Lebanon is steadily pursuing plans to revive its nascent oil and gas sector, with a determination that is similar to what we witnessed in 2012 and the first months of 2013. Over a short period of time, deadlines were fiercely met. Unusual, in a country where the prevailing political culture views deadlines as mere suggestions.
With Cesar Abi Khalil at the helm of the Ministry of Energy, a lot of parallels can be made with Gebran Bassil’s tenure at the Ministry. Energetic, ambitious, determined, for considerations that are not necessarily related to the sector per se.
In a previous article, Mesp mentioned that the success of the first licensing round depends on two things: global market conditions and what Lebanon offers investors. And we acknowledged that while there isn’t much we can do to affect the first, there are some things that can be done to encourage investors – finalize our legal and regulatory framework, offer a competