Page 5 - MEOG Week 05 2023

MEOG COMMENTARY MEOG

When Novatek withdrew Fayad said the firm Better luck licensing?
had cited “economic and financial [issues and] The political agreement and the entry of
political risks” as its reasons for pulling out. QatarEnergy are both supportive of efforts to
TotalEnergies agreed a deal with Beirut in expand activity in the Lebanese offshore, which
October regarding the development of Block 9 has had limited success in attracting investment.
in parallel with accord between Lebanon and In December, the LPA extended the deadline
Israel that resolved their long-running dispute for the bid round from December 15 until June
around the demarcation of a shared maritime 30. The original bidding deadline was January
border despite technically remaining at war with 31, 2020 and this was extended first to April 30,
each other. then June 1 amid the coronavirus (COVID-19)
Lebanon’s President Michel Aoun announced pandemic and falling oil and gas prices. The
that the talks had come to “a positive end”, call- deadline was then moved to the end of 2021,
ing the agreement an “historic achievement”. with the process relaunched in December 2021.
The deal sees Beirut regain an 860-square km The deadline of June 15, 2022 was missed and
offshore area. pushed back until December. The government
The new border will run, for the most part, said in June that it had extended the auction
along the Line 23 demarcation, south of the Hof “based on the recommendation of the LPA.”
Line, named after the proposed by US envoy It added that the delay was “necessary to
Frederic Hof in 2012, though no Lebanese or allow additional companies not currently oper-
Israeli companies are permitted to operate in the ating in the Lebanese offshore to prepare their
area around the new border. files and studies and participate in the second
During negotiations, Lebanon pushed hard licensing round, thus allowing an acceptable
for the Line 29 to be adopted, though this was level of competition among international oil
never likely to be acceptable, particularly as and gas companies.” The latest delay came with
it would have posed major challenges to the no such explanation. The second bid round
development of the Karish gas field, where Lon- comprises blocks 1, 2, 3, 5, 6, 7, 8 and 10. Blocks
don-listed Energean recently hooked up a float- 1, 8 and 10 were those not awarded in the first
ing production storage and offloading (FPSO) round between February and November 2017,
unit. Meanwhile, the deal sees Israel retain full while blocks 2 and 5 were added to the final
control over Karish, and Lebanon keep owner- cabinet-approved list later, with blocks 3, 6 and
ship of the Qana deposit. 7 added in late 2021. The Lebanese EEZ is delin-
The majority of Qana is located in waters rec- eated into 10 concession areas.
ognised as Lebanese by the Hof proposal, and Speaking to MEOG, Douglas McDonald,
forms part of the Block 9 concession. Middle East analyst at consultancy IGM Energy,
Mona Sukkarieh, energy and political risk said: “Beirut has three of the world’s top gas
consultant at Middle East Strategic Perspectives, explorers working in its offshore, a boon given
said: “Unlike the rest of the Lebanese [Exclu- the challenges it has faced getting the second
sive Economic Zone (EEZ)], the border area licensing round up and running.”
isn’t extensively covered by 3D surveys […] the He added: “Now that an agreement is in place
Qana prospect happens to be located in the only for the maritime border and a replacement for
spot on the border covered by 3D surveys. If we Novatek has been found, if results from the Block
extend the coverage, will we find additional pros- 9 well are encouraging, the outlook for the bid
pects? It’s possible.” round could be much more positive.”™

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