Principles For Managing Lebanon's Natural Resource Revenues
on 2/17/2020

The administrative track of the Petroleum Sector in Lebanon started in 2010 upon the adoption of the Offshore Petroleum Resources Law, which constitutes the legal framework governing the management of the sector. It was followed by a series of executive decrees known as the “Petroleum Activities Regulations”.

In November 2012, the Lebanese Petroleum Administration was created by virtue of a decree issued by the Council of Ministers and consequently started operating within a month.

The Lebanese Petroleum Administration elaborated an action plan setting the deadlines for the first licensing round for the exploration of petroleum resources in Lebanese offshore. Qualification requirements for the round were approved in March 2013 before the resignation of Najib Mikati’s Cabinet, which led to the blocking of the launching of this round.

Between 2013 and early 2017, several political factors that remain vague and ambiguous up until today led to delaying the adoption of the decrees relevant to the Tender Protocol and division of offshore blocks, which therefore led to delaying the launching of the first licensing round. This (in addition to the global decrease of oil and gas prices) diminished the enthusiasm of international petroleum companies.

On the 5th of January 2017, the Council of Ministers adopted the pending decrees (relevant to the Tender Protocol and the division of Offshore blocks), thus launching the first licensing round which was completed in October when a consortium of 3 companies being Total (French) acting as operator, Eni (Italian) and Novatek (Russian), as non-operators, submitted two offers for offshore blocks 4 and 9. In January 2018, the Lebanese State, represented by the Minister of Energy and Water, signed an Exploration and Production Agreement (EPA) with the consortium.

On the 16th of December 2019, the Minister of Water and Energy declared the issuance and delivery of the first license to the Consortium to perform the exploration of petroleum in block 4.

While waiting for the results of exploration drillings in block 4, Lebanon still has years ahead before starting to collect financial earnings generated by the extraction and sale of gas. However, this does not mean that Lebanon still hasn’t collected, until this date, dividends, since the beginning of the sector track in 2010.

There are currently two sources for the returns generated by this sector and benefiting the Lebanese State, i.e. the application fees payed by companies in order to participate in the first offshore licensing round and the sale of the seismic surveys data to interested companies.

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