Total E&P Liban sal, which is the operator of the consortium that won bids for the exploration of oil & gas in Blocks 4 and 9 of Lebanon’s territorial waters, announced that the results of the drilling of Lebanon's first exploration well are "negative". It noted that it completed the drilling of the "Byblos 16/1" exploration well in Block 4 on April 26, and reached a depth of 4,076 meters below the sea level. Italy's Eni International BV and Russian firm JSC Novatek are the two other members of the consortium that was awarded the right to explore the two blocks. Total E&P Liban sal is wholly owned by France's Total S.A.
 
Total S.A. indicated that it found evidence of traces of gas in the exploration well, which confirms the presence of a hydrocarbon system in Lebanon's territorial waters. However, it said that it did not find reservoirs in the Tamar formation, which was the main target of the exploration well located 30 kilometers offshore of Beirut. Despite the "negative" results, it pointed out that the exploration activity has provided valuable information that will be incorporated in future complementary studies about the exploration potential of Lebanon's offshore Exclusive Economic Zone.
 
The drilling for oil & gas started on February 27, 2020 in the first exploratory well in Block 4 in the center of Lebanon's offshore Exclusive Economic Zone. Total S.A selected Tungsten Explorer in an international tender to explore the first well. Tungsten Explorer is managed by the U.S.-based offshore drilling contractor Vantage Drilling Company. In December 2017, the Council of Ministers approved the bid submitted by a consortium of three companies for offshore oil & gas exploration and production in Lebanon.
 
In parallel, the Ministry of Energy extended from the end of April 2020 to June 1, 2020 the deadline for interested companies to participate in the second licensing round for offshore oil & gas exploration in Lebanon, citing the outbreak of the coronavirus pandemic. The ministry’s decision to postpone the deadline was the second such extension, as it previously delayed the deadline from the end of January to the end of April 2020, in response to requests from international oil companies to allow them to complete their administrative, technical and financial preparations. The Council of Ministers approved in April 2019 the launch of the second licensing round for offshore oil & gas exploration and production in Lebanon's territorial waters. Five blocks are open for bidding for the second licensing round, including Block 1 and Block 2, which are located in the north of Lebanon's offshore Exclusive Economic Zone, Block 5 is in the center, and Block 8 and Block 10 are in the south of Lebanon's territorial waters.

Source: Lebanese Petroleum Administration

The Association of Banks in Lebanon (ABL) indicated that it cannot endorse the government's financial recovery plan. It said that the government did not consult nor approach ABL about the plan, even though the ABL is a key part of any solution. It noted that the proposed restructuring of the public debt and financial sector will destroy local and foreign confidence in Lebanon. It added that the plan mentions essential building blocks for investor confidence, such as an effective anti-corruption strategy, but does not provide details about them, which raises questions about the timeline for the implementation of these measures. Overall, it considered that the government's plan is likely to deter investments in the economy, which will hinder recovery prospects.

Moreover, the ABL indicated that the government's plan is unfunded, as the authorities assume international financial support, especially from the International Monetary Fund and from the financial pledges made at the CEDRE conference. It added that the government is about to start official discussions with the IMF, while the disbursement of CEDRE-related funds is contingent on the implementation of reforms. In addition, it pointed out that the plan's fiscal measures on the revenues and spending side, which are essential for any support from the IMF, are vague and are not associated with a specific implementation calendar. Further, the ABL considered that the plan's assumptions, including its growth and fiscal assumptions, could be challenged due to "the limited impact ascribed to the aggressive nature of the domestic debt restructuring" and the unknown impact of the current global crisis. It added that an assessment of these impacts could significantly change the fiscal projections in the plan. 

In parallel, the ABL said that the plan does not address inflationary pressures and may lead to hyperinflation. It also noted that the banking sector financed the public sector, which decided to spend the funds without input from banks. It considered that this "presentation portrays a borrower accusing its lender of being responsible for its failure", and that "having a punitive approach to the banking sector actually means a punitive approach to the depositors". It believes that several measures in the plan "infringe upon private property vested rights, which is guaranteed by the Lebanese Constitution and which is one of the key fundamentals of Lebanese society". 

