Lebanon: The Oil & Gas Week, November 11, 2013

Lebanon – Maritime border dispute

The maritime border dispute between Lebanon and Israel was the subject of increased attention since the publication of an article in the Israeli business magazine Globes on 29/10 claiming that Israel rejected a US compromise, although the Israeli Ministry of Foreign Affairs refused to comment on the subject. In an interesting development, a Lebanese official source talking to Lebanese daily Assafir on 31/10 denied the claim. The “Lebanese official source” is likely to be caretaker Energy Minister Gebran Bassil, who told Assafir on 02/11 that the news about Israel rejecting the US compromise is incorrect.

The leak comes at a time the US initiative is said to have reached an advanced stage. The quick denial by a Lebanese minister is significant and indicates Lebanon seems to be satisfied with the US initiative and would like it to proceed. The leak also coincides with a resumption of tension between Lebanon and Israel on multiple fronts. Israel has multiplied violations of Lebanese airspace over the past few weeks and installed spying devices along the borders. This, coupled with an earlier Israeli report, also published in Globes, has raised fears that Israel might be preparing an attack. Whether this is true or not, the atmosphere it created cemented the population, and particularly the Shiite community, around the resistance parties (Hezbollah, Amal Movement) and served as a reminder that Israel continues to pose a grave threat even if other enemies are popping up elsewhere (takfiris in Syria, and Lebanon). That said, the tension of the past couple of weeks must not be interpreted as a sign of failure of US mediation effort, and we believe it is unlikely to affect it. A delegation from the US State Department will visit Lebanon next week to discuss the maritime border issue, a few days after Bassil’s 2-day visit to Cyprus, on November 7-8, much of which was devoted to energy cooperation and to the border dispute.

Bassil’s visit was on the agenda for months but only carried out this week. The border dispute is of utmost importance to the Lebanese side. The Minister announced from Cyprus that he is there to correct the mistake that was committed a few years ago when determining border points. According to a Cypriot diplomatic source, discussions regarding the border dispute were positive. But the Lebanese delegation was also seeking to strengthen bilateral cooperation across sectors, including water transfer. It was clear, from the start, that Bassil wished to give a strategic dimension to the visit and to relations with Cyprus in general, referring to the “energy and water ‘highway’” that is being developed between the two countries.

The minister, who was accompanied by some of the members of the Petroleum Administration (Wissam Chbat, head of the Geology and Geophysics Unit; Wissam al-Zahabi, head of the Economic and Financial Affairs Unit; and Nasser Hoteit, head of the Technical & Engineering Affairs Unit), met President Nicos Anastasiades, Minister of Foreign Affairs, Ioannis Kasoulides, Minister of Commerce, Industry and Tourism Yiorgos Lakkotrypis and Minister of Agriculture Nicos Kouyialis.

In addition to the maritime border dispute, they discussed gas export options, noting that Lebanon can constitute a potential market for Cypriot gas and could also provide an alternative export route. The joint development and exploitation of common hydrocarbon fields was also on top of the agenda and the two sides agreed to form a joint committee to follow up on the issue and conclude a framework agreement “as soon as possible.” A follow-up meeting is expected by the end of the year.

Lebanon – UK:

The British Embassy in Beirut and UKTI Lebanon hosted a webinar on 31/10 on “Opportunities in the Lebanese oil and gas market.” The webinar was designed to assist UK companies interested in the local oil and gas sector by:

1)      raising awareness of the opportunities in the Lebanese oil and gas market

2)      providing updated information on the policy landscape

3)      providing a platform for UK companies to put questions directly to potential customers and market participants.

The event, organized by the Head of Trade and Investment at the Embassy Paul Khawaja, confirmed the interest of a number of UK companies in the sector. In the past few weeks, local media spoke of the difficulties encountered by British surveyor Spectrum in completing its onshore surveys and, the largest newspaper in the country, Annahar, announced on its front page that Shell has decided not to take part in the tender. Our sources in the Ministry of Energy and Water and at the British Embassy confirm that Shell is still strongly interested in the first licensing round, and Spectrum will complete its onshore surveys, despite rumors that it is withdrawing.

The event highlights the dynamism of the British Embassy in Beirut, actively engaged in supporting UK companies wishing to invest in Lebanon. The dynamism is not limited to the oil and gas sector and the parallel opportunities it can provide, it is part of a broader policy of promoting bilateral trade and investments. On 07/10, the Embassy and UKTI Lebanon organized the first “British Business Awards” in Lebanon to honor individuals and companies that are helping to double trade between the two countries in three years. This has provided the Embassy, and indirectly, UK businesses, a more visible presence in Lebanon.

Lebanon – Local politics:

In Lebanon, probably more so than elsewhere, certain declarations by certain public figures can be seen as indicators of where the political backer/sponsor stands. As such, it might be interesting to occasionally examine their declarations, even if they are not decision-makers and even if they do not necessarily influence decision-making, as they offer insights on how things are perceived by their political backers.

Speaking to local (MTV) and regional (Kuwati daily Al-Anbaa) media, Baath Party MP and member of the Energy and Water Committee at the Parliament, Assem Qanso warned that once exploration licenses are awarded “caretaker PM Najib Mikati, MP Walid Joumblat and caretaker Energy Minister Gebran Bassil and others” will amass billions of dollars. The pro-Syrian regime MP slammed the “sectarian” Petroleum Administration, established with “the sole purpose of sharing profits”. Qanso believes that the absence of a petroleum ministry facilitates the embezzlement of billions of dollars. The subtle messages that one can extract from Qanso’s declarations recently is that pro-Syrian regime factions expect to recover some of their lost political influence, and they prefer to hold up oil and gas exploration until a more favorable government is in place.

Lebanon International Oil and Gas Summit:

Preparations for the Lebanon International Oil and Gas Summit which will be held in Beirut on 4-5 December 2013 are well under way. The event, which will be held under the patronage of the Lebanese Ministry of Energy and Water and in collaboration with the Petroleum Administration Lebanon, has attracted the support of major international and national organizations. It is endorsed by the International Gas Union (IGU) and sponsored by Schlumberger, Baker Hughes, Halliburton, Danagas, BB Energy, Hypco and others. Locally, the summit is supported by the Federation of the Chambers of Commerce, Industry and Agriculture in Lebanon, along with other organizations.

The importance of the LIOG 2013 Summit is reflected in the impressive number of participants. Over 350 participants, sponsors, exhibitors or delegates, are expected, from nearly 200 local and international companies and organizations. In addition to high-ranking officials and executives from public and private sectors, the summit will host oil and gas exploration and production companies along with a wide range of service and logistics companies. These include drilling and well management companies; pipelines manufacturers and suppliers; engineering, construction and maintenance companies; banks, law firms and telecommunications companies; as well as environment, health, and safety (EHS) consultants, on the ground service suppliers, training companies and recruitment specialists.

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 25, 2013.

Previous issues:

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

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