Embarking on a Joint Venture in Maritime Oil and Gas Exploration: A Closer Look at the Consortium Formed by QatarEnergy, TotalEnergies, and Eni in Lebanon.

Lebanon has witnessed a significant shift in its energy sector dynamics with the announcement of a three-way consortium between QatarEnergy, TotalEnergies, and Eni to explore oil and gas in two maritime blocks off its coast, signaling an intriguing turn of events for the region’s energy landscape. Amidst a complex geopolitical backdrop and an evolving global energy market, this endeavor, heralded by the Lebanese energy ministry, unfolds a chapter that could be pivotal for Lebanon’s economic prospects and energy security.

In a beacon of positive development amidst Lebanon’s multifaceted challenges, the energy ministry declared that QatarEnergy would be joining hands with France’s TotalEnergies and Italy’s Eni to foster exploration activities in the nation’s offshore sectors. The consortium underscores a shared vision and collaborative effort aimed at harnessing the potential encapsulated in the eastern Mediterranean and Levant offshore areas, which have historically proven to be reservoirs of substantial gas discoveries, especially over the previous decade.

Following months of intricate negotiations, the stakeholder distribution among the consortium members was agreed upon, with QatarEnergy securing a 30% stake, while TotalEnergies and Eni would retain 35% each. Notably, this resolution emerges after Lebanon’s first licensing round in 2017, during which a consortium—comprising TotalEnergies, Eni, and Russia’s Novatek—was victorious in procuring bids to explore offshore 4 and 9 blocks.

However, the journey to this current consortium configuration has not been without its share of challenges and evolutions. In September 2022, Novatek relinquished its involvement, thereby bestowing its 20% stake upon the Lebanese government. This withdrawal necessitated the recalibration of stakeholder investments and roles within the exploration project and rendered the involvement of a new partner, QatarEnergy, both timely and vital to sustaining the momentum of exploration activities.

Moreover, the geopolitical dimension, invariably intertwined with energy exploration and production in the region, played a critical role in shaping the framework and agreements related to these maritime blocks. Particularly, the lingering dispute between Lebanon and Israel concerning their maritime border witnessed a historic resolution in the month succeeding Novatek’s withdrawal. The U.S.-brokered landmark agreement between Lebanon and Israel, delineating their maritime borders, became a pivotal determinant in the structuring and future trajectory of the exploration endeavors in block 9. Notably, a portion of block 9 is situated south of the newly established border with Israel.

A distinct and diplomatically nuanced agreement between Total and Israel was fashioned concerning the revenue generation from the aforementioned segment of block 9, reinforcing the intricacy of managing energy exploration within a context of layered geopolitical considerations. The agreement firmly established that neither Lebanese nor Israeli corporations would operate in the zone located below the newly delineated border, instigating the transfer of the TotalEnergies and government stakes to entities referred to as “vehicles” of TotalEnergies and precipitating the quest for a new consortium partner.

This ambitious exploration initiative arrives amidst heightened global interest in the eastern Mediterranean and Levant regions, particularly given the notable gas discoveries in the previous decade and the augmented reliance on diversified gas supply chains in the aftermath of Russia’s invasion of Ukraine. The consortium, therefore, not only represents a cooperative venture aimed at tapping into the rich energy potential off Lebanon’s coast but also resonates on a larger scale within the context of regional energy security and global energy supply dynamics.

In conclusion, the formation of the consortium between QatarEnergy, TotalEnergies, and Eni and the ensuing exploration in Lebanon’s maritime blocks is emblematic of the complex, yet potentially rewarding, interplay of energy exploration, geopolitical considerations, and collaborative international ventures. It is imperative that such collaborations are navigated with a judicious blend of economic foresight, environmental consideration, and diplomatic acumen to ensure that the potential benefits can be realized in a manner that is conducive to regional stability and symbiotic international relations.

With this initiative underpinning Lebanon’s aspirations for energy self-sufficiency and economic rejuvenation, all eyes will be attentively observing the unfolding chapters of this exploration story, deciphering its implications not only for the nation but also for the broader dynamics of the global energy landscape.

Turkey is set to resume operations on a crucial crude oil pipeline from Iraq following a six-month suspension, as announced by Turkey’s Energy Minister, Alparslan Bayraktar, on October 2nd. The announcement was made during the ADIPEC conference held in Abu Dhabi. Upon reactivation, the Iraq-Turkey pipeline is poised to supply almost half a million barrels to the global oil markets weekly.

