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3. TotalEnergies’ Operations Linked to Politics as Lebanon Pursues Onshore Exploration

In his upcoming visit to France on March 28, President Joseph Aoun is expected to once again raise, with French President Emmanuel Macron, the issue of TotalEnergies resuming its operations in Lebanon. Aoun had previously requested Macron’s assistance during the French president's visit to Lebanon in January, but there has been no progress on the matter.

Observers of Lebanon’s oil and gas sector have grown convinced that TotalEnergies has no intention of making new discoveries or drilling a third well in Lebanon anytime soon, should it choose to maintain its presence. These sources suggested the company’s role in Lebanon was primarily to provide cover for Israel’s operations in its offshore fields. Given the security situation in previous years, including Hezbollah's presence and threats, companies could not safely operate in Israel without a parallel presence in Lebanon.

In this context, observers noted the politically timed nature of TotalEnergies' operations in Lebanon. Drilling in Block 4 occurred following the political settlement that brought General Michel Aoun to the presidency, with the French company entering the first licensing round at the last moment before the deadline. Similarly, drilling in Block 9 took place after the maritime border agreement was reached in October 2022. This timing allowed Israel to complete work on the Karish field, develop it and begin production and export. Observers highlighted that a key indication of the political nature of TotalEnergies’ activities in Lebanon is its refusal to share the report on drilling results in Block 9 with Lebanese authorities.

Reports indicate TotalEnergies has informed the Petroleum Sector Management Authority that it is no longer interested in Block 9, but may consider Block 8, which requires seismic surveys. Consequently, if all goes according to plan, drilling in block 8 is not expected to begin for at least three years.

In light of this information, observers of Lebanon's oil and gas sector have stressed the importance of the new government reconsidering the criteria for companies eligible to participate in licensing rounds. This would prevent the process from being monopolized by large corporations, which currently show little interest in Lebanon’s exploration and drilling, due to political influence. As a result, no major companies have applied for the extended third licensing round, which is set to end on March 31, with expectations that it will be extended until late November this year.

Additionally, observers have urged the government to begin onshore oil and gas exploration. While the cost of drilling an offshore well can reach $120 million, drilling an onshore well costs only $7 million. This means Lebanon could drill 17 onshore wells for the price of just one offshore well. Even with modest discoveries, the lower cost of onshore drilling would still yield a positive financial return for Lebanon.