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Lebanon will place all future oil revenues in a sovereign wealth fund (SWF) to invest in development projects, President Michel Aoun said, referring to hoped-for oil wealth as the country gears up for the long-awaited auctioning off of its offshore exploration blocks.
"Everything that is extracted will be for the Lebanese people," Aoun said during a meeting with a press syndicate delegation, adding that revenue would be invested into development, with a particular focus on upgrading the country’s devastated infrastructure.
Khalil told reporters that exploration contracts should be signed within nine months. Drilling could begin as early as a year and a half after that.
"Lebanon is blessed with the chance of starting straight from the beginning with its oil and gas industry. It can learn from others' mistakes and best practices," CNBC quoted Diana Kaissy, of the Lebanon Oil and Gas Initiative, as saying.
After four grueling years of national political paralysis, Lebanon’s Cabinet approved two oil and gas decrees that pave the way for the country’s first offshore drilling licensing round.
Bidding is set for the middle of this year, and at stake is an estimated potential 96 trillion cubic feet of natural gas reserves and 865 million barrels of oil offshore.
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Lebanon is offering up five offshore blocks (1,4,8,9 and 10) for bidding in its first licensing round, which was confirmed last week by Minister of Energy and Water Cesar Abou Khalil.
Lebanon shares the Levant Basin in the eastern Mediterranean with Cyprus, Israel, Egypt and Syria.
In 2013, before the process was stalled, 46 companies qualified to take part in bidding—12 of them as operators, including Chevron, Total and Exxon Mobil.
These companies will remain qualified to bid in a second pre-qualification round. For other companies, contracts would run between February 2nd and March 31th, said Abou Khalil, and qualifying companies will be announced on April 13th.
By Damir Kaletovic for Oilprice.com
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Damir Kaletovic is a veteran investigative journalist covering Europe and the Middle East, and a senior consultant for Divergente Research.