Riding on the positive momentum following the successful completion of the pre-qualification phase, the Lebanese Minister of Energy & Water was joined on Tuesday 30 April 2013 by all six members of the Petroleum Administration to announce the launch of the first Lebanese Offshore Bidding round, which subsequently opened as scheduled on 2 May 2013. During the launch ceremony, a number of key issues were addressed, ranging from information related to the model EPA to the revealing of a more detailed timeline of interim steps for the coming months (along with pertinent caveats) leading to a projected target date for the signature of EPAs with successful bidders by February-March 2014. The announced timeline includes the following milestones:
- 1 June 2013 – Deadline for pre-qualified applicants to offer their comments on the model EPA.
- 15 June 2013 – Companies to nominate blocks they wish to bid for.
- Week of 17 June 2013 – Participants’ conference in Beirut.
- 30 June 2013 – Petroleum Administration to announce which blocks will be open for bidding.
- 31 July 2013 – Deadline for the payment of the application retrieval fee.
- Summer 2013 – Publication of final model EPA and Tender Protocol (both subject to approval by a Council of Ministers with full powers).
- 4 November 2013 – Deadline for submission of bids / Closing of bidding round.
- December 2013 – Details of short-listed bidders to be revealed.
- February-March 2014 – Signature of EPA with successful bidders.
Today, on 2 May 2013, the model EPA (in draft form) was made accessible to pre-qualified companies for their consideration, following the signature of a non-disclosure agreement. Additional key pieces of information to come out of the conference include the following points:
- Successful bidders will be required by law to hire 80% of their workforce locally, although the exact terms and conditions of the local content requirements are not yet finally established. Likewise, it was announced that Lebanese companies offering services to successful consortia would be given priority over foreign competitors, within a yet to be formalized margin.
- While all ten blocks will initially be open for bids, only four to five are expected to be offered to consortia in the first round. Pre-qualified companies would rank in advance the blocks that they are interested in bidding for in order of preference. It was also announced that a minimum of three bids would need to be made for a specific block in order for such a block to be offered for exploitation in the first round.
- Special tax regulations. The tax regime is not expected to be frozen through a stabilization clause.
- Applicants will be required to purchase all seismic data for the block they choose to bid for.
- The finalized EPA is expected to include two biddable items: cost recovery (R factor defining the split between profit and cost oil) and the work program.
While it is clear that the Petroleum Administration and Ministry of Energy & Water are keen to proceed expediently in order to help ensure that the current timeline remains in place, it is nonetheless crucial to bear in mind the fact that several decrees relating to inter alia block delineation, the model EPA and taxation are still outstanding, and cannot be legalized in the absence of a newly formed government. It is, however, likely that once a new government is in place it will prioritize the enactment of the required complementary decrees.