The ABL pointed out that the prevailing conditions in the country urgently call for a constructive dialogue, unity, and solidarity. It considered that it is urgent to take concrete actions and reach consensus among all stakeholders, as the lack of reforms is worsening the situation. The ABL indicated that it intends to submit shortly a plan capable of mitigating the recession and setting the stage for sustained growth.

The consolidated balance sheet of commercial banks operating in Lebanon shows that total assets stood at $208.5bn at the end of March 2020, constituting a decrease of 3.8% from $216.8bn at the end of 2019 and a decline of 17.5% from $252.8bn at end-March 2019. The year-on-year decline in assets is mainly due to the "netting" on the assets and liabilities' sides of the consolidated balance sheet of banks, as part of the implementation of international accounting standard IFRS 7 starting in December 2019.
 
Loans extended to the private sector reached $45bn at the end of March 2020, regressing by 9.6% from end-2019 and by 21.5% from a year earlier. Loans to the resident private sector totaled $40bn, constituting a decrease of 9.5% from the end of 2019 and of 20.8% from end-March 2019. Also, credit to the non-resident private sector reached $5bn at end-March 2020, declining by 10% from end-2019 and by 26.8% from a year earlier. In nominal terms, credit to the private sector contracted by $4.8bn in the first quarter of 2020 relative to a decrease of $2.1bn in the same quarter of 2019, as lending to the resident private sector declined by $4.2bn and credit to the non-resident private sector regressed by $552.8m in the covered quarter. 
 
In addition, claims on non-resident financial institutions stood at $5.1bn at the end of March 2020 and declined by $1.6bn (-24%) from end-2019, by $4bn (-43.7%) from the end of August 2019, and by $5.5bn (-51.7%) from a year earlier. Also, deposits at foreign central banks totaled $626.2m, constituting an increase of 6.4% from end-2019 and a drop of 34.3% from end-March 2019. In addition, claims on the public sector stood at $25.1bn at end-March 2020, down by $3.6bn (-12.4%) from end-2019 and by $8.2bn (-24.6%) from the end of March 2019. The banks' holdings of Lebanese Treasury bills stood at $14.2bn at the end of March 2020, down by $473.8m (-3.2%) from the end of 2019; while their holdings of Lebanese Eurobonds reached $10.8bn at end-March 2020, constituting a decline of $3bn (-22%) from end-2019, largely due to the banks' selling of Lebanese Eurobonds. Further, the deposits of commercial banks at BdL totaled $117.8bn at the end of March 2020, nearly unchanged from the end of 2019.
 
In parallel, private sector deposits totaled $149.6bn at the end of March 2020, and decreased by 5.8% from the end of 2019 and by 13.3% from end-March 2019. Deposits in Lebanese pounds reached the equivalent of $33bn at end-March 2020, down by 13.4% from the end of 2019 and by 35% from a year earlier; while deposits in foreign currency stood at $116.6bn, as they regressed by 3.5% from end-2019 and by 4.3% from end-March 2019. Resident deposits totaled $120bn at the end of March 2020 and decreased by $6.5bn (-5.1%) from the end of 2019 and by $15.6bn (-11.5%) from a year earlier. Also, non-resident deposits reached $29.6bn at end-March 2020, as they regressed by $2.8bn (-8.7%) from end-2019 and by $7.3bn (-19.7%) from the end of March 2019. In nominal terms, private sector deposits declined by $3.8bn in January, by $3.4bn in February, and by $2.1bn in March 2020. As such, aggregate private sector deposits regressed by $9.3bn in the first quarter of 2020 relative to a decrease of $1.8bn in the same quarter of 2019, with deposits in Lebanese pounds dropping by $5.1bn and foreign-currency deposits declining by $4.2bn. In comparison, private sector deposits declined by $2.2bn in September, by $1.9bn in October, by $5.8bn in November and by $3.7bn in December 2019. As such, aggregate private sector deposits dropped by $22.9bn in the seven-month period ending in March 2020, due largely to the repayment of loans, to the hoarding of cash at households, and to deposit outflows.