Tuesday, June 16, 2015

Will Lebanon Start Producing Offshore Natural Gas?

BACCI-PWYP-Will-Lebanon-Start-Producing-Offshore-Natural-Gas-June-2015


BEIRUT, Lebanon
June 16, 2015
Dear friends,

I would like to share with you the short article "Will Lebanon Start Producing Offshore Natural Gas?", which I have recently published on the Publish What You Pay (P.W.Y.P.) bimonthly electronic bulletin. P.W.Y.P. is a group of civil society organizations that advocates for financial transparency in the extractive industry.  

Thank you

Sincerely,
Alessandro

WILL LEBANON START PRODUCING OFFSHORE NATURAL GAS? 

Alessandro Bacci 
P.W.Y.P. Electronic Bulletin 
June-July 2015

BEIRUT, Lebanon — Leviathan and Tamar (in Israeli waters), Gaza Marine (Palestine Authority’s waters), and Aphrodite (belonging to Cyprus) are four of the most important gas fields discovered in the Levant Basin, the easternmost part of the Mediterranean Sea. In 2010, the U.S. Geological Survey estimated that the Levant Basin could have 122 trillion cubic feet (TCF) of undiscovered natural gas resources. Today the volume of gas found is modest, but could still boost the economic development of the involved countries. According to recent geological surveys, Lebanon should have up to 25.4 TCF of recoverable offshore gas reserves; exploiting these reserves could permit Lebanon to:

  • Reduce its dependence on imports of oil products
  • Reduce its public debt
  • Create a sovereign wealth fund for the benefit of future generations and use the residue for public investments


Currently, Lebanon's offshore gas dossier is not progressing at all. In fact, in order to advance with the gas business, it is necessary that the government approves two decrees: the first one concerning the demarcation of 10 maritime blocks (the division of the exclusive economic zone) and the second one concerning the details of the production sharing agreements to sign with the international oil companies. Without these two decrees it is not possible to have the auction for the assignment of the blocks — an auction which has been postponed several times since October 2013.

Apart from the necessary approval of the decrees, if Lebanon decides to develop an offshore gas sector, it will have to consider three main issues:

  • Are Lebanon's public institutions capable of managing a petroleum sector?
  • Will the full cycle costs of the extracted gas be competitive on the gas markets?
  • If there are sufficient quantities of gas for export, 'where' and 'how' will Lebanon export the produced gas?




Read the article on the P.W.Y.P Electronic Bulletin



 

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