Cleary Gottlieb advised the Ministry of Energy and Water of the Republic of Lebanon, and the Lebanese Petroleum Administration, in connection with its First Offshore Licensing Round.
Exploration and Production Agreements were awarded for two blocks in Lebanon’s exclusive economic zone to a consortium comprising Total, Eni, and Novatek.
The Council of Ministers approved the contracts on December 14, 2017, and a signing ceremony was held in Beirut on February 9, 2018.
Cleary has been working on the licensing round process since 2012, when the Lebanese Council of Ministers adopted a decree governing the pre-qualification of companies for bidding. Bids were received in October 2017, and the final contract was negotiated in December 2017.
Lebanon’s seabed is estimated to contain a significant hydrocarbon potential consisting primarily of gas reserves, in addition to possible untapped oil reserves. Significant sub-sea gas fields have been discovered in the Levant Basin in the eastern Mediterranean since 2009. Lebanon’s exclusive economic zone has been the subject of extensive seismic studies that have confirmed the existence of significant prospects for exploration and development.
If a discovery is made, the companies will be required to evaluate its potential and, if it is deemed to be commercial, to submit a plan for development and production over a period of twenty-five years. Total investments could be in the billions of dollars. The companies will recover their costs from a portion of the production, and the remainder will be split between the companies and the Lebanese State. Revenues accruing to the state will be deposited in a newly created sovereign wealth fund that will be used to invest in economic development and to benefit future generations.