The Lebanese Petroleum Administration (LPA) will hold talks with an international consortium led by French oil major Total and Italy’s Eni, as the body that governs upstream oil and gas operations in Lebanon prepares to award exploration licences amid heightened political uncertainty in the country.
"The ministry has already sent a letter to the consortium to negotiate with them, and that is set to take place on the 27th, 28th and 29th of this month," a senior LPA official told The National. He declined to be named as discussions are private. "After that a report will be sent to the council of ministers to award petroleum licences.
"A caretaker government is needed to approve petroleum licences, however [the] LPA is preparing the documentation and the [energy] minister will submit the report by the end of the year and exploration work can begin after that," the official said. “The minister has [already] declared that the offers are good and will take a decision to award blocks four and nine,” he noted.
The resignation of prime minister Saad Hariri earlier this month has plunged the tepid restart of Lebanon's offshore licensing round into confusion. Lebanon currently burns environmentally inefficient fuel oil to generate electricity and imports nearly 90 per cent of the fuel to meet power generation needs. Influx of refugees fleeing the civil war in neighbouring Syria has swelled its population numbers and added to rising power demand. It has also increased public debt, which had led to missed payments for fuel oil imports in the past, highlighting the dire need for exploration of gas. However, Lebanon was unable to proceed with a planned licensing round for nearly four years as it lacked a stable government to oversee the tendering process.
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Following the formation of the new cabinet in December, the Lebanese energy and water ministry announced plans to relaunch the licensing round for five blocks in the Mediterranean, which has in recent years, yielded high-profile discoveries offshore Israel, Cyprus and Egypt.
According to some Lebanese government estimates, the territorial waters of the country could hold as much as 96 trillion cubic feet of natural gas and 850 million barrels of oil, which could translate into huge savings for its economy and end its dependence on fuel imports.
LPA had pre-qualified around 51 firms, which included oil majors such as Shell, Total, Chevron and Exxon Mobil. The Lebanese government had also passed the much-awaited petroleum tax law in September, just ahead of the October deadline for companies to form consortia of three to submit bids.
A team of Total, Eni and Russia’s Novatek submitted two bids for blocks four and nine. Block nine lies in disputed territory with Israel, which remains at war with Lebanon and has threatened arbitration should Beirut sanction exploration work in the area.
While the scope of the bids received remains unknown, they might not be very attractive to the Lebanese government, which may have little choice but to accept the terms from the bidding consortium, Carole Nakhle, chief executive at London-based energy consultancy Crystol Energy said.
“Most likely, whatever the companies placed on the bid, it’s not attractive for the government. It’s attractive for the companies. The companies must think the risk is worth taking as long as they expect a rate of return commensurate of that risk," she said.
“The LPA submitted their review of the bids to the minister but the final approval from the council of ministers may be delayed because of the resignation of the prime minister, which risks stalling the process if the formation of a new government takes time to materialise,” she noted.
A spokesperson for Total said the that its bids in consortium with Eni and Novatek were currently were being reviewed by the Lebanese authorities, but declined to comment further. Eni and Novatek referred requests for comment to Total.
Lebanon has also long considered the possibility of importing liquefied natural gas (LNG) as a substitute for fuel oil, however, that plan was put on the back-burner due to political instability. In October, the Lebanese energy ministry said the country planned to tender three LNG import terminals but the project has yet to be sanctioned by the cabinet.
The Kingfisher Secret
Anonymous, Penguin Books
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
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Brief scores:
Liverpool 3
Mane 24', Shaqiri 73', 80'
Manchester United 1
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Man of the Match: Fabinho (Liverpool)
COMPANY PROFILE
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Launched: 2014
Employees: 60
Based: Abu Dhabi
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Funding to date: $15 million
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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