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Delay in Offshore Exploration to Remain.BMI

Business Monitor International anticipated that Lebanon will continue to lag its regional peers in establishing oil & gas exploration and production due to systematic and persistent political risks, as well as because of political disputes within the government, as reported by Lebanon This Week, Byblos Bank economic publication.

 

It added that the ongoing crisis in Syria is causing the deterioration of both the political and security landscape in Lebanon, which would sug- gest further delays to both the licensing round and to efforts to establish the country's oil & gas industry. It noted that the disputed maritime border with Israel further complicates the industry's outlook and constitutes an obstacle for the sector's long-term development, even though early licensing rounds are not expected to include blocks in the disputed maritime border with Israel.

 

It pointed out that the region's offshore potential has increased following substantial discoveries near Cyprus and upcoming commercial production in Israel. It noted that Israel has moved quickly towards commercializing resources, as it is expecting to start extracting gas from the offshore Tamar field by 2013 and to become a net exporter of natural gas by 2017. In contrast, the Lebanese government delayed the launching of the first offshore licensing round that was scheduled in 2011 on the back of continued political problems in the country. It noted that continued delays in developing domestic natural resources will translate into a higher reliance on energy imports.

 

It indicated that Lebanon intends to shift energy consumption to natural gas from gas oil, which would generate substantial savings for the country's energy import bill, among other benefits. It considered that the upside potential would be significant if Lebanon is able to tap its offshore resources, given its wide fiscal deficit and high debt burden. But it considered that Lebanon will continue to rely on imported energy for its consumption needs over the foreseeable future, given that offshore production is likely to remain a slow-moving process.

 

In parallel, BMI said that a three-dimensional offshore seismic survey, which will be conducted by geosciences data providers Dolphin Geophysical and Spectrum Energy & Information Technology, will provide advanced information regarding prospective oil & gas presence off Lebanon's coast. It expected the survey to be completed by September 2012 and data to be ready by the end of 2012. The United States Geological Survey (USGS) estimates that the Levant Basin Province has a mean of 1.7 billion barrels of recoverable oil and a mean of 122 trillion cubic feet of recoverable gas.

 

The Levant Basin Province encompasses approximately 83,000 square kilo- meters of the eastern Mediterranean area off the coasts of Lebanon, Syria, Cyprus and Israel. The USGS stressed that the estimates represent technically-recoverable oil and gas resources, and are not estimates of economically-recoverable resources.

 

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