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Lebanon’s Petroleum Sector Lebanon’s First Offshore Licensing Round 2017 His Excellency Minister Cesar Abi Khalil His Excellency Minister Cesar Abi Khalil Lebanon Minister of Energy and Water Houston : 6-July-2017
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Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

Jul 13, 2020

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Page 1: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

Lebanon’s Petroleum SectorLebanon’s First Offshore Licensing Round 2017

His Excellency Minister Cesar Abi KhalilHis Excellency Minister Cesar Abi Khalil

Lebanon Minister of Energy and Water

Houston : 6-July-2017

Page 2: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

OUTLINE

1- Lebanon’s Offshore Status

2- First Licensing round Characteristics

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3- Challenges and Opportunities

4- Lebanon’s comparative advantage in attracting explorationinvestments

Page 3: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

LEBANON OFFSHORE STATUSLEBANON OFFSHORE STATUS

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Page 4: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

WHERE DOES LEBANON STAND?

Clear Policies Enabling LawsEnacting

RegulationsLicensingProcess

RegulatoryAgency

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Explorationand

ProductionPolicy

• OffshorePetroleumResourcesLaw (OPRL)

• DraftPetroleumTaxationLaw

PetroleumActivities

Regulations(PAR)

• LicensingStrategy

• TenderProtocol (TP)

• ExplorationandProductionAgreement(EPA)

LebanesePetroleum

Administration(LPA)

Page 5: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

1ST LICENSING ROUNDCHARACTERISTICS1 LICENSING ROUNDCHARACTERISTICS

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Page 6: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

LEBANON RESOURCE MANAGEMENT PILLARS• Stable and clear

legalframework

• EPA terms

• Monetization &

• Various exportroutes

• Nationaldemand

• Localinfrastructure

EnergySecurity

AttractingForeign Long

termInvestors

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• Prudentproduction

• QHSE

• Gradual licensing

• SWF

Investors

SustainabilityRevenues for

futuregenerations

Page 7: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

OBJECTIVES OF LEBANON’S 1ST OFFSHORELICENSING ROUND

1- Striking a commercial discovery : re-shaping the Lebaneseeconomy to develop this nascent sector

2- Preserving Lebanon’s sovereign rights in developing its

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2- Preserving Lebanon’s sovereign rights in developing itsnatural resources : taking into consideration the potentialchallenges on the southern EEZ border .

Page 8: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

1ST LICENSING ROUND – OPEN BLOCKS

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Page 9: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

RESULTS OF THE 2ND PREQUALIFICATIONROUND – 28 APRIL 2017

Operators Non Operators

ONGC Videsh Limited PJSC LukoilSapurakencana Energy Sdn BhdSonatrach International Petroleum Exploration andProduction Corporation (SIPEX BVI)Qatar Petroleum International LimitedPetropars LimitedJSC NovatekNew Age (African Global Energy) Limited

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• 10 new submissions received in 2017: 2 Operators and 8 Non-Operators.• Not Passed: 1 Operator and 2 Non-Operators.• Prequalified companies in 2013 still eligible to participate in the licensing round

provided they still meet the eligibility criteria and submit financial statements for2014 and 2015 (audited) and for 2016 (unaudited).

• The overall number of pre-qualified companies sums up to 51 companies.

Page 10: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

HOW ARE PETROLEUM LICENSES AWARDED?

Company interested in acquiring an EPA

Pre-qualification process based on technical, legal,financial and QHSE criteria

Pre-qualified companies invited to participate in an open and

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Pre-qualified companies invited to participate in an open andcompetitive licensing round defined by TP

Prequalified companies provide technical and commercialproposals

LPA evaluates proposals based on TP and best offer ispresented to the Minister of Energy and Water who will in turnpresent them to Council of Ministers for approving EPAs

Page 11: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

THE LICENSING PROCEDURE

Model EPA published with fixed provisions

Tender Protocol published with fixed terms

Biddable parameters defined

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Quantitative assessment of applications (Technical/Commercial)

Evaluation report and results submitted to CoM for award

License awarded based on CoM Decision

Petroleum Register – Licenses, Companies, Beneficial Ownership etc.

Page 12: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

1ST LICENSING ROUND ROADMAP ADOPTEDIN A TIMELY MANNER

23 February

From 2 Februaryto 31 March

Inviting oil and gas companies to participate in a consultation workshop in Lebanon

Inviting oil and gas companies to participate in a prequalification round

Issuing the tax law related to the petroleum activities by the parliament

Launching a marketing campaign to promote the first licensing round

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15 September

22 September

16 October

15 November

Answering questions received from the oil and gas companies and publishing theclarifications on the LPA website

Receiving bids from prequalified companies on the blocks open for bidding

Publishing the list of applicants per block

LPA prepares an evaluation report per block

CoM decision to approve awards and signature of EPAs with winning consortiums

LPA to follow up on the contracts awarded and the commencement of the explorationphase

Page 13: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

POTENTIAL LOCAL DEMAND FORNATURAL GASPOTENTIAL LOCAL DEMAND FORNATURAL GAS

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Page 14: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

LEBANON HAS DEVELOPED VARIOUS NATURAL GAS LOCALDEMAND FORECASTS ACCORDING TO NORMAL ANDACCELERATED GROWTHS.

