Lebanon: The Oil & Gas Week, October 28, 2013

Lebanon – Local politics:

The political debate around oil and gas seems to have subsided a little, owing less to a convergence in points of view than to a receding number of public declarations.

The major point of contention, related to the question of holding a special cabinet meeting to adopt the missing oil and gas decrees, remains unsolved, caretaker PM Najib Mikati still determined not to call for a meeting in the current circumstances.

Within the same camp, tensions between Speaker Nabih Berri’s Amal Movement and caretaker Energy Minister Gebran Bassil over the number of blocks to open up for bidding in the first licensing round reached a climax before receding during the adha break. Bassil scheduled a press conference on Friday, 18/10, the first day after the adha break, to respond to his detractors. In what turned out to be an effective communication move, contrasting with earlier communication blunders, Bassil canceled the conference and scheduled a televised interview instead, prime time Sunday (20/10) evening. For over two hours, the minister pulled out data, charts, maps and explained his point of view in a simplified, rational approach, to the disappointment of his host who preferred to discuss more controversial, divisive subjects. It was the first such interview by a minister, devoted entirely to what he called strengthening “petroleum culture” in the country. The days leading up to the interview were filled with erroneous declarations by officials from all sides, and local media was bursting with inaccurate coverage of the sector, giving the impression that the country was in a state of collective hysteria. Bassil noted on TV that there is a lack of “petroleum culture” in the country, and we believe that local governmental and non-governmental institutions must address the issue, incomprehension representing a small yet non-negligible part in the current deadlock.

Several points tackled during the interview deserve to be highlighted:

First, and following clarifications by the Amal Movement that calling for opening up all ten blocks for bidding does not necessarily mean that all should be awarded, Bassil met them halfway and said that nothing prevents opening up all blocks, if the cabinet decides to do so, as long as all sides are aware that it would be more prudent not to award them all in the first licensing round.

Second, regarding tender delays and PM Mikati’s persistence not to convene the cabinet to adopt the missing oil and gas decrees, Bassil announced that several options are being studied in order to proceed with the tender, in case President Michel Slaiman also failed to convene the cabinet. In such exceptional circumstances, he said, a government official, like himself, has to step up and take the necessary decisions, in coordination with other ministers. A petition calling on PM Mikati to convene the cabinet is being prepared with the aim of collecting the signatures of fellow cabinet members. Other decisions might follow, signaling that constitutional norms will be increasingly challenged.

Lebanon – UNIFIL:

Maritime security is one of the biggest challenges for oil and gas exploration in the Eastern Mediterranean. Although the government has recently approved a 5-year plan to strengthen the Lebanese Armed Forces, including boosting the capacities of the Navy (a 43m long fast patrol vessel, Trablous, the biggest and most advanced ship in the Navy’s fleet, was acquired in November 2012), security of offshore petroleum installations and activities remains a cause of concern, leading some to speculate on the role that the UN could play, particularly through the naval component of the United Nations Interim Force in Lebanon (UNIFIL).

Lebanese daily al-Akhbar met with UNIFIL commander Gen. Paolo Serra (Italy), and quoted him (on 24/10) as saying that once a political solution is reached in Lebanon, UNIFIL, through its nine vessels, will contribute to ensuring security and will offer its logistic capabilities to help in the exploitation of the country’s resources, although, he added, an official request has not been formulated yet. A UNIFIL spokesman, Andrea Tenenti, clarified the position on 25/10, and said that while the intention to assist Lebanon is always present, UNIFIL activities are strictly governed by its U.N. mandate, specified in resolution 1701.

Lebanon – Petroleum Administration:

The PA is pursuing its public appearances aiming to introduce the emerging oil and gas sector, and present the first licensing round. After addressing the students at the American University of Beirut on October 10, the PA held a specialized session on the legal and regulatory framework governing the sector at the Beirut Bar Association on October 25 (click here for the agenda). The event was organized by the newly-established “Energy & Water Committee” at the Beirut Bar, as part of a series of activities aimed to train lawyers (junior lawyers got extra credits for attending the conference, particularly those who attended the second session and stayed until the end of the event) and encourage them to get involved in the sector.

It is important to note the professionalism of PA members. Questions were mostly related to issues currently animating the political debate, and though PA members were selected in part as a result of political backing (as is normally the case in high administrative posts in Lebanon), the members sought to distance themselves from the political aspect of the debate and some even held views that are not in line with those held by the political side that backed their appointment. In particular, the dispute among various political factions over how many blocks must be awarded at the end of the first licensing round was strongly criticized and labeled as a “strategic mistake”.

The PA’s effort to introduce and explain every aspect of the sector and the tendering process to the public is commendable, and we hope similar events will be organized with other professional associations.

New Report: Lebanon’s Oil & Gas Sector: Potential and Opportunities:

MESP is in the process of preparing a report on the Lebanese oil and gas sector, focusing on its potential and opportunities, particularly for companies and businesses that are seeking to enter the Lebanese market.

For more information, or to order your copy, click here.

Middle East Strategic Perspectives – Lebanon: The Oil & Gas Week:

Our next report will be published on November 11, 2013.

Previous issues:

Lebanon: The Oil & Gas Week, October 14, 2013
Lebanon: The Oil & Gas Week, September 23, 2013
Lebanon: The Oil & Gas Week, September 16, 2013
Lebanon: The Oil & Gas Week, September 09, 2013
Lebanon: The Oil & Gas Week, September 02, 2013

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