FRI 23 - 8 - 2019
Apr 5, 2019
The Daily Star
Cabinet OKs second gas licensing round
Joseph Haboush| The Daily Star
BEIRUT: Lebanon took a step toward affirming its sovereignty over maritime borders with Syria and Israel Thursday after the government approved the launch of Lebanon’s second licensing round for offshore oil and gas exploration.
Meanwhile, a ministerial committee agreed on a new electricity plan submitted by Energy Minister Nada Boustani last month. It will now be sent to Cabinet for approval despite failure to agree on who will carry out the tenders to implement the plan. The session will be held Monday at the Baabda Palace, a presidential source said.
After the Cabinet session, headed by Prime Minister Saad Hariri, Boustani tweeted: “[Cabinet] approved the launch of the 2nd licensing round offshore Lebanon. Deadline for submittal of offers set for 31-January-2020.”
Three different ministers confirmed to The Daily Star that blocks 1, 2, 5, 8 and 10 were approved for the oil and gas exploration tenders.
Blocks 1 and 2 are along Lebanon’s northern border with Syria, which is disputed. Blocks 8 and 10 lie along Lebanon’s southern border, which is disputed by Israel. Around 856 kilometers of disputed water lie in Block 8 - the biggest disputed area of any block.
Block 5 is above Block 8 and is not in a disputed area.
With four of the five blocks being controversial, oil and gas experts say Lebanon is testing the waters for the appetite of international companies to take part in bids on these areas.
“The first point and Lebanon’s objective is to confirm its sovereignty over these blocks, and if there are offers, this will be a bonus,” one expert who asked to remain anonymous told The Daily Star.
The expert added that the southern blocks also had an “interesting geological profile.”
Parts of Blocks 8 and 9 run through what Israel claims are located in its Exclusive Economic Zone.
Israeli Energy Minister Yuval Steinitz had said last year that he was open to mediation with Lebanon on the issue of the 870 square kilometers of disputed territory on the maritime border.
Lebanon says that the maritime map it submitted to the United Nations is in line with a set of armistice agreements signed in 1949 following the Arab-Israeli War.
Lebanon is set to see exploratory drilling by a consortium of international companies later this year.
France’s Total, Italy’s Eni and Russia’s Novatek have been awarded contracts to drill in Blocks 4 and 9 of Lebanon’s territorial waters. Earlier this week, Wissam Chbat of the Lebanese Petroleum Administration said the companies had decided to drill in Block 4 and then start work in Block 9. He said the firms would select the best spot in Block 4, taking into consideration the geological data they collected in order to achieve the best result.
Ministers also discussed what Information Minister Jamal Jarrah said in a news conference after the session were “several important items.”
Jarrah described the atmosphere as positive, saying that Cabinet had approved a majority of the 26 items on the agenda, while a few “minor” items were postponed to next week’s session.
One of the key postponements was a controversial item related to the exemption of number unspecified companies from fines for late tax payments, Jarrah explained, adding that the topic required further discussion.
He did not elaborate on which companies these were or the other items that were postponed, but he clarified that the exemption was strictly from fines and not the taxes themselves. He noted that the Finance Minister had the authority to exempt up to LL99 million ($66,000), and if the amount were higher, it needed to be approved by Cabinet. “There was a controversy on this, but the matter is just a project of exemption from the fines resulting from the nonpayment of dues,” Jarrah said.
Shortly after Hariri adjourned the Cabinet session, he headed the ministerial committee meeting on electricity.
Despite failing to agree on who will have jurisdiction over who implements the plan, the committee passed the plan onto Cabinet, which will meet next week. But Boustani told reporters after the sessions that all parties cooperated positively with the plan. She said what remained was minor and that no significant modifications were made. The main issue holding up the plan is a spat over who will oversee the tenders, pitting the Lebanese Forces, Hezbollah, Amal Movement and the Progressive Socialist Party against the Free Patriotic Movement and the Future Movement.
The committee had been discussing whether the bidding would be conducted by state-run Electricite du Liban, the Central Inspection Bureau’s Tenders Department or unspecified third parties. After the committee meeting Thursday, Jarrah told reporters that the choice was now between the Tenders Department and a ministerial committee.
LBCI quoted Boustani as saying that the issue of tenders would be discussed in Cabinet. “We will accelerate the bidding and the short-term solution should appear in 2020, with 20 hours of electricity,” she said.
The plan aims to overhaul the electricity sector, improve power supply and reduce state subsidies to EDL, estimated at $2 billion annually.
Responding to a question from The Daily Star on how transparency would be ensured, Jarrah said after the evening meeting: “It’s not a thing of who is with and against. In the committee, stances changed. We [as the Future Movement] have no issue with how the tender is carried out; the important thing is that it happens.”
The temporary portion of the plan would provide “about 20 hours of coverage next year, which means there will still be four hours [of power cuts],” he told The Daily Star.
If the plan is approved by Cabinet Monday, it will still need to be endorsed by Parliament.
Additional reporting by Timour Azhari
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