Lebanon Explores Offshore Energy

Focus: GLOBAL

Lebanon's first offshore oil and gas rights auction has drawn interest from about 100 companies, writes April Yee of The National.

Twenty-nine American firms are among those that have bought geophysical data in preparation for an upcoming bid round for Lebanese offshore energy production rights, which should take place this May, , Lebanese energy minister Gebran Bassil said last week.

The government is banking on hydrocarbons to help pay back debt of $56 billion—more than the country's annual economic output, and the highest proportion of debt to GDP in the Arab world. Inflation has ballooned to more than 10%, putting it in league with Nigeria.

Lebanon hopes to narrow the list of bidders next month before launching a six-month bidding process aimed at getting a formal exploration contract signed next year. Royal Dutch Shell (RDS.B), Scotland's Cairn Energy (London: CNE), Ireland's Cove Energy (London: COV), and Russia's Lukoil (LUKOY) are among those reportedly in the running.

An oil or gas find would also help Lebanon to disentangle its energy security from an unreliable regional pipeline network. Along with Israel, Jordan, and Syria, it forms part of the Arab Gas Pipeline, designed to deliver Egyptian supplies to Eastern Mediterranean states. But in the wake of the Egyptian revolution, the pipeline has been plagued with at least 14 acts of sabotage, mostly bombs, and the overall decline in Egyptian production.

Today, Lebanon spends 15% of its $40 billion GDP on fuel imports.