The current, caretaker Lebanese Cabinet has missed a deadline to pass two important decrees relating to the 10 offshore exploration blocks in Lebanon’s 22,730 square kilometre exclusive economic zone, as part of Lebanon’s first licensing round. The first decree outlines the details of Lebanon’s exploration and production agreement and the second delineates the blocks to be put up for auction. In addition to postponing offshore drilling and exploration, the missed deadline means potential investors lack clarity over the process. As well as the delineation of the blocks and the establishment of production sharing contract terms, the decrees are required to specify tender protocols – all of which remain of key importance to potential investors. The country is seeking revenue to help reduce its public debt which, as a share of annual economic output, ranks highest amongst 22 Arab nations.
The Cabinet intends to open bidding in relation to the offshore gas blocks 1, 4, 5, 6 and 9 once a Cabinet session is held to pass the two decrees according to the caretaker Energy and Water Minister, Gebran Bassil. The date to submit bids for licences to explore for gas in these blocks has now been delayed until 10 December 2013 although the date may be extended in the event that the decrees are not issued.
As a result of the delay in progress to the first round of bidding, some oil companies that were approved in the earlier prequalification round are reported to have withdrawn. Despite the delays, the award of block contracts is still scheduled for March 2014.