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Lebanon has embarked on an ambitious push to develop offshore gas resources and generate hard-currency earnings to help pull the country out of its deepest financial crisis, following the signing of a landmark exploration deal last week.
The tiny Arab nation of 6.5 million people could be home to at least 20 trillion cubic feet of proven gas deposits concentrated offshore in the southern part just close to Israel with which it signed a border demarcation agreement in 2022.
The deposits are believed to be concentrated in an area 50-70 kilometres off Lebanon’s southern shores at a depth of more than 1,500 metres, according to the Kuwaiti-based Arab Energy Organisation (AEO), an Arab League establishment.
Although previous exploration efforts in nearby blocks were disappointing, Lebanese officials this year expressed optimism about discoveries in the offshore block targeted by the international consortium with which the deal was signed.
The deal for exploration Block 8 follows a marine border demarcation pact between Lebanon and Israel signed in 2022.
The contract was signed in Beirut on Friday by Lebanon's energy minister Joe Saddi and the consortium of France’s TotalEnergies, Italy’s ENI, and Qatar's state-owned oil and gas company QatarEnergy.
QatarEnergy said it would own 30 percent of that concession area while 70 percent would be shared equally by TotalEnergies and Eni.
“We are pleased to have acquired a stake in this area, which will enable us to support efforts to develop the oil and gas exploration sector in Lebanon…it also reflects Qatar’s continued commitment to a brighter future for Lebanon and its people,” said Saad Al-Kaabi, Qatar’s minister of state for energy and CEO of Qatar Energy.
“Although the drilling of the Qana well on Block 9 did not give positive results, we remain committed to pursue our exploration activities in Lebanon. We will now focus our efforts on Block 8, together with our partners Eni and QatarEnergy and in close cooperation with Lebanese authorities”, said Patrick Pouyanné, Chairman and CEO of TotalEnergies.
An AEO expert said in a recent study that Lebanon needs 4-5 years to extract gas in commercial quantities but could meet its present needs through imports.
Wael Abdul Mutti said Lebanon has enough gas potential to cater for its demand and export the surplus when development projects are completed.
“Over the past two decades, we have gathered results of 3-D seismic surveys in that offshore area of around 22,000 square kilometres…preliminary analysis of the results show that there are gas concentrations of nearly 25 trillion cubic feet,” he said.
TotalEnergies said the consortium’s initial work program on Block 8 consists of the acquisition of a 1,200 sq km 3D seismic survey, in order to further assess the area’s exploration potential.
Arab Gas Pipeline
Lebanon signed an agreement with Egypt four years ago for the supply of natural gas through the 'Arab Gas Pipeline (AGP),' which was built two decades ago and passes through Egypt’s Sinai desert to Jordan, Syria and North Lebanon. But the deal did not materialise because Syria was under US sanctions.
In December, the two countries again signed a memorandum of understanding for the supply of Egyptian gas to power Lebanon’s power facilities.
Last November, the International Finance Corporation (IFC), a member of the World Bank Group, said it would be an adviser to Lebanon in its first gas-to-power project that involves the installation of a floating storage and regasification unit (FSRU).
In late 2019, Lebanon plunged into its deepest economic and financial abyss due to accumulating debt, the collapse of the financial sector and widespread corruption. As a result, the local currency, the lira, has lost over 95 percent of its value against the US dollar, sending inflation to rocketing levels.
“I believe Lebanon has a gas potential…that is why such big companies are not abandoning exploration plans,” Walid Khaddouri, a former information chief at AEO, told Zawya Projects.
(Reporting by N Saeed; Editing by Anoop Menon)
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