The pipeline’s operations were initially halted half a year ago subsequent to an arbitration decision by the International Chamber of Commerce (ICC). The ICC mandated Turkey to remunerate Baghdad for unauthorized exports that occurred between 2014 and 2018. Following the ruling, Turkey embarked on maintenance work on the pipeline, which is a significant conduit contributing approximately 0.5% to the global crude supply.

In the interim, Baghdad and Ankara came to an agreement to postpone the recommencement of the pipeline flows until the maintenance assessment, particularly imperative as the pipeline transverses a seismic zone, was finalized. Concurrently, the two nations have been entwined in a legal skirmish regarding arbitration awards. Bayraktar had mentioned in the previous month that Turkey was considering legal proceedings against Iraq, given that the latter has an outstanding enforcement case against Turkey.

Moreover, Bayraktar emphasized Turkey’s history as a steadfast transit route for oil and gas. This pipeline resumption is not only vital for Turkey and Iraq but also stands to have a substantial impact on global oil markets by infusing a considerable quantity of crude oil amidst existing market dynamics.

The decisions and subsequent actions from both countries following the reactivation of the pipeline will be pivotal, especially considering the previous legal and operational challenges. As this development unfolds, it may potentially usher in various economic and geopolitical implications within the region, and perhaps, on a global scale.

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In a strategic move to spur more investment, Bahrain, known as the Arabian Gulf’s most petite oil producer, recently granted golden licences to five companies that have committed over $1.4 billion to extensive investment projects within the kingdom.

This initiative is a part of Bahrain’s larger strategy to shift its economic focus from oil and promote business expansion. The past few years have seen Bahrain rolling out several plans to foster growth. In 2021, a significant economic reform plan was set in motion, pledging around $30 billion towards pivotal projects intended to fuel post-pandemic growth, heighten job opportunities for locals, and magnetise foreign direct investments.

Following this ambitious plan, the government proposed cost-saving measures with an end goal of generating over 20,000 jobs for its citizens by the upcoming year. The efficacy of these efforts is evident. Bahrain’s economy bolstered by 4.9% the previous year, marking the most commendable growth rate since 2013, predominantly driven by the country’s non-oil sectors.

Initiated in April, the golden licence scheme extends a host of benefits to both local and international corporations. These perks range from priority in land allocation for investments and expedited access to governmental services like building permit approvals to financial support avenues through the Bahrain Development Bank and the labour fund, Tamkeen.

Furthermore, beneficiaries can anticipate an enhanced collaboration with diverse governmental departments, a dedicated account manager courtesy of Bahrain’s Economic Development Board, and a potential revision of standing laws or regulations as deemed necessary.

The principal objective behind this enticing scheme is clear: to pull in investments from both domestic and international shores, thereby facilitating economic progression and local job creation.

To qualify for this golden ticket, companies must either propose major investment initiatives that promise to introduce more than 500 jobs within Bahrain or commit to an investment exceeding $50 million. The pioneer beneficiaries of this scheme comprise notable names such as Citi, Eagle Hills Diyar, Infracorp, Saudi Telecom, and the Whampoa Group, all of which have been greenlit by the government to initiate or enhance their operations within the kingdom.

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In a bid to invigorate its economy, Oman‘s Sultan Haitham has decreed the establishment of the Khazaen Economic City, complete with two free economic zones, as confirmed by the Oman News Agency on Monday. Located within the South Al Batina Governorate, the new city will be administered by the Public Authority for Special Economic Zones and Free Zones.

These pioneering initiatives will come to life under the management of Oman Logistics Company, tasked with operating both Khazaen Economic City and its two embedded free zones. The responsibility for developing these economic areas falls to the Khazaen Economic City Company.

This ambitious move comes as Oman intensifies its economic diversification strategy, buoyed by favourable oil prices, prudent fiscal reforms, and the containment of inflation, as reported by the International Monetary Fund last month.

Despite anticipating a budget deficit of 1.3 billion rials in 2023, accounting for 3% of its economy, Oman enjoyed a surplus of 1.14 billion rials the previous year, according to the nation’s Ministry of Finance.

To galvanise the country’s economic rebound from the COVID-19-induced slowdown, Oman launched a three-year fiscal stability programme last October. This scheme is designed to spur the Sultanate’s financial sector and facilitate national economic recovery.

Further bolstering its economy, Oman has recently signed several agreements with its Gulf Cooperation Council (GCC) counterparts. These include a $3 billion railway project linking the Sultanate with the United Arab Emirates and a $320 million infrastructure development endeavour, backed by the Saudi Fund for Development.

Oman’s efforts have not gone unnoticed by international observers. In April, Fitch Ratings revised its outlook for the country from stable to positive, maintaining its “BB” rating. The agency cited a surge in oil revenue and a reduction in public debt as key contributors to this positive trajectory, reflecting the government’s commitment to fiscal consolidation.

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Underneath the sheen of an unprecedented collaboration between Aston Martin, the preferred automaker of fictional British spy James Bond, and Californian electric vehicle prodigy, Lucid Motors, lies a compelling subplot—the omnipresent hand of Saudi Arabia, a leading exporter of oil and gas on the planet.

Last month’s partnership, far from being merely an alliance of tradition and innovation, also features the Public Investment Fund (PIF)—Saudi Arabia’s sovereign wealth fund. While the PIF’s role in channelling immense quantities of fossil fuel-generated wealth into projects and enterprises worldwide is well-known, its significant stakes in both Aston Martin and Lucid Motors might raise a few eyebrows.

Estimated to oversee assets exceeding £500 billion, the PIF is chaired by Saudi Arabia’s de facto ruler and Prime Minister, Crown Prince Mohammed bin Salman (MBS), a scion of the Al Saud dynasty. The PIF holds an 18% stake in Aston Martin, valued at approximately £450 million, exemplifying the ultra-conservative kingdom’s ambition to extend its economic reach in Britain, akin to the approaches of other Gulf countries such as Qatar.

Beyond Aston Martin, the PIF’s portfolio also comprises holdings in Carnival, a renowned cruise ship company, and several controversial forays into the realm of sports. In 2021, it attracted global attention following its purchase of Premier League football team Newcastle United from the former owner, retail tycoon Mike Ashley. Despite the charges of “sportswashing” surrounding this takeover—due to allegations of regimes with dubious human rights records leveraging professional sports to improve their images—supporters compared the backlash to the response to similar acquisitions by other Middle Eastern entities.

Moreover, the kingdom’s growing clout in the sports sector was further underscored last month amidst uproar over a proposed merger between the Saudi-backed LIV Golf tour and the US PGA Tour. Simultaneously, Saudi Arabia has committed to a ten-year Formula One hosting deal, with speculation also swirling about its plans to host the 2030 football World Cup.

The dive into professional sports is perceived by many as Saudi Arabia’s attempt to ‘cleanse’ its international reputation, particularly given its notorious human rights record and stringent laws, which include capital punishment for same-sex activity and severely restricted women’s rights.

“The Saudi authorities’ use of their sovereign wealth fund reveals that it is not merely a vehicle for state investment—it’s also a tool for state-level image management,” Peter Frankental, Economic Affairs Director at Amnesty International UK, noted. He added that Saudi’s acquisition of Newcastle United and partnership with Aston Martin could be seen as another step in this ‘sportswashing’ direction.

However, opponents of Saudi Arabia’s growing influence must reckon with one undeniable truth: the PIF’s extensive resources offer the potential to fund the kind of long-term investments that the UK sorely requires. Infrastructure endeavours such as the Sizewell C nuclear power plant are expected to be financed in part by sovereign wealth funds.

The future influx of Saudi investment seems unlikely to slow down, particularly given the boon of recent global oil price surges following Russia’s invasion of Ukraine.

The British Government recognises Saudi Arabia as its largest trading partner in the Middle East. With shared interests and a potential free-trade agreement with the Gulf Cooperation Council on the horizon, the UK aims to stimulate its economy, bolster employment, and increase wages.

Additionally, private Saudi investors, like their peers in countries such as Qatar and the United Arab Emirates, are increasingly captivated by the UK’s profitable property market. The ninth son of Saudi King Salman bin Abdulaziz, Turki bin Salman Al Saud, reportedly owns around 20 properties in London via Moncrieff Holdings, a firm headquartered in the British Virgin Islands.

Image Credit: U.S. Department of State