QatarEnergy To Acquire 30% Stake in Lebanese Oil Exploration Block
By: Arab America Contributing Writer / Drew Jackson
QatarEnergy CEO Saad al-Kaabi confirmed in a recent statement that the state-owned energy company is seeking a 30% stake in the offshore Lebanese oil field of Qana in the Mediterranean.
As reported by Reuters, the deal will have QatarEnergy join the three-party consortium alongside French oil producer TotalEnergies and Italian oil producer ENI. As part of the deal, QatarEnergy will assume the 20% stake previously held by Russian company Novatek, who pulled out of the TotalEnergies-lead consortium this September. In addition to the Novatek stake, QatarEnergy will also acquire 5% stakes from TotalEnergies and ENI respectively.
Qatar’s new involvement in the consortium comes as the past few months have seen major steps toward the exploration and development of commercially viable oil fields in the Eastern Mediterranean.
Recently European markets have been struggling to meet oil demand in the wake of the Russian invasion of Ukraine. However, since 2006 European energy analysts have eyed the Eastern Mediterranean as a viable option for oil exploration and production.
Qana and Karish Gas Fields
In 2012 London-based firm Spectrum, conducted a seismic analysis of the Mediterranean waters off the coasts of Lebanon and Israel, estimating Lebanon to have recoverable gas reserves of up to 25.4 trillion cubic feet. Since this 2012 study, both Lebanon and Israel have disputed the territory and brought in major oil stakeholders to explore the blocks of the Karish and Qana reserves.
Israel first contracted London company, Energean, in 2014 to explore its Karish reserve. As recently as November 7 Energean PLC has confirmed an additional 13 billion cubic meters of commercially viable oil near the Karish field and should be ready to pump by early 2023.
Lebanon awarded a winning bid to the TotalEnergies led consortium of ENI and Novatek in late 2017. Exploratory drilling lasted for the next two years until being halted in 2020 due to disappointing findings. However, recent findings by Energean within the region have encouraged the three-party consortium to renew its contract using a shell company to hold the place of QatarEnergy until a deal can be finalized.
This is just the latest development in the past month and a half of activity, as US brokered negotiations between Lebanon and Israel reached an agreement on October 26. The deal brokered by Amos Hochenstein, US Senior Advisor for Energy Security, reached a historic agreement between two nations still technically at war.
The negotiations have, for the first time, established a maritime border between the two countries. This agreement separating exclusive economic zones along what is known as “Line 23” entitles Lebanon to the majority of the Qana gas field, whilst Israel is given a minority stake in the Qana field and all of the smaller Karish reserve.
With Israel being given 17% of profits from the Qana field, Israeli, Lebanese, and Hezbollah leaders have publicly praised the agreement as good for all parties.
Additionally, there is hope and a silent agreement that with a third Arab entity joining the group in the form of Qatar, Israel will be encouraged to increase Palestinian quality of life due to positive business ties.
What does this mean for Lebanon?
The size of the Qana reserve has been largely disputed since the 2012 seismic study of the region. More recent estimates of its actual size since exploratory drilling began in 2018, places the size of the reserve closer to 16 trillion cubic feet.
According to France 24, Lebanon can expect to bring in about 6 billion USD from the reserve over the next 15 years.
This figure is good, but does little to address the massive 72 billion USD in losses Lebanon has suffered in the private sector. This is yet another step in the right direction for Lebanon’s economy.
Lebanon’s investment into energy is just the latest step the nation has taken to ensure a way out of their current economic crisis. As reported several weeks ago in Arab America’s E-News, Lebanon is placing substantial investment into its agriculture sector. Steps such as these will continue to create jobs and stimulate the economy, while also significantly opening up the nation to trade and business to raise its GDP.
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