Republic of Lebanon
The Lebanese State has put in place a legislative framework tailored for the petroleum sector. This legislative framework consists of laws, decrees and decisions that cover all the phases of the petroleum value chain such as Reconnaissance, Exploration and Appraisal, Development and Production, and Decommissioning. This framework includes clear and transparent rules and criteria to prequalify companies to be eligible to hold petroleum rights.
The OPRL has set the pillars of the petroleum sector legislative framework. This law was issued by the Parliament on 24 August 2010. It stipulates the rules and provisions related to the sector and to petroleum activities. One of the most important rules set by the law is the production sharing regime combined with the royalty, the collection of petroleum revenues in a sovereign wealth fund, the competitive bidding, the grant of a petroleum license through Exploration and Production Agreement, and the provisions related to Health, Safety and Environment.
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The Law for Tax Provisions related to petroleum activities (Law no. 57/2017) includes articles that determine income tax on petroleum activities and on the salaries and remunerations of personnel and workers in the petroleum sector. The law also covers the stamp duty fee on Exploration and Production Agreements, the Value Added Tax (VAT), the custom fees on equipment, machines and tools used in petroleum activities as well as exemptions from such fees. The law allows Right Holders to establish in Lebanon a signing company of the EPA which is wholly owned by a Right Holder.
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The Law enhancing Transparency in the Petroleum Sector is a specific law that imposes transparency in the petroleum sector through the whole value chain from exploration until decommissioning.
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Click here to download the Petroleum Administration Decree.
After the launching of the First Offshore Licensing Round, the Decree no. 9882/2013 (Pre-qualification of Companies to Participate in Petroleum Activities Licensing Rounds) has been issued. The decree included pre-qualification criteria on the basis of legal, financial, technical and QHSE requirements and the companies willing to pre-qualify to participate in the licensing round shall fulfill these criteria.
In 2019, this decree has been cancelled and its provisions have been merged with the provisions of the Tender Protocol related to the Second Licensing Round and issued by Decree no. 4918/2019 after the amendment of some of the provisions issued by the Decree no. 9882/2013.
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The PAR has been issued in 2013, it consists of 27 implementation decrees of the OPRL and it includes legal, technical, Quality, Health, Safety and Environmental (QHSE) and financial provisions.
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This decree divides the Lebanese Offshore and the Exclusive Economic Zone determined by the Decree no. 6644/2011 into 10 blocks with specified coordinates for each block.
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This decree includes the Tender Protocol to participate in licensing rounds and The Model Exploration and Production Agreement with its annexes. The Tender Protocol which constitutes Annex 1 of this Decree covers all the provisions related to the conditions of participation in the First Licensing Round as well as the administrative, financial, technical and legal requirements for the submission of Applications, the process of evaluation of Applications by the LPA, the submission of the evaluation report to the Minister of Energy and Water, the negotiations with Provisional Winners and the submission of the negotiations’ results to the Council of Ministers in order for the COM to take the appropriate decision about the award of blocks open for bidding.
The Model Exploration and Production Agreement includes the provisions related to all phases of Petroleum Activities. The EPA extends over the exploration, appraisal, development and production phases up until decommissioning and it also covers other provisions related to the Government Take as determined by the bid, assignment and mortgage of petroleum rights, early termination of the EPA, force majeure and arbitration.
This Decree has been amended by the Decree no. 4918/2019 related to the Second Licensing Round.
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Since a second Pre-qualification Round has been organized for companies willing to participate in the First Licensing Round after its completion in 2017, it was necessary to amend the list of pre-qualified companies previously mentioned in Annex 3 of the Tender Protocol issued by Decree no. 43/2017.
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In the light of changes that occurred between the date of issuance of the PAR and the first licensing round in 2017, it was necessary to amend the articles of the PAR related to the valuation of crude oil and to the valuation of petroleum other than crude oil.
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The last paragraph of article 4 of the Law no. 57/2017 stipulates that the details of implementation of the paragraph related to interests due on the portion of loans and debt which exceeds 60% (sixty percent) of the Recoverable Costs balance that is approved by the Petroleum Administration shall be issued by decree upon the suggestion of the Minister of Finance.
This decree determines the details of implementation of the provisions related to interests due on the loans and debt of Right Holders and Operators. The following are not considered as allowable tax-deductible: Interests due on the portion of loans and debt which exceeds one and a half times (150%) the related equity in the case of thin capitalization; Interests due on the portion of loans and debt which exceeds 60% (sixty percent) of the Recoverable Costs balance that is approved by the Petroleum Administration.
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Pursuant to the Council of Ministers’ Decision no. 61 dated 16/5/2018 and mandating the Minister of Energy and Water and the Lebanese Petroleum Administration to prepare for the launch of the Second Offshore Licensing Round, and in order to implement this decision, the necessary procedures have been prepared to launch the Second Licensing Round, in accordance with the provisions of Law No. 132/2010 (Offshore Petroleum Resources Law) and its implementation decrees. Furthermore, updated procedures that are compatible with the provisions of the above-mentioned law, have been adopted to pre-qualify companies and to grant exploration and production agreements in a manner that aims to secure a balanced share of petroleum revenues for the Lebanese state.
