Will Lebanon soon benefit from its oil and gas wealth?

BEIRUT, LEBANON - JULY 21: (TURKEY OUT) A Lebanese flag waves as as American families are evacuated by a U.S. Marine helicopter ship in the Mediterranean Sea on July 21, 2006 in Beirut, Lebanon. Hezbollah fought fierce battles with Israeli troops on the Lebanese border on Thursday, as thousands more foreigners fled the ten-day-old war in Lebanon, including 1,000 Americans evacuated by U.S. Marines. (Photo by Burak Kara/Vatan Daily/Getty Images)

Despite the upbeat measures adopted by the Lebanese state in the oil and gas sector which jumpstarted in the year 2010 and continued till 2013, the Lebanese people are still awaiting the completion of this process pending the approval of other needed requirements to benefit from this vital sector.

Oil and Gas Expert Laury Haytayan recapped in an interview to the National News Agency (NNA) the most prominent steps undertaken so far by the Lebanese state, notably the adoption of the offshore Petroleum Resources Law (OPRL), the establishment of the Lebanese Petroleum Administration (LPA), the drafting of relevant regulatory decrees, and the holding of pre-qualification process, in which 52 oil companies submitted their pre-qualification applicationswith 46 short-listed, including major international companies prior to the licensing period.

“Lebanon was the first within the eastern Mediterranean countries in the launching of oil companies’ pre-qualification process… This was a very positive step to attract major oil companies,” Haytayan said.
Asked about the factors which held back progress in said dossier, Haytayan said: “I think that one of the most important challenges standing nowadays in front of moving ahead with this process is the lack of political will to exploit this sector,” Haytayan remarked.

Haytayan considered that the Lebanese people’s dreams and aspirations fell short of reality with the existence of two pending decrees requiring approval by the Council of Ministers, the first related to delineating offshore blocks and the other related to the exploration and production model agreement, in addition to the parliament’s endorsement of the petroleum tax law.

While Haytayan saw that the fundamental reasons behind the delay in the endorsement of these decrees are not so far clear enough, she considered the political situation which existed during the previous period especially with the presidential vacuum has hindered the adoption of these measures. The Oil expert pinned great hopes on the new mandate under the chairmanship of President Michel Aoun in giving an impetus to the oil and gas dossier and according it utmost priority.

Haytayan also underlined that the delay in commencing with the exploration and drilling works leaves negative impact on Lebanon

“The most important thing that should be accomplished prior to the gas extraction is to secure markets for exportation… In this regard, among Lebanon’s objectives is to secure export to Europe, seek regional markets, notably the Arab markets, and utilize this gas internally for domestic consumption purposes.

“The first negative impact can be the possibility of Lebanon’s losing the European markets,” Haytayan noted, pointing out that Israel “has made great strides in the subject of exportation to Europe to be able to deliver its gas, either via a pipeline to Turkey or to Cyprus &Greece or even the possibility of using the Liquefied Natural Gas (LNG) plants in Egypt and through it to Europe.”

Haytayan went on to indicate that the second challenge facing Lebanon is finding regional markets, citing the example that the US company investing in “Leviathan” field in Israel clinched an initial contract with Jordan, the matter which indicates “Israel’s” potential competition with Lebanon on the Arab regional markets.

Haytayan also highlighted the challenge represented in the delay of the completion of needed infrastructure for gas on the domestic scene.

“If Lebanon wants to benefit from gas in the domestic market, it has a huge infrastructure work to undertake in this regard, especially in terms of rehabilitation of power stations to be able to use gas instead of fuel and the establishment of new plants running on gas, as well as the extension of pipelines stretching along the coast and the interior. The Lebanese industrial enterprises can benefit hugely from the gas, the matter which would restore vitality to the industrial sector,” Haytayan noted.

Haytayan concluded by sounding optimistic about the future potential chances though the picture nowadays is shady as she portrayed it.

“Hope is always there. It is true that the picture is dim nowadays and we are losing opportunities, yet there are other opportunities in the future which Lebanon can take advantage of, notably that the future is moving towards gas, where countries are seeking to replace coal and to some extent oil with ‘cleaner’ energy, namely gas, and therefore leaving demand for it soared. ”

Till the application and approval of the two pending decrees related to oil and gas exploration and till the fulfillment of all other prerequisite steps, the Lebanese remain hostage to the political decision to give the green light to move forward with this process, which shall immensely benefit all the Lebanese.

Pending answers to all these questions, will the Lebanese enjoy their natural oil and gas wealth soon?!