[Oil & Gas Updates]: Weekly Roundup 04/03

Lebanon – Hungary:

As we noted in our previous roundup, high-level diplomatic activity is expected in Beirut in the coming months, and energy cooperation will be high on the agenda. Hungary’s Prime Minister, Viktor Orbán arrived to Beirut on 27/02 evening, on a one-day official visit, with a delegation that included Minister of Defence Csaba Hende, State Secretary for Foreign Affairs and External Economic Relations Péter Szijjártó and Minister of State for National Economy Zoltán Cséfalvay, as well as 36 Hungarian businessmen. Orbán held meetings with President Michel Slaiman, Speaker Nabih Berri and Prime Minister Najib Mikati. His visit came at the invitation of PM Mikati who visited Hungary on November 06, 2012 to discuss strengthening business cooperation, including in the field of energy.

Orbán and Mikati attended the Hungarian-Lebanese Business Meeting, organized by the General Union of Chambers of Commerce, Industry & Agriculture for Arab Countries (GUCCIAAC) in cooperation with the Hungarian Investment and Trade Agency (HITA) on 28/02 [Click here to view the list of Hungarian companies present at the meeting]. GUCCIAAC and HITA had previously organized The 1st Arab-Hungarian Economic Forum in Budapest on November 12-13, 2012, also attended by PM Orbán. “Opening to the East” is an integral part of Hungary’s new foreign economic strategy and the Hungarian PM seems determined to strengthen relations with Lebanon, which he referred to as a key player in the Arab world. He also confirmed Hungary’s commitment to Lebanon’s stability and stated Hungary will push towards that objective within the European Union. A number of cooperation agreements in the political, diplomatic and educational field were signed. But Orbán added that cooperation in other fields need to be strengthened. A pattern seems to be emerging: Associating military assistance and energy cooperation. Just like his British counterpart a week before him, Orbán offered to assist the Lebanese Army, in terms of training and equipment, and expressed Hungary’s interest in investing in the oil and gas sector.

Eastern Mediterranean – Naval activity:

It’s been many years since the Mediterranean, the Eastern part in particular, was able to attract so much attention. Arab revolts and the discovery of considerable oil and gas reserves have brought back the region into the spotlight. The Eastern Mediterranean is buzzing with naval activity: Iranian Navy Commander announced in January that the 24th fleet will be deployed in the Mediterranean. The Syrian conflict prompted the Russians, who hold a naval base in the Syrian city of Tartous, to reinforce their presence in the region, sending their only aircraft carrier to the region, followed by other warships. The Russians are even planning to deploy a permanent naval task force consisting of up to 10 vessels in the coming months. The French and the British also hold regular military exercises in the region with local navies. Chinese naval presence is also no longer a surprise to anyone. All this just as the U.S. decided (but later came to reconsider its decision) to ease its presence in the area and transfer some of its military resources to the Asia-Pacific theatre. At the same time, local navies (Israeli, Turkish, Greek, and to a lesser extent Cypriot and Lebanese) are looking to boost their capabilities after the discovery of offshore resources exacerbating pre-existing tension and border disputes. In addition, the Maritime Task Force, the naval component of the United Nations Interim Force in Lebanon (UNIFIL), is also deployed off the Lebanese coasts since 2006 to assist the Lebanese Naval Forces in preventing the smuggling of illegal shipments. Naval deployments are likely to become more common in the next few years.

Lebanon – Academic formation and programs:

Lebanese universities are keeping an eye on oil and gas related developments in the country. Given Lebanon’s proximity to the Arab-Persian Gulf, some of them already offer oil and gas related degrees (The American University of Beirut and the University of Balamand offer a degree in Chemical Engineering). However, they are now expected to anticipate the discovery of gas reserves offshore and offer a wider range of related degrees and modernize facilities and equipments to cater to the needs of the local petroleum industry. The University of Balamand, in the northern part of the country, inaugurated the “Maroun Semaan Chemical Engineering Building” on 01/03. The faculty of Engineering, which among other things proposes a BS in Chemical Engineering and a Master’s degree in Chemical Engineering (including a Petroleum Option), is now equipped with modern installations and proposes scholarships for interested students. This is certainly an interesting development, even if we believe that such initiatives should be coordinated, and part of an elaborate strategy that would define the needs of the oil and gas industry and propose relevant programs, including partnerships between local universities and international companies as part of a broader offset policy [see “Lebanon – Offset” in our 14/01 roundup].

Syria – Golan Heights:

Damascus condemned Israel’s issuance of a license on 21/02 to US-based Genie Energy for petroleum exploration in the Golan heights, a region considered as occupied under international law. In letters sent to the U.N. Security Council and the U.N. Secretary General on Thursday 28/02, the Syrian Ministry of Foreign Affairs labeled the Israeli decision as “illegal” and called for “serious action by the United Nations to prevent Israel from carrying out the new aggressive and provocative measure.”

The timing of the Israeli decision is directly related to the events in Syria and to the fact that the Syrian government is too overwhelmed to deal with it, thus allowing Israel to create facts on the grounds. It’s interesting to note that the Arab League has yet to condemn the Israeli move, and the Syrian opposition hasn’t been vocal either, which could indicate that the matter does not feature high on their priority list, and may be even negotiable. However, for reasons of their own, the Lebanese will be following the story closely and will be carefully monitoring the reactions of the international community [see “Israel – Licensing process” in our 25/02 roundup].

The Council for Arab-British Understanding (CAABU) issued a statement saying “it is vital that a strong message is sent to the Israeli government… The British government and other allies should make it explicitly clear that that this is illegal.” Egyptian Petroleum Minister Osama Kamal declared, late February, that diplomatic and legal steps, including an appeal to the International Court of Justice, will be taken to obtain reparations from Israel for “looting Egypt’s oil” during its occupation of the Sinai peninsula (1967-1982). For Israeli journalist Akiva Eldar, it is safe to assume the Syrians will hand Israel a similar bill if oil or gas were indeed extracted from the Golan heights.

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