Political Chaos Hinders Lebanon's Oil And Gas Hopes

Politics, Geopolitics & Conflict

A month after TotalEnergies said it would finally start filling offshore Lebanon in the third quarter of this year, political chaos (again) threatens to throw a wrench in the fractured country’s plans to boost its failing economy and energy supplies with a hoped-for oil and/or gas discovery in the prolific Levant Basin. Lebanon has a vacant presidency and it’s largely depending on external forces to resolve it before it completely collapses. After 12 tries at electing a new president, the vacuum is set to implode, and the shifting dynamics across the Middle East (a Saudi/Iran detente, UAE normalization of relations with Israel, Iran’s stepped-up meddling in Syria, etc) always plays out by proxy in fragile Lebanon—a long-time venue of Sunni-Shi’ite tinderbox. That makes whatever happens next between Saudi Arabia and Iran of decisive importance to Beirut.

NATO will create a critical undersea infrastructure center to protect pipelines (among other undersea infrastructure) in the face of the Russian invasion of Ukraine. The new maritime security center will be headquartered in London. NATO leadership has noted that Russia has the capacity to map and “potentially to conduct actions against critical infrastructure”, including not only oil and gas pipelines but also thousands of kilometers of internet cables across the North Sea, the Baltic Sea, the Atlantic Ocean and the Mediterranean Sea.

Further to shifting Middle East relations, this week, the UAE and Qatar moved to restore diplomatic ties that have been cut off since 2017 when the Saudis led a push against Qatar, launching a GCC-wide blockage over Qatar’s close ties with Iran and its alleged support of Shi’ite extremism. Restoring diplomatic relations was an obvious development after Saudi Arabia restored relations with Iran.

Discovery & Development

Guyana is delaying its first offshore block auction while it tries to nail down new regulations for its fledgling oil and gas industry. This is the fourth delay. The delays come after pushback for what was perceived as Exxon’s sweetheart deal. Ironically, the delays are keeping Guyana from diversifying its oil explorers’ base. Elections were held this week, which Guyana claimed contributed to the delays, although a new date has yet to be set.

Europe’s OMV Petrom and Romania’s Romgaz have rubber-stamped the development of the Domino and Pelican South nat gas fields in Neptun Deep. National Agency for Mineral Resources must now sign off. OMV Petrom is operator, and both parties will have a 50% interest in the project. The project will see 100 Bcm of nat gas brought online. OMV and Romgaz will invest a combined $4.37B.

Deals, Mergers & Acquisitions

MAC has finalized its purchase of the Cobar copper mine in New South Wales from Glencore for $1.1B. MAC will now own and operate. Glencore will own a 20.6% stake in MAC and will maintain offtake for all of the copper concentrate produced at Cobar. Glencore said the sale was in line with its strategy to focus on lower-cost and long-life assets.

Equinor has sealed a long-term deal with Cheniere to purchase 1.75 million mt per year of LNG for 15 years. The volumes will begin in 2027. When the shipments start, Equinor will be exporting 3.5 million mt/year from Cheniere’s U.S. Gulf Coast LNG terminals.

Eni SpA is said to be coming close to reaching a deal to purchase Neptune Energy for $5 billion, and could beat out TotalEnergies for the company. Eni has had eyes for Neptune since late last year. No deal has been struck.

Chevron Argentina will invest $500 million to develop the El Trapial block in Argentina. The three-year process will include $66 million for drilling, completing, and commissioning five horizontal weeks, along with $13 million for infrastructure. Investment should take place by the end of July.