These procedures necessitated to move the provisions of Decree 9882/2013 (Pre-qualification of Companies to Participate in Petroleum Activities Licensing Rounds) to the first part of the proposed new Tender Protocol (Tender Protocol for Pre-qualification of Applicants and the Award of Exploration and Production Agreements), where the Pre-qualification Applications of companies are submitted in one package with the Licensing Round Application, but in two separate envelopes. Only the Licensing Round Applications of pre-qualified companies will be evaluated.
Accordingly, and pursuant to Decree 4918/2019, Decree 43/2017 has been amended in terms of adopting a new Tender Protocol, amending some articles and annexes of the Model Exploration and Production Agreement, and canceling Decree 9882/2013 (Pre-qualification of Companies to participate in Licensing Rounds), since pre-qualification has become a part of the bid procedures.
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The Decree on Registration, Mortgaging and Transfer of Petroleum Rights stipulates the creation of a Petroleum Register to record awarded Petroleum Rights and any changes or mortgages related to these Petroleum Rights. The Petroleum Register secures the rights of the Right Holders, establishes notoriety towards third parties (other than the State and the Right Holders) and transparency regarding the specified Registrable Petroleum Rights.
The information of the Petroleum Register is publicly available, including electronically via internet, and any natural or legal Person may request a printout certificate from the Petroleum Register.
The provisions of this decree go beyond Right Holders and their affiliates and wholly-owned affiliates to cover Beneficial Owners and Politically Exposed Persons who own shares and rights in these companies.
Click here to download Decree no. 9471
The Decree on Contracts Disclosure aims to complete the legislative framework related to transparency in the petroleum sector. This decree sets the principle of disclosing contracts between Right Holders and Contractors and between Right Holders and Subcontractors.
Click here to download Decree no. 6437/2020 (cancelled by Decree no. 9095/2022)
On 14/9/2020, Decree No. 6940 of 9/8/2020 was issued in the Official Gazette, which is the implementation decree of the Access to Information Law and is entitled “Determining the details of implementation of Law No. 28 Date 10/12/2017 (Access to Information Law)".
The decree includes clarifying provisions regarding the administrative document, the confidentiality clauses included in the contracts concluded by the administration, other provisions related to the information that should be published accordingly and the manner of publishing such information from a technical perspective, as well as provisions related to the documents subject to the information request.
However, the provisions of Article 2 of this decree remain of great importance since this article covers the abuse of the right by the information requester and the cases where the latter is considered abusive by using his right to access information.
Click here to download Decree No. 6940.
Decree no. 9095 dated 29 April 2022 amended the Tender Protocol for prequalification of applicants and the award of Exploration and Production Agreements for the participation in the Second Offshore Licensing Round. This decree also amended several articles and annexes of the Exploration and Production Model Agreement.
The new Tender Protocol covers provisions for the online submission of applications by oil and gas companies willing to participate in this bid round.
The Lebanese Petroleum Administration (LPA) will publish on its website, as soon as possible, the integral text of the Exploration and Production Model Agreement and its Annexes issued by Decree no. 43/2017 and as was amended by Decree 4918/2019 and Decree no. 9095/2022.
Click here to download Decree no. 9095
Postponing the deadline of submission of Lebanon’s Second Offshore Licensing Round Applications and amending some articles of the Decision no. 1/M Dated 10/06/2019 and published in the Official Gazette issuance no. 30 Dated 13/06/2019
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Decision no. 3 dated 04/03/2020 postponing the deadline of submission of Lebanon's Second offshore Licensing Round applications and amending some articles of the Decision no. 1 d/m dated 10/06/2019 and published in the Official Gazette issuance no. 30 dated 13/06/2019.
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Click here to download the Minister's Decision No. 12 d/m regarding the transfer of the participating interest of the Right Holder Non Operator Novatek Lebanon SAL to the Lebanese state within the Exploration and Production Agreements of Block 4 & 9.
The Minister of Energy and Water issued on 8 December 2022, a decision extending the deadline for the submission of Lebanon's Second Offshore Licensing Round Applications till 30 June 2023 and determining some related procedures. Click here to download the Minister's decision.
Replace the name of DAJA 216 the right holder non operator of Blocks 4 and 9 in the Lebanese maritime waters with TTE Blocks, and the name of DAJA 215 the right holder operator of Block 9 in the Lebanese maritime waters with TotalEnergies EP Block 9.
Click here to download the Minister's Decision
Click here to download the Minister's Decision.
Click here to download the Minister's Decision
Click here to download the Minister's Decision.
Click here to download the Minister's Decision.
Click here to download the Minister's Decision
Click here to download the Minister's Decision.
Click here to download the Minister's Decision.