Lebanon pins hopes on first oil exploration

The drilling ship Tungsten Explorer is seen off the coast of Beirut, Lebanon, on Feb. 26, 2020. The vessel is scheduled to start later this week the first oil and gas exploration drills off the Lebanese coast. (AP Photo/Hussein Malla)
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Updated 26 February 2020

Lebanon pins hopes on first oil exploration

  • Tungsten Explorer drilling ship will be docked in Lebanon’s special economic zone to carry out the drilling of the first exploration well for oil or gas
  • French company Total said the drilling will continue for two months off the coast of Keserwan-Jbeil district

BEIRUT: Lebanese President Michel Aoun has described the potential discovery of oil under the country’s seabed as “the initiation of the Lebanese people’s dream.”

In the coming days, the Tungsten Explorer drilling ship will be docked in Lebanon’s special economic zone — about 30 km north of Beirut — to carry out the drilling of the first exploration well for oil or gas.

French company Total said the well located off the coast of Keserwan-Jbeil district “will be drilled at a depth of 1,500 meters from the sea surface. The drilling aims to explore reservoirs located at a depth exceeding 2,500 meters below the seabed.”

The Lebanese are pinning their hopes on the exploration of an area on the seabed called Block 4, which could revive the ailing economy. This event was the central focus of a message delivered by Aoun on Wednesday, in which he said it could “have a positive impact on the national economy and reduce negative repercussions.”

A delegation of officials from Total briefed Aoun on arrangements made “to begin the drilling operation within the next few hours,” according to Rafic Chlala, the president’s media adviser.

The drilling operations could last about two months, according to a company estimate.

The head of Total’s exploration and production in the MENA region, Stephane Michel, said: “If you think the drilling process looks easy, I assure you that it is not the case at 1,500 to 2,000 meters below the seabed. This is very complicated.

“We are doing it in a country where all the legal frameworks have been created. Multiple complex licenses have been prepared. This is a very important task. We are proud to have helped Lebanon take this path in an effective and expeditious manner, and I confirm that everything has been dealt with transparently and efficiently.”

Chairman of the Lebanese Petroleum Administration Walid Nasr said: “The logistics base in the port of Beirut and helicopters at Beirut’s airport are ready for the drilling operations, and all required environmental licenses have been secured in the necessary time.”

Nasr added: “Members of the Lebanese Army, public security and customs will be on board the ship to secure all the requirements for the drilling operations. The drilling operations are estimated to last two months, in addition to two extra months to analyze the results. We hope that the results will be positive, and that we will find oil or gas in preparation for the second stage. Preparations are underway for Block 9, in which drilling operations will be taking place this year as well.”

Drilling operations in Block 9 had been scheduled to begin before Block 4, but Block 9 includes a disputed part with Israel. Lebanon adheres to reaching, through American mediation, an agreement on both maritime and land borders with Israel. Lebanon and Israel are officially in a state of war and there is no demarcation of the land or sea borders between them.

Lebanon had signed contracts with three companies: French Total, Italian Eni and Russian Novatek to explore oil and gas in two areas in regional waters. Last April, a second licensing course for oil and gas exploration was launched in five other areas.

US Ambassador to Lebanon Elizabeth Richard said during her meeting with Aoun on Wednesday that the US supports Lebanon, considering that it “has reached a turning point.”

Richard said in a statement: “There is no reason why this country — that has many blessings, including amazing human resources — not to have a modern waste management system, 24/7 electricity for all, as well as one armed force under the state’s control, and a growing economy, in 2020.”

The US diplomat added: “Difficult decisions must be made, and everyone will have to bear some burden. It is an opportunity to chart a new path that will make this country realize its full potential as a modern and prosperous member of the international community.”

Wall Street’s Big Tech enthusiasm getting stronger amid virus concerns

Updated 1 min 46 sec ago

Wall Street’s Big Tech enthusiasm getting stronger amid virus concerns

  • Behavioral shifts during pandemic lifted the sector into stratosphere, leaving broader stock market far behind

NEW YORK: Tech stocks were going strong even before COVID-19, but behavioral shifts during the pandemic have lifted the sector further into the stratosphere, leaving the broader stock market far behind.

The tech-dominated Nasdaq Composite Index has closed at records in six of the last seven sessions, reflecting investors’ confidence that tech companies benefit from the so-called “stay-at-home” trade even as the market has pummeled airlines, hotels and brick-and-mortar retailers.

“There’s clear winners and losers right now in the market,” said Dan Ives, an analyst at Wedbush Securities, who thinks the biggest tech giants could still gain another 30 percent this year.

“From a winner perspective, the clear spotlight [is on] tech names.”

Technology companies are a “pocket of certainty” in a time of economic weakness, said Quincy Krosby, chief market strategist at Prudential Financial.

The latest surge means that just five companies, the so-called “FAANG” group — Facebook, Apple, Amazon, Netflix and Google — now account for more than 20 percent of the value of the S&P 500.

With spiking coronavirus cases in the US expected to bolster the dynamics behind the recent surge, the industry’s biggest worry is probably politics, analysts said.

The CEOs of Apple, Google, Facebook and Amazon are scheduled to appear on July 27 at a Capitol Hill hearing on antitrust issues, possibly raising concerns that the government’s interest will move beyond political noise.

“July 27th is an important day to see if it’s more of a political grandstanding event or the beginning of something much broader in terms of going after the breakup of these companies,” Ives said.

Krosby agreed that politics remains a wildcard, and if former Vice President Joe Biden wins the battle for the White House in November that could make aggressive action by Washington more likely.

Large tech companies are expected to be a bright spot in the upcoming earnings period, which kicks off this week.

While airlines and cruise companies saw revenue drops of 90 percent or more during parts of the second quarter, tech giants such as Amazon and Netflix are projected to see gains of more than 20 percent, according to Wall Street analysts.

The Nasdaq surge also reflects gains by biotech companies working on vaccines and drugs to treat COVID-19, said David Kotok, co-founder of Cumberland Advisers.

The sector “is a bargain today,” he said. “Health care companies are spending today and the revenue will come tomorrow.”

“I don’t think it’s a bubble,” Kotok added.

While the success of the Nasdaq is the most obvious sign of the tech surge, the broad-based S&P 500 also shows the increased weight of the sector.

As the COVID-19 crisis spread, the index removed motorcycle company Harley-Davidson and department stores Nordstrom and Macy’s, replacing them with less familiar names like Tyler Technologies and Bio-Rad Laboratories.

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said the pace of change could accelerate as fallout from the coronavirus crisis continues to mount.

“In turbulent times, you get higher turnover,” Silverblatt said. “The index at some point needs to react to the market and to the economy.”

The information technology group currently accounts for around 28 percent of the S&P 500, up from 16 percent in 2010.

Silverblatt declined to comment on speculation that Tesla will soon be added to the S&P 500, but one of the criteria is to post profits over four consecutive quarters, a requirement Tesla could meet when it reports results on July 22.

Shares of the electric car maker have enjoyed a meteoric rise of late, eclipsing even other tech companies, and they now trade at more than four times their level in mid-March.

Though Tesla initially struggled to attain profitability, the surge has made it the world’s biggest car company in terms of market value, well above Toyota, General Motors and other traditional auto giants that sell many times the number of vehicles.

But some think Tesla’s surge has gotten out of hand, including analysts at JPMorgan Chase, who see “lofty valuation coupled with high investor expectations and high execution risk.”