MEOG: Novatek leaves Lebanon

Russia’s Novatek has withdrawn from a consortium that controls two Lebanese licences, the latest in a string of disappointments and delays for Beirut as it looks to explore for resources offshore.

Energy Minister Walid Fayad said that Novatek had cited “economic and financial [issues and] political risks” as its reasons for dropping its 20% stake in the consortium with TotalEnergies of France and Eni of Italy, both of which own stakes of 40%.

The consortium was awarded blocks 4 and 9 in 2018. The group drilled their first well in Block 4 in early 2020 but reported that no commercial discovery had been made. With around 7-9% of Block 9 overlapping with a triangle of territory disputed with Israel, which condemned any efforts to explore the concession, TotalEnergies said the consortium would seek to drill as far from the offending area as possible, but work in the licence remains suspended.

While Novatek’s withdrawal is perhaps unsurprising given challenges it is facing closer to home, it raises questions about the future of the consortium. Speaking to L’Orient, Lebanese energy expert Laury Haytayan said: “All provisions, whether the law, the signed decrees or the signed exploration deal, say that there have to be at least three companies in the consortium.” She noted that the Lebanese authorities must replace Novatek or redraft the country’s energy laws.