Lebanon: Oil and gas drilling to begin in 2019
Lebanon: Oil and gas drilling to begin in 2019
“This is going to create a new sector in the economy,” said Abi Khalil. “And it is going to secure a local source for energy.”
Lebanon’s economy is mired in debt and struggling to grow as the civil war in neighboring Syria stretches into its seventh year. The conflict has paralyzed trade and pushed some 1 million refugees into Lebanon.
The country has been slow to capitalize on geological survey findings from 2011 indicating a strong possibility of mineral resources in its offshore waters. Its government has been crippled by political deadlock emanating from the crisis in Syria as parties butt heads over taking sides in the war.
It is not certain whether companies will find reserves in Lebanese waters. But a bid, accepted by the Lebanese government on Thursday, by a consortium of international oil and gas giants to explore two sectors in the eastern Mediterranean reflected the potential for a windfall, said Mona Sukkarieh, a political risk analyst at the Beirut-based consultancy group Middle East Strategic Perspectives.
“If they choose to proceed with exploration and drilling, then we are talking about a lot of money,” said Sukkarieh.
The consortium’s members are Eni from Italy, Total from France and Novatek from Russia. Lebanon’s government approved the necessary licenses Thursday.
The country’s share of revenues from oil and gas sales will measure between 55 and 71 percent, said Abi Khalil. The window for exploration will be open for up to six years. The contracts with the three companies will be signed in early 2018.
A major finding in Lebanon’s southernmost waters could raise the possibility of a dispute with its neighbor Israel. There are over 800 square kilometers of waters claimed by the two countries which are technically at war.
Abi Khalil said exploration would proceed in “Block 9,” one of the two sectors open for drilling, in any case.
“It is our right to explore in all our southern blocks, we are determined to exploit this national wealth,” he said.
Several companies told Lebanon’s Petroleum Authority in 2013 they considered Block 9 the most promising, according to Sukkarieh.
The US Energy Information Administration estimated in 2010 there were 122 trillion cubic feet of undiscovered natural gas resources in the eastern Mediterranean basin.
Gas is expensive to extract. A major finding could spur investment in Lebanon’s failing energy sector that civil society activists say is rife with corruption. Lebanon experiences rolling blackouts on a daily basis, despite massive subsidies to its national electricity company. The World Bank says transfers to the Electricite du Liban account for a staggering 40 percent of the debt the country has accumulated since 1992.
Abi Khalil said politicians were working on developing a national sovereignty fund to invest resource revenues in a transparent manner.
Oil prices mixed as producers release more supply in the market
- The US Energy Information Administration also reported US oil production reached a record 11 million barrels per day
- US crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels
TOKYO: Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the US, the world’s biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.
Brent crude futures fell 11 cents, or 0.2 percent, to $72.79 a barrel at 0401 GMT. West Texas Intermediate (WTI) crude futures climbed 6 cents, or 0.1 percent, to $68.82.
Both benchmarks rose by 1 percent on Wednesday after inventory data from the US Energy Information Administration reported on Wednesday US gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose from the week before and was up from a year earlier.
However, the EIA also reported US oil production reached a record 11 million barrels per day (bpd). The US has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.
Also, a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer monitoring their supply pact reported on Wednesday that compliance with the agreement has declined, meaning more oil is available to the market.
The bullish tone sparked by the gasoline data is unlikely to last, said Stephen Innes, head of trading APAC at brokerage OANDA.
“President Trump is doing everything in his power to lower gasoline prices,” he said.
“With Russia quick to offer the President a supply olive branch and Saudi Arabia mainly in his back pocket when it comes to increasing their supply, its challenging to see (the) gasoline numbers turning the bearish market’s tide,” he said.
Gasoline inventories fell by 3.2 million barrels last week, while distillate stockpiles, which include diesel and heating oil, dropped by 371,000 barrels, the EIA said on Wednesday.
A Reuters poll taken before the data release had forecast that gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels.
A sharp jump in crude oil inventories in the US also added to the bearish tone in the market.
US crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.
Oil markets have fallen over the last week as Saudi Arabia and other members OPEC member and Russia have increased production and as some supply disruptions have eased.
OPEC and non-OPEC’s compliance with oil output curbs has declined to around 120 percent in June from 147 percent in May, two sources familiar with the matter told Reuters on Wednesday.