election to be held May 25.
Sources close to the matter said some ministers had reservations about the two decrees and would prefer to amend them before they were referred to the Parliament.
An oil executive also advised postponement of the auction.
“Most countries would set the date of the auction three to four months from the date of the decision in order to give international oil companies time to prepare their bids, study the data and assess all the blocks that will be auctioned off,” the CEO explained.
He added that approving the two decrees would be the right move to take now.
Baroudi said he did not think that oil companies would take their business elsewhere if the auction date was delayed again.
“Oil companies do not like to operate in hostile environments or countries that are experiencing conflict. I think the oil firms realize that gas prospects in Lebanon are high, and for this reason they will wait to bid, even if the auction date is delayed,” Baroudi said.
Experts insist that a further delay of the auction will not affect the country’s credibility.
Bassil estimated that Lebanon was sitting on 96 trillion cubic feet of gas off its coast, and the value of these reserves is close to $600 billion, according to some experts.
But the actual gas exploration is not expected to take place for another three to four years, even if the decrees passed in one month.