Page 4 - MEOG Week 46

MEOG Commentary MEOG
Total set to begin
Lebanon exploration
Following the arrival of drilling equipment, a consortium led by Total is preparing to spud the first well in Lebanon’s offshore as the deadline for the country’s second bid round nears.
LeBanon
What:
Total, ENI and Novatek are planning to drill
in block 4 in January, following up with a well in block 9 in Q2.
Why:
The consortium was awarded the blocks early last year, and beirut will be hoping that it can replicate the exploration success of neighbouring Cyprus and Israel.
What next:
The profile of those involved is a major boon for Lebanon, though early disappointments would put future efforts under question.
FrENCh super-major Total is set to kick off exploration efforts in the waters off Lebanon, with the drilling rig en route to Block 4, north- west of Beirut.
Comments over the last week by Lebanese Water and Energy Minister Nada Boustani and Total CEO Patrick Pouyanne indicate that the first well will be spudded in early 2020.
Lebanese promise
Lebanon is in a state of chaos, amid widespread corruption and protests against its government. Prime minister Saad al-hariri quit on October 29, but is seeking to form a new administration.
Clearly trying to calm the situation, Boustani was quoted by the National New Agency last week as saying: “I assure the Lebanese that preparations for the drilling of the first oil well in Block 4 [are] very close. We will receive addi- tional equipment and a drilling vessel which will enable us to start our work.”
Meanwhile, Total’s Pouyanne told Upstream Online that Vantage Drilling’s Tungsten Explorer rig had been assigned the job, adding that it was moving into position following the drilling of Egypt’s Nour prospect for ENI.
Total holds a 40% operated stake in Block 4 along with ENI (40%) and russia’s Novatek (20%).
Block 4 was awarded to the Total-led con- sortium along with Block 9, in February 2018. The latter block lies in a maritime zone contested by neighbouring Israel and the potential for exploratory drilling there has been the cause of increased friction between Beirut and Jerusalem.
Around 7-9% of Block 9 overlaps with an 890 square km triangle of territory disputed with Israel and amid uproar from Lebanon’s southern neighbour, Total previously said that it would seek to drill as far from the offending area as possible.
Drilling there is anticipated to begin in Q2 2020 and Middle East Oil & Gas (MEOG) under- stands from Lebanese sources that a well will be spudded 20-30 km from the area of controversy.
Bid round
January 2020 is also the deadline for bids in Leb- anon’s five-block second licensing round, which Boustani launched in April.
In December 2018, the Lebanese Petro- leum Administration (LPA) announced that a
recommendation of four blocks had been sub- mitted to the cabinet for inclusion in the second round. Blocks 1, 8 and 10 were those unawarded in the first round while Block 5 was to be newly included and Block 2 was also belatedly added to the final cabinet-approved list. The Lebanese Exclusive Economic Zone (EEZ) is delineated into 10 concession areas.
In contrast to the first bid round the prequali- fication and bidding stages have been combined, with a deadline for submissions set at January 31, 2020.
The first bid round closed last year, with some disappointment as only the aforementioned con- sortium had submitted offers for blocks.
Like Block 9, Blocks 8 and 10 lie in the south of the EEZ and within the area of contention with Israel and are also likely to provoke objec- tions from Tel Aviv as with the awarded licence.
Block 5 covers uncontested territory to the north of Block 8 while Blocks 1 and 2 are in the north of the EEZ and include portions of a 400 square km area disputed with neighbouring Syria. All three southern blocks were previously deemed prospective primarily for gas while Block 1 was marketed as more likely to yield oil.
Last month, the LPA noted that the country’s exclusive economic zone (EEZ) covers 22,700 square km, with the blocks accounting for 17,506 square. To date, 14,000 square km of 2D seismic and 15,000 square km of 3D seismic have been shot.
With only two months left for bids to be sub- mitted, Beirut will be hoping to improve upon the results of the first auction, though with neigh- bouring Israel and Cyprus having struggled to bring about the swift development of sizeable assets in their EEZs, most prospective bidders would prefer to see the results of the upcoming drilling campaign before committing.™
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Week 46 20•November•2019