The accomplishment of the presidential elections stirred up the “stagnant waters of the republic,” bringing back attention to all the political and economic issues that local and regional circumstances had prevented from reaching appropriate solutions.
Oil and gas exploration in the waters of the Lebanese exclusive economic zone (EEZ) issue rose to the top, especially after President Josef Aoun demanded that French President Emanuel Macron urge TotalEnergies to complete its work in Lebanon.
TotalEnergies is the operator in the consortium that includes Novatech and ENI. The consortium won two blocs, 4 and 9, after the first licensing round launched in February 2017. Exploration and production agreements were signed in 2018. Exploration work was delayed until February 25, 2020, when the drillship Tungsten Explorer reached the drilling point for the first exploration well in Block 4. Drilling work was completed on May 8, 2020.
The operating company’s announcement of the end of drilling in Block 4 is, in fact, a cessation of drilling. The company stopped drilling after reaching 4,076 meters from the seabed instead of 4,200 meters, the depth stipulated in the exploration and production agreement. Although the company report talks about the presence of a hydraulic system, it could not find reservoirs that were the exploration goal. What is the bad news for the Lebanese?
The stumbling block in Lebanese oil and gas exploration continued with the exploratory well in Bloc 9, the start of which was delayed until August 24, 2023, after an initial delay caused by the damage caused by the Beirut port explosion on 4 August 2020, to the logistical base designated for the implementing petroleum activities in Lebanese maritime waters.
The collapse of oil and gas prices in the global market also contributes to the delay. It makes companies revise their priorities, which curbed the enthusiasm with which the operator company was working.
While the bet was high, the drilling in Block 9 would yield positive results, and the cessation of the exploratory well came to repeat the scene of cessation in Block 4. Where drilling stopped at a depth of 3900 meters, contrary to the agreement’s text stipulating that drilling should reach 4400 meters.
It is worth noting that stopping before reaching any specified drilling targets is equivalent to abandoning the entire block if an alternative well is not drilled since the first well constitutes part of the minimum obligations of the agreement.
Therefore, the operator company had to drill an alternative well for the well that had been stopped drilling or abandon the relevant block following the provisions of the Exploration and Production Agreement. In this case, the operator company cannot invoke the issue of the replacement well cost, especially since the minimum work obligations under the agreement are not minimum spending obligations, but rather minimum work obligations (drilling), according to Paragraph five of Article eight of the Agreement.
The operating company stopped drilling, procrastinated, and even refused to present its drilling results report. The report was supposed to be submitted to the Ministry of Energy within six months of the completion of drilling work, but this deadline expired in mid-April 2024. Despite nearly ten months since the deadline expired, the company is still refraining from submitting its report on the drilling results.
The action of the operator company, and even the consortium, regarding the participation in the second licensing round for Blocks 8 and 10 are suspicious, where the consortium submitted its offer to participate on the last day of the deadline and less than one hour before its end. Suppose there is an explanation for what the operating company and the consortium behind it did, starting from Block 4 through Block 9, and reaching participation in the second licensing round, which obstructs and delays Lebanon’s attempts to invest its oil and gas resources and control their fate and path.
The developments following the halt in drilling the exploratory well in Block 4 showed that the real reason was the pressure on Lebanon to accept the demarcation of the southern borders of the Lebanese EEZ with the Israeli enemy.
Block 9 is in the same situation, as the drilling halt confirmed that continuing exploration requires the end of the Gaza support war and the maturity of the compromise in the region. This indicates that gas and oil extraction is not an internal decision but a geopolitical decision whose timing is linked to regional and international calculations beyond the country.
However, the problem is not only the regional and international pressures that accompanied the exploration process but also the internal approach to the entire file, from the preparation of the agreements and specifications models to the amendments made to them later.
It also lies in the fact that the Ministry of Energy and the Oil Sector Management Authority’s knowledge of the exploration work depends on the reports submitted by the operating company. This situation makes the state’s exploration efforts useless and prevents it from providing accurate answers about the drilling results in Block 4 and Block 9 and their future fate.
On the eve of the new era’s launch and the occasion of the oil and gas exploration file’s activation, the loopholes in the exploration and production agreement model must be addressed. The agreement must also include provisions that regulate all issues related to the extraction of oil and gas, whether from the Lebanese mainland or from the bottom of the waters of the EEZ.
Those in charge of the oil and gas file must take the initiative to amend the special conditions book and reconsider the conditions for participation in the licensing rounds to bid on blocks in Lebanese maritime waters, especially regarding the size of the companies that can participate.
