|19 January, 2018

Lebanon-based Petroleb plays with the big firms in oil exploration

Petroleb managed last week to grab the first oil extraction contract in Oman

Businessman supporting oil price in business concept. Oil prices expected to trade around $60-$70 through 2020.

Businessman supporting oil price in business concept. Oil prices expected to trade around $60-$70 through 2020.

BEIRUT - It is not very common for a new and small firm to win a contract to drill for oil in the competitive markets in the Middle East. But the Beirut-based Petroleb, which was founded in 2011, managed last week to grab the first oil extraction contract in Oman after seeing off competition from three other firms.

“We succeeded in winning a $20 million contract to drill for oil in Oman in one of the country’s oil fields. The contract is for three years but will be extended once we complete the first phase,” Salah Khayat, the CEO of Petroleb, said.

Khayat admits the deal is small compared to international and regional standards but indicates Lebanese firms can compete in oil and gas licensing rounds despite the limited resources they have in comparison to major oil companies.

According to the contract, Petroleb would drill exploratory wells to assess oil reserves in the Al-Afif concession area of southern Oman, inland from the borders of Yemen and Saudi Arabia.

Naji Abi Aad, the chief operating officer at Petroleb, explained that the company has contracted experienced oil engineers and workers to accomplish the drilling.

“I was very impressed by the transparency in Oman. They requested specific documents and papers and in a short period we won the contract. This will not happen in Lebanon unfortunately due to long procedures and conditions,” Abi Aad said.

Petroleb was hoping to take part in Lebanon’s gas exploration but its Brazilian partner and operator Petrobras, one of the leading companies in the world in offshore gas exploration, decided to pull out following repeated delays in approving the two decrees for gas exploration.

“Initially we set up the company and we hired professional people in the oil and gas field. We allocated funds for the company and we reached partnership agreements with Petrobras. We also formed agreements with other major companies. We positioned ourselves to be able to ... participate in Lebanon’s offshore gas exploration,” Khayat said.

The CEO of the company did not hide his disappointment in the complicated procedures and conditions set by the Lebanese Petroleum Administration in the beginning.

“They put very tough qualification conditions and very few Lebanese companies managed to qualify in the first prequalification round, and we were one of them through a joint venture. There were two other Lebanese companies that qualified in the prequalification round. But much of the interest in Lebanon’s oil sector withered away due to the decline in the oil prices,” Khayat said.

He added that other factors that prompted Petroleb and Petrobras to stay away from the final bidding were repeated delays in launching the tender and political bickering among the parties in Lebanon.

Khayat admitted that some of the companies they approached for partnership were deeply displeased by the way the Lebanese government handled the garbage problem.

Lebanon has been facing difficulty over the past several years in agreeing sites for the disposal of the country’s trash.

“The oil companies were saying look how you are managing the garbage so how can we explore gas. These companies started looking outside Lebanon because there are many opportunities in the world,” he said.

Khayat stressed that Petroleb is looking forward to eventually operating in Lebanon with its partners.

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