A Long Road
By Trends • Mar 4th, 2009Then the government hired Norwegian energy consulting firm PGS Geophysical in May 2006, to conduct a three-dimensional seismic study that pointed to the presence of hydrocarbons. PGS even financed the acquisition and processing of the data, saving the Lebanese government up to $15 million. Many took that as a sign of private-sector interest in Lebanon’s petroleum potential.
Unfortunately, war broke out in 2006, followed by a series of unfortunate political debacles. As a result plans to start commercial drilling by the end of 2007 were scrapped. By then, the energy draft law necessary to start the bidding process had already been finalized and was awaiting approval.
Contingencies.
Regrouping, Lebanon and Norway partnered up in 2007, establishing an oil and development cooperation program under the Norwegian Agency for Development Cooperation. The two-year, $1.79 million program is expected to “support Lebanon in the management of the potential petroleum resources on its continental shelf, by assisting with the setting up of relevant institutions and the drafting of legislation, by training key personnel and by helping the authorities to prepare license negotiations.”
Indeed, Norway has been instrumental in preparing the petroleum law that should be ready in the coming months. The development cooperation program has been extended to 2009, and will now focus on preparing the tender. Those efforts have been sufficient to spark more interest in the petroleum industry, with a number of international firms such as Shell, Total Elf Fina and Petrocanada showing interest in bidding to drill in Lebanese territory.
The oil issue has also generated passionate debates in Lebanon, as many hope that oil revenues could help reduce the country’s inflating public debt if significant deposits are tapped. Lebanese public debt reached a staggering $44.7 billion by the end of 2008. Only offshore exploratory drilling can prove how large Lebanon’s reserves are, and the country’s offshore waters remain pristine.
But the most optimistic estimates peg Lebanon’s capacity at 70,000 to 90,000 barrels per day, which could generate up to $25 billion in oil revenues over two decades, at $40 per barrel of oil.
