Lebanon: The Oil & Gas Week, June 03, 2013

Lebanon – Local politics:

Lebanese MPs decided on Friday 31/05 to extend the mandate provided to them for four years by Lebanese citizens in 2009, without consulting them, for 17 additional months. 97 MPs, out of 128, attended the 7-minute session and (all) endorsed a law that extends the Parliament’s mandate until November 20, 2014, invoking the deteriorating security situation. President Michel Slaiman and caretaker Prime Minister Najib Mikati signed the law on the same day. On 01/05, the President challenged the law before the Constitutional Council, who, in 1996, declared unconstitutional the move to extend the Parliament’s mandate at the time for an additional eight months. The Free Patriotic Movement (20 MPs), the party caretaker Energy Minister Gebran Bassil belongs to, boycotted the session and will also challenge the constitutionality of the move.

As mentioned in our previous report [see Lebanon – Local politics in “Lebanon: The Oil & Gas Week, May 27, 2013“], and noted by Bassil on more than one occasion since, among the reasons invoked to justify the extension is the “presence of a confirmed oil wealth” – the presence of which is in fact not officially confirmed yet – indicating (and this is already confirmed) that these resources will be invoked as a pretext by the political class every time the political context is not to its liking. This is likely to be the “political gas” decade in Lebanon.

In a way, and strictly from a stability point of view, the move can be reassuring (although it is disturbing from a democratic point of view). It is the Lebanese political class’ way to avoid vacuum and to control risks emanating from it after repeatedly failing to reach other (democratic) solutions. Among the Parliament’s most important duties, if the extension of its mandate is approved, is electing a President of the Republic (the term of Michel Slaiman expires in May 2014), and holding parliamentary elections, if the security situation allows it. A repeat of the sterile debates and unproductive initiatives that preceded the extension of the Parliament’s mandate is to be expected ahead of every election if the regional context (the Syrian conflict in particular) is not appeased.

The Constitutional Council’s decision is highly anticipated. The Parliament’s term expires on June 20. If the Council deems the extension unconstitutional, and its decision comes after the Parliament’s term has expired, we will have a political vacuum. A fact that may influence the Judges.

In the meantime, the country is run by a caretaker government. Prime Minister-designate Tammam Salam is still unable to form a new cabinet. The uncertainty related to the organization, or not, of parliamentary elections, made his task even more complicated. Salam will hold another round of parliamentary consultations to discuss the formation of the new cabinet, the type of which (technocrat, political, national unity etc.) is still not settled yet. The struggle to control the Ministry of Energy and Water is ongoing, particularly between Walid Joumblat’s Progressive Socialist Party (PSP) and Michel Aoun’s Free Patriotic Movement (FPM). As mentioned in previous reports, Joumblat intends to appoint Bahij Abou Hamze to head the ministry, but above all he insists on excluding any FPM candidate. The FPM and Gebran Bassil are responding by questioning his ability to manage such an important ministry, given previous experiences and widespread corruption in ministries and public funds managed by the PSP (Bassil is referring to a ministry and a fund that were created for internally displaced persons after the end of the civil war, both of which have been almost exclusively controlled by the PSP). In a TV interview on 28/05, Bassil went as far as saying that “their insistence to exclude us from the Ministry of Energy and Water is another attempt to (politically) weaken the Christians in this country.”

Lebanon – Seismic surveys:

Caretaker Energy Minister Gebran Bassil accompanied a group of journalists on a tour to one of the areas currently being surveyed by Spectrum. Around 70% of Lebanon’s Exclusive Economic Zone (EEZ) has been covered by 3-D seismic surveys, which, according to Bassil, will speed up exploration once licenses are awarded. Neil Hodgson, from Spectrum, indicated that there may be between 40 and 80 tcf in all, off the Lebanese coast. Bassil gave an initial assessment of 15-20 tcf, in the surveyed area, which covers most of block 3 and small parts of blocks 1, 5 and 6. The news is significant, ahead of the announcement by the Petroleum Administration on June 30, of which blocks will be open for bidding. The maritime border dispute between Lebanon and Israel may push certain companies to turn their attention to blocks that are not along the Lebanese-Israeli border, although these are very promising, as Bassil and Spectrum have both indicated in the past. Block 3 has the potential of becoming one of the most attractive blocks for investors.

Lebanon – AAPG workshop:

The American Association of Petroleum Geologists (AAPG) organized a workshop in Beirut on 27-29/05, addressing the Challenges of New Frontier Off-Shore Deep Water Hydrocarbon Basins, focusing on the Levant basin and the Eastern Mediterranean. The workshop was attended by caretaker Energy Minister Gebran Bassil and members of the Petroleum Administration (PA). Bassil announced that 15,100 Km2 of Lebanon’s EEZ have been covered by 3-D surveys and early assessments show that promising fields are not limited to a certain area but seem to be present in the north, south and in the center of the EEZ, which allowed the PA to divide it into attractive blocks. Only five blocks will be open for bidding in the first licensing round, to allow time for the country to be better prepared by the time a second licensing round is organized, and perhaps the State would secure a stake through the participation of a national oil company.

Previous reports:

Lebanon: The Oil & Gas Week, May 27, 2013

Lebanon: The Oil & Gas Week, May 20, 2013

Lebanon: The Oil & Gas Week, May 13, 2013

[Oil & Gas Updates]: Weekly Roundup, May 6, 2013

[Oil & Gas Updates]: Weekly Roundup, April 29, 2013

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