Lebanon’s second licensing round: Lessons learned and the case for stability
▻https://www.mesp.me/2018/09/12/lebanons-second-licensing-round-lessons-learned-and-the-case-for-stability
▻https://i0.wp.com/www.mesp.me/wp-content/uploads/2018/09/Offshore-petroleum-licensing-timeline.jpg?fit=1300%2C588&ssl=1
The most obvious obstacle when the first bid round was announced in 2013 was to launch it despite an incomplete legal framework. There are many political reasons that explain why it took over four years to close the tender, but the straightforward answer is missing regulations and legislation. The absence of three basic documents – a decree defining offshore blocks, a decree specifying the tender protocol and model EPA, and the petroleum tax law – made it impossible to pursue the tender, which had to be repeatedly delayed. Obviously, this lesson had not been learned by 2017 when the tender resumed after a four-year hiatus. At the beginning of 2017, the government approved the first two of these basic documents and announced the resumption of the bid round. The absence of the third document, the petroleum tax law, meant that the closing of the tender had to be extended once more until the parliament had approved the law. Fast forward to 2018, since there is an intention to amend some of the documents governing the second licensing round, ideally, it would be good to have a stable framework, if not on time for the pre-qualification round (logical and preferable), at least by the time companies are invited to submit their bids.
In fact, stability is preferable across the board. This includes the choice of blocks to put up for bidding. When the first bid round was launched in 2013, blocks 1, 4, 5, 6 and 9 were open for bidding. However, when the tender was resumed in 2017, blocks 1, 4, 8, 9 and 10 were put on offer. This confused and discouraged some of the companies that had initially been genuinely interested in the tender. In addition, four out of the five blocks on offer included disputed areas. Awarding Block 9 to a Total-led consortium was indeed a feat that few people expected, given that international oil companies typically are extremely wary of shaky legality. But this should not be taken as the norm. This does not mean that blocks along disputed borders should not be open for the tender. Rather, it means that more hassle-free options should be on offer alongside them.