Lebanon announces pre-qualification round for offshore oil and gas exploration

On Friday 15 February the Lebanese authorities announced the launch of a pre-qualification round for those IOCs interested in its offshore acreage. The statement came after news that up to 675 million barrels (MMB) of oil and 16 trillion cubic feet (TCF) of gas have been discovered in Lebanese waters adjacent to its northern maritime border with Cyprus and Syria. So far up to 30 IOCs have expressed their interest with contracts due to be signed in 12 months and drilling to begin at the end of 2015.

Despite the obvious potential, as witnessed by the US Geological Survey's (USGS) 2010 estimate that the Levant Basin as a whole could contain two billion barrels of oil and up to 123 TCF of gas, it has taken over two years for the government in Beirut – which has been dogged by slow-motion politics, neighbouring conflicts, and sectarian divides - to establish a Petroleum Administration to handle applications from IOCs bidding on exploration blocks. The delay has been compounded by the issue of the region's unresolved maritime border disputes.

In 2007 a bilateral agreement was signed between Lebanon and Cyprus on the delimitation of the former's Exclusive Economic Zone (EEZ) but, in protest at the 2010 bilateral agreement between Cyprus and Israel, it has never been ratified by the Lebanese government. There is a disputed area of 874 km², as Israel began its maritime border with Cyprus at Point 1 which coincided with the final point demarcated between Lebanon and Cyprus. Beirut argues, however, that this final coordinate was deliberately chosen because it was in uncontested Lebanese waters and that the de jure border should actually lie 17 kms further at Point 23. This dispute, as well as Turkish political pressure on Lebanon, has also held up the ratification of the 2007 Lebanese-Cypriot agreement, despite the existence of clauses in these agreements to accommodate for amendments.

In a move to hasten the acceptance of an agreement and strike an accord between Lebanon and Israel, which technically still remain in a state of war, Cyprus' outgoing President Demetris Christofias signed a memorandum of understanding with Lebanon's President Michel Sleiman in January 2013 to “ to increase co-operation to agree on principles and sound means that would allow us to extract this resource.” This latest discovery, plus the huge discoveries already made in both uncontested Israeli and Cypriot waters, have put fresh impetus on all sides to come to an agreement which will enable the whole of the Levantine Basin to be explored without violating each other's maritime sovereignty.