On Jan. 4, Lebanon's newly confirmed Cabinet approved two executive decrees related to oil and natural gas exploration in the country's Exclusive Economic Zone. Lebanon's oil and natural gas sector has been caught amid political gridlock for the past two years, while the country has fought to appoint a president and Cabinet. The approval will enable Lebanon, which has yet to launch any meaningful exploration efforts in its maritime territory, to begin exploring in the eastern Mediterranean.
The eastern Mediterranean Sea has been a hotbed for natural gas exploration and the site of many important discoveries over the past decade, including Cyprus' Aphrodite, Israel's Leviathan and Egypt's Zohr natural gas fields. Lebanon has been trying to grab hold of its own successful field since 2010, when it first approved its Offshore Petroleum Resources Law. Seismic studies suggest that Lebanon's maritime region may have as much as 15 trillion cubic feet of natural gas. It was not until 2013, however, when Lebanon first launched its maiden licensing round — a round that initially garnered interest from 52 different companies but that was disrupted by political disputes in Beirut.
The two decrees passed Jan. 4 are intended to kick off a six-month bidding process. The first decree defines the 10 blocks to be tendered, and the second decree sets out the protocol of the tender and the model Exploration and Production Agreement (EPA) to be signed with the consortiums and companies that win bids. Any EPA signed has to be approved by the Council of Ministers, which is not as difficult as pushing measures through the parliament. Lebanon's taxation law still needs to be finalized and will have to be passed by parliament.
Despite the progress, Lebanon's history of governmental stalemate could delay bidding. In fact, the Lebanese government is already facing its next political hurdle: amending the electoral law. Disputes over how to reform the law could delay its approval and even 2017 legislative elections, and any political disruption could have consequences for Lebanon's oil and natural gas sector.