By 2030, the local demand for Natural Gas would range between0.3 and 0.5 Tcf / year

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Lebanese Petroleum Administration

Page 15: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

OVERALL, WE BELIEVE THAT THE ELECTRICITY SECTOR ISTHE FIRST POTENTIAL LOCAL CUSTOMER OF NATURALGAS.

Short Term Medium Term Long Term

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ElectricitySector

Industrialhubs

Commercialand largeinstitutions,cities,transportsector

Page 16: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

EXPORT POTENTIALSEXPORT POTENTIALS

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Page 17: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

LEBANON HOLDS FRIENDLY RELATIONSHIPS WITHPOTENTIAL MARKETS AND IS WELL CONNECTED IN THEREGION.

Lebanon holds friendly relations withCyprus, Greece, Syria, Turkey, Egypt,Jordan and the EU.

Lebanese Natural Gas can easilyreach Syria, Jordan and Egyptthrough the Arab Gas Pipeline.

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Turkey can be reached by anextension of the Arab Gas Pipeline orthrough an offshore shallow waterpipeline.

The EU markets can be reachedthrough Turkey.

Lebanon can collaborate with Cypruson projects of common interest.

Page 18: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

RESULTING ECONOMIC IMPACTS ONLEBANON

Potentialeconomicbenefitsresultingfrom

Power generation and self-sufficiency from a relativelycleaner, cheaper and more efficient source of indigenousenergy

Lowering the financial burden resulting from energy imports

Developing energy intensive industries, reducing productioncosts and improving productivity and competitiveness

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fromindigenousgasresources

costs and improving productivity and competitiveness

Creating investment opportunities and spillover effects toother sectors in the economy

Improving welfare and standards of living throughchanneling investments towards diverse and productiveeconomic activities

Page 19: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

CHALLENGES AND OPPORTUNITIESCHALLENGES AND OPPORTUNITIES

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Page 20: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

LEBANON’S CHALLENGES AND OPPORTUNITIES

Availability of local market

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• Frontier deep water.• Insufficient infrastructure.• Markets, prices and costs.• Political factors.

• Availability of local marketto monetize the gas.

• Economic impacts from arelatively cleaner/cheapersource of indigenousenergy.

• Impact of local content onjob creation.

• Opportunity to export gasto the region and the EU.

Page 21: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

STATE AND INVESTOR CONCERNS

State Concerns Investor Concerns

Fair Revenue Share

Transparency

Finding Commercial Discoveries

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Activity Control

Prompt Exploration

Local Goods & Services

Training

Environment

Local Employment

Prudent Production

Right To Monetize

Enforceability

Stability

Legal SystemPredictability

Page 22: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

LEBANON’S COMPARATIVE ADVANTAGE INATTRACTING EXPLORATION INVESTMENTS

Attractive Blocks Offshore Advanced data available Oil and gas discoveries in

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Attractive Blocks OffshoreLebanon are available for

licensing

Advanced data availableto possible investors (2D,

3D)

Oil and gas discoveries inneighbouring and similar

basins

Modern Legal andContractual framework

Progressive Fiscal system/Transparent bidding

Proximity to LargeMarkets

Page 23: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

STRENGTHENING COOPERATION: PUBLIC/PRIVATE ANDCOUNTRY TO COUNTRY

Tapping into new investment opportunities

• As per Lebanese regulations, the prospectivesector provides an opportunity for IOCs andservice companies to invest in Lebanon.

• Opportunity for IOCs to invest in newtechnologies, replenish reserves and securemarket share.

Developing an integrated gas market

• Global nature of industry connecting countries.

• Facilitates gas exports and brings Lebanon to theregional and int’l scene as a significant energyproducing country: the combined regionalprospective gas could justify development andexport investments.

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market share.

• Invest in R&D, vocational training and providegoods and services in a competitive and openmanner.

• Capacity building, information spillover andlearning by doing opportunities.

export investments.

• High cost industry requires the need to buildtransboundary infrastructure and addressunitization frameworks where applicable.

• Invest in existing and planned infrastructure todevelop wider networks and increase competitionand market access and integration.

• Strengthen political ties across countries for thebenefit of all – e.g. diversification of energysupplies.

Page 24: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

SAVE THE DATES

Upcomingimportantmilestones

15 September 2017: Deadlinefor submitting bids

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milestonesfor

Lebanon’sfirst

offshorelicensing

round

15 November 2017: CoMdecision to approve awardsand signature of EPAs withwinning consortium

Page 25: Lebanon’s Petroleum Sector · Sapurakencana Energy Sdn Bhd Sonatrach International Petroleum Exploration and Production Corporation (SIPEX BVI) Qatar Petroleum International Limited

THANK YOU