Beirut: Lebanon is considering further extending the deadline for a new offshore exploration round, with some potential bidders waiting for the outcome of drilling by a group led by TotalEnergies SE.
That group will drill an exploratory well at block 9 in Lebanese waters by September, with the results due by the end of the year. There could be a “natural extension” to the existing June 30 deadline for bids as those results could be a “turning point,” triggering further investment in offshore exploration, Lebanese Energy Minister Walid Fayyad said in an interview in Beirut.
US and French companies are among six parties to have expressed preliminary interest in bidding. Extending the deadline would give those companies time to compile bids, the minister said.
“Many of the companies are in a wait-and-see mode and would decide to bid for new blocks only after they see the results,” Fayyad said.
TotalEnergies is working with Eni SpA and QatarEnergy to explore for gas in blocks 4 and 9, which include waters previously contested by Israel. The second licensing round “- for exploration rights to another eight offshore blocks “- has already been delayed several times.
A discovery would help fuel power plants that run on natural gas in Lebanon, which has suffered from chronic power rationing for decades, said Fayyad. It could also potentially lead to more energy exports to Europe.
The TotalEnergies-led consortium, which originally included Russia’s Novatek PJSC, won a bid to explore the two blocks in late-2017. The group began drilling in block 4 in 2020 but disappointing results halted development. Novatek withdrew last year.
Gas development, which could start in three years if drilling results are positive, would earn “billions of dollars” for Lebanon, which faces a deepening financial crisis, said Fayyad. Israel would also be entitled to payments if hydrocarbons are produced from the previously contested offshore zone.