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
1- Lebanon’s Offshore Status
2- First Licensing round Characteristics
3- Challenges and Opportunities
4- Lebanon’s comparative advantage in attracting explorationinvestments
LEBANON OFFSHORE STATUSLEBANON OFFSHORE STATUS
WHERE DOES LEBANON STAND?
Clear Policies Enabling LawsEnacting
• OffshorePetroleumResourcesLaw (OPRL)
• TenderProtocol (TP)
1ST LICENSING ROUNDCHARACTERISTICS1 LICENSING ROUNDCHARACTERISTICS
LEBANON RESOURCE MANAGEMENT PILLARS• Stable and clear
• EPA terms
• Monetization &
• Various exportroutes
• Gradual licensing
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
2- Preserving Lebanon’s sovereign rights in developing itsnatural resources : taking into consideration the potentialchallenges on the southern EEZ border .
1ST LICENSING ROUND – OPEN BLOCKS
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
• 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.
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
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
THE LICENSING PROCEDURE
Model EPA published with fixed provisions
Tender Protocol published with fixed terms
Biddable parameters defined
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.
1ST LICENSING ROUND ROADMAP ADOPTEDIN A TIMELY MANNER
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
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
POTENTIAL LOCAL DEMAND FORNATURAL GASPOTENTIAL LOCAL DEMAND FORNATURAL GAS
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
Lebanese Petroleum Administration
OVERALL, WE BELIEVE THAT THE ELECTRICITY SECTOR ISTHE FIRST POTENTIAL LOCAL CUSTOMER OF NATURALGAS.
Short Term Medium Term Long Term
EXPORT POTENTIALSEXPORT POTENTIALS
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.
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.
RESULTING ECONOMIC IMPACTS ONLEBANON
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
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
CHALLENGES AND OPPORTUNITIESCHALLENGES AND OPPORTUNITIES
LEBANON’S CHALLENGES AND OPPORTUNITIES
Availability of local market
• 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.
STATE AND INVESTOR CONCERNS
State Concerns Investor Concerns
Fair Revenue Share
Finding Commercial Discoveries
Local Goods & Services
Right To Monetize
LEBANON’S COMPARATIVE ADVANTAGE INATTRACTING EXPLORATION INVESTMENTS
Attractive Blocks Offshore Advanced data available Oil and gas discoveries in
Attractive Blocks OffshoreLebanon are available for
Advanced data availableto possible investors (2D,
Oil and gas discoveries inneighbouring and similar
Modern Legal andContractual framework
Progressive Fiscal system/Transparent bidding
Proximity to LargeMarkets
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.
• Invest in R&D, vocational training and providegoods and services in a competitive and openmanner.
• Capacity building, information spillover andlearning by doing opportunities.
• 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.
SAVE THE DATES
15 September 2017: Deadlinefor submitting bids
15 November 2017: CoMdecision to approve awardsand signature of EPAs withwinning consortium