Prequalification round for oil drilling bidders takes off

Actual production set to start in three years

The Ministry of Energy and Water (MoEW) launched the prequalification round for oil and gas companies to start bidding for drilling rights. The deadline for submitting applications was set for March 28. The Petroleum Administration will examine applications and announce the qualified firms by April.

Bidding for the first licensing round is expected to kick off by end 2013. The bidding process will take six months, according to oil and gas expert Rabih Yaghi. “In November, negotiations with shortlisted companies should be launched, and by February 2014 contracts of exploration and production should be signed,” Yaghi said.

According to the MoEW’s estimates, the first drilling operation will be launched in 2015, with production set to start after a year.

The Cabinet needs to issue two executive decrees before launching the licensing round. The first decree invoves organizing oil and gas blocks, and is expected by May 2. “This decree delineates the oil and gas blocks in the Exclusive Economic Zone, based on the geological structure of the seabed,” said Yaghi.

The second decree concerns the contracts to be signed with private companies. “Contracts including exploration and production guidelines will be signed by the State, and oil and gas companies selected after the licensing round,” Yaghi said.

A law dictating the establishment of a sovereign fund must be issued by Parliament before production can begin.