Lebanon delays oil and gas tender again

The Ministry of Energy and Water organized a press conference on January 8 to discuss the first licensing round for offshore oil and gas exploration and other related developments. Caretaker Energy Minister Gebran Bassil delayed the tender for the third time due to the absence of two important decrees, one defining offshore blocks and their coordinates and another one approving the model exploration and production agreement. The new deadline for submitting bids is April 10, 2014.

The announcement was expected as more and more political factions spoke publically in favor of delaying the tender. The latest public figure calling to postpone the bid was President Michel Slaiman, leaving Bassil’s Free Patriotic Movement and, to a lesser extent, Hezbollah and Speaker Nabih Berri’s Amal Movement alone in their quest to proceed with the bid.

Back in December 2013, Bassil did not rule out proceeding with the tender even in the absence of the two decrees. He, however, acknowledged that the legality of the move would be questioned and likely to discourage companies from participating in the bid (Assafir, 27/11/2013).

Bassil insisted today that this is the last time he delays the tender. He expressed hopes a new cabinet would be in place by April to continue the work, but, he added, if the current caretaker cabinet is still in place he will proceed with the tender, whether the two decrees are approved or not. Middle East Strategic Perspectives believes this is risky. If the legality of the process is not ensured, the tender is unlikely to succeed. The limits of risk-taking have been reached. The tender cannot be dissociated from the process of forming a new cabinet, which in turn depends on regional power struggles.

It seems Bassil is running out of cards to push for holding the tender. Invoking potential Israeli threats (July 2013), drafting petitions (October 2013) and threatening to proceed with the tender even without the two decrees (Nov-Dec 2013, January 2014), all proved to be unsuccessful. The political class called his bluff. Ensuring a say or a share in the sector remains the single most important driving force behind local leaders’ position on the subject: those who are currently in a position to affect the sector are in favor of proceeding with the tender. Those who believe they may have more influence in a future government are pressuring for delaying the tender.

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