Lebanon Signs Offshore Exploration Contracts

Lebanon on January 29 signed exploration & production agreement (EPA) contracts with a consortium of companies made up of Total, Eni, and Novatek.

In October 2017, the consortium had placed two separate bids for Block 4 and Block 9 in Lebanon’s first licensing round in its offshore Exclusive Economic Zone, and on December 15 the Lebanese government awarded EPA licenses to the consortium.

Preparing for the exploration phase has already begun. December 14 marks the effective date of the EPA, the date from which all contractual milestones of the EPA will be measured.

The EPA calls for two exploration periods, the first lasting three years and the second lasting two years, with an option for an additional year. According to the terms of the contracts, the consortium has committed to drill two wells in 2019, one in each block. In February, 60 days from the contracts’ effective date, the consortium must submit its exploration plan for each block, detailing the additional geological assessments or seismic surveying to pinpoint where and how it will drill the first wells.

The EPAs also include clauses to benefit the Lebanese economy. Local companies will get an advantage in consortium tenders for goods and services, even if bids for up to 5% of goods or 10% of services are more expensive. The workforce of the consortium must comprise 80% Lebanese workers, and the consortium will have to budget $300,000/year for training public sector employees working in the sector, with a 5% increase to the budget each year.