emerging markets
HOSTAGE TO POLITICS Lebanon’s Hydrocarbon Bonanza Just Out of Reach BY MARK WILLIS
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ollowing the precipitous collapse in global energy markets over the last three years, an increasing volume of high cost hydrocarbon exploration projects once considered economically viable have been scaled down, put on hold, or canceled altogether. Exploration projects requiring a breakeven point in excess of current oil and gas prices that have already succumbed to cost cutting among international oil companies include the Canadian oil sands, offshore drilling in the North Sea and Gulf of Mexico, and development of deep sea hydrocarbon reserves in the Arctic and West Africa. While depressed oil and gas markets have continued to defy expectations of a likely rebound over the last 12 months, a number of exploration projects situated onshore or in relatively easy to access shallow waters remain scheduled to come on stream over the coming years. Given the extent of infrastructure development traditionally associated with the initial upstream phase of hydrocarbon exploration, and subsequent provision of midstream services, these projects present a range of opportunities for the project cargo community, as well as other operators within the global energy sector. Among the global regions so far largely unaffected by cost cutting and distressed energy markets is the East Mediterranean, with national governments and international oil companies still optimistic about the prospects for tapping into offshore hydrocarbon reserves contained within the Levant Basin, which falls within maritime 22 BREAKBULK MAGAZINE www.breakbulk.com
territories controlled by Israel, Turkey, Egypt, Cyprus and Lebanon. While a relatively small number of drilling projects in the region have taken place so far, with some success, the exact extent of hydrocarbon reserves remains unknown. However, a 2010 study from the U.S. Geological Survey estimated the Levant Basin has mean probable undiscovered natural gas reserves of 122 trillion cubic feet and mean probable undiscovered oil reserves of 1.7 billion barrels. As yet largely untapped, the reserves therefore represent extraordinary potential for national governments in one of the world’s poorest regions, and underscore the considerable interest from some of the world’s largest oil and gas exploration firms. The most significant progress towards eventual large-scale drilling and production has so far taken place within Israeli, Turkish and Cypriot waters, reflecting their relative political stability and reliable business climates within a notoriously volatile and unpredictable region.
MOVE INTO LEBANON
Recent months have also witnessed a more concerted political drive in Lebanon to exploit the country’s wholesale offshore natural gas deposits, raising
hopes and expectations that initial exploratory drilling may take place over the next 12 months. While a consensus of analysts point to high potential for international oil companies, no official figures for the size of Lebanon’s hydrocarbon deposits are available. “At this stage, the presence of these resources in commercial quantities is still hypothetical. No wells have been drilled offshore, and in the absence of exploration, these resources cannot be confirmed,” said Mona Sukkarieh, co-founder of Middle East Strategic Perspectives, a political risk consultancy. However, credible analysis has estimated Lebanese waters may hold up to 80 trillion cubic feet of gas, and an additional 865 million barrels of oil, representing a source of great potential for domestic economic development, international oil companies, and project cargo operators. Despite the absence of drilling, the government has made concerted efforts to gauge the extent of available recoverable reserves, with geological and geophysical service companies having performed wholesale seismic surveys covering the entirety of offshore waters over recent years. According to Wissam Zahabi, chairman of the Lebanese Petroleum Administration, the official regulatory body in charge of managing the country’s petroleum sector, this process will pave the way for eventual drilling and gas production. “The interpretation of 2D [two-dimensional] and 3D [threedimensional] geophysical data shows well-defined structural and stratigraphic traps regarded as prospective, particularly for natural gas,” he said. “Once drilling activities start, resources that are accessible to exploration
OFFSHORE AND ONSHORE GEOPHYSICAL SURVEYS 2D seismic survey 2D seismic survey acquired by Geco-Prakla 2D seismic survey acquired by Spectrum 2D seismic survey acquired by PGS 3D seismic survey acquired by Spectrum 3D seismic survey acquired by PGS airborne geophysical survey acquired by NEOS
Source: Lebanese Petroleum Administration ISSUE 5 / 2016