FLASH: Lebanon: Cabinet approves first licensing round for offshore drilling, adopts regulatory decrees

Today’s cabinet session (27/12), the last in 2012, has been announced with much fanfare, several days in advance, by government officials. Local media described the news as “a holiday gift”, quoting Parliament Speaker Nabih Berri or Energy Minister Gebran Bassil, both of whom described it as such.

The cabinet meeting, chaired by President Michel Slaiman, launched the first licensing round for offshore oil and gas exploration. Companies wishing to participate in offshore drilling can start applying for the qualifying round on 01/02. Qualified companies will be announced by 21/03 and will be invited to propose their bids starting 02/05. The cabinet also adopted a series of decrees organizing offshore oil and gas exploration, including a decree setting the monthly salaries of the Petroleum Administration’s board members. That decree in particular was met with a mixture of skepticism and concern as the amount it sets for salaries and entitlements is particularly high, by Lebanese standards, exceeding the salaries of the President of the Republic and the Central Bank Governor, as reported in today’s edition of the Lebanese daily Annahar. Initially, these were set at 36,000,000 LBP (approximately $24,000) per month, but were brought down to 25,000,000 LBP (approximately $16,666), after discussions in today’s cabinet session.

In fact, the suggested wages can be considered reasonable for such a strategic sector, and are meant to cement the board members’ loyalty and provide them with  some sort of “immunity” – always relative in such cases – against corrupt practices, quite common in Lebanon, including at the highest levels. The government, however, decided to reduce the salaries, to avoid a public outcry in times of economic crisis (knowing that the government has so far failed to adopt the new salary scale). Bassil reacted on his personal twitter account and reiterated his preference to the wages that were initially suggested, comparing them, once again, to salaries for similar positions abroad. He also added that the salaries are inferior to salaries provided by other public administrations, such as the Casino, MEA and the Banking Control Commission of Lebanon etc.

To sum up, the message that the Lebanese government wants to convey is that Lebanon is officially entering the exploration phase.

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