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Instability scaring off some oil, gas bidders

File - A worker operates aboard the Polarcus Adira seismic vessel off the shore in Beirut, Thursday, May 30, 2013. (The Daily Star/Mohammad Azakir)

BEIRUT: As officials appeal to speed up the development of Lebanon’s nascent oil and gas industry, a source involved in the bidding process told The Daily Star that some of the firms which initially qualified have decided to withdraw from the next round. Political instability, security breaches and the possibility of Israel drawing off oil and gas resources from Lebanon’s reservoirs are proving major challenges in the country’s ongoing first licensing round.

“There are a few companies that withdrew [from the round], others who are weighing options and others that lost a bit of interest,” the source said, declining to elaborate further. “Some companies had technical reasons, but of course the political and security situation played a major role.”

The source declined to identify any firms and The Daily Star could not independently verify the claims.

Fourteen international oil and gas companies qualified in April as operators while 38 qualified as nonoperators for the first licensing round.

In addition to political and security problems, the Energy Ministry sounded last week alarm bells over Israel’s ability to siphon resources from Lebanon and has urged President Michel Sleiman and caretaker Prime Minister Najib Mikati to hold an urgent Cabinet session to pass two key decrees that enable the ministry to award oil and gas exploration contracts.

The ministry’s concerns over potential Israeli attempts to exploit Lebanon’s wealth emerged after Noble Energy, a U.S.-based company working offshore Israel, announced in May a natural gas discovery named Karish, 32 kilometers northeast of the Tamar field, in very close proximity to Lebanon’s EEZ.

“Discovered gross resources, combined with the de-risked resources in an adjacent fault block on the license, are estimated to range between 1.6 and 2 trillion cubic feet with a gross mean of 1.8 tcf,” a statement by the firm said.

Head of Lebanon’s energy parliamentary committee MP Mohammad Qabbani said Thursday that Lebanon had four months to come up with a plan to safeguard its oil and gas wealth.

“Lebanon should start drilling from the south of our exclusive economic zone in the first licensing round to guarantee our rights. ... The priority should be given to the border blocks 8, 9, and 10 which are in close proximity to Karish,” the MP told a news conference.

He also called for the establishment of a national oil and gas company, adding that a draft law would be prepared in this regard.

Bashir Bassatne, manager of BB Energy, echoed Qabbani’s call to start awarding contracts for blocks in the EEZ’s southern region. He added that reservoirs in the area were most likely to stretch across the borders not only with Israel but also with Cyprus.

“In the absence of an agreement to divide natural resources, an unlikely outcome [given Lebanon and Israel’s state of war], it will be a race over who exploits the wealth first,” he said.

 
A version of this article appeared in the print edition of The Daily Star on July 12, 2013, on page 5.

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