Qatar's energy giant cements Lebanon deal, substituting Russia

QatarEnergy formally agreed Sunday to take a stake in Lebanon’s offshore energy exploration blocks, substituting Russia's Novatek in a deal that US envoy Amos Hochstein helped broker. 

The deal was signed in Beirut with France’s TotalEnergies and Italy’s Eni. QatarEnergy took a 30% stake in Blocks 4 and 9 in Lebanon’s Mediterranean Sea territory, while TotalEnergies and Eni will now each have a 35% stake, according to a press release. 

TotalEnergies chairman and CEO Patrick Pouyanne said, “The recent delineation of Lebanon’s maritime border with Israel has created a new momentum for the exploration of its hydrocarbon potential.”

Why it matters: The deal follows Israel and Lebanon agreeing on the demarcation of their maritime border last October after more than a year of US mediation. The two countries have technically been at war since the state of Israel declared independence in 1947, and tensions between Israel and the Iran-backed Hezbollah organization remain high. 

US energy envoy Amos Hochstein said the QatarEnergy deal represents “progress” in the Lebanon-Israel border agreement. 

Congratulations to #Lebanon on @qatarenergy joining as investor with @eni @TotalEnergies. Welcome additional new investment in Lebanon energy sector and another example of progress from the maritime agreement. @Najib_Mikati @usembassybeirut pic.twitter.com/O2qnMG7wJm

— amos hochstein (@amoshochstein) January 29, 2023

Israel has been pumping gas from the eastern Mediterranean for years, and Lebanon now hopes to do the same. Lebanese Prime Minister Najib Miktati said the QatarEnergy deal will help with “creating opportunities for Lebanese companies interested in the services sector in the field of petroleum and will provide job opportunities for Lebanese youth, especially for workers in the technical field,” according to the official National News Agency. 

Mikati added that the deal “opens the way” for other investments from Gulf and Arab countries in Lebanon’s energy sector. 

QatarEnergy is taking over the stake previously held by Russia’s Novatek. Lebanon allowed Eni, TotalEnergies and Novatek to start exploring Blocks 4 and 9 in 2017. They did not find significant oil and gas in the former and plans in the latter were derailed by the border dispute with Israel, according to The Associated Press. 

Novatek pulled out of the consortium this past August. They cited business considerations as well as “political risks,” the Lebanese news outlet L’Orient Today reported at the time. 

What’s next: The timeline for Lebanon’s energy exploration is not exactly clear. TotalEnergies said in December that they plan to select a drilling rig in the first quarter of 2023 and complete an environmental study by June. 

A statement from the Lebanese Energy Ministry Sunday said the plan is to start drilling in Block 9 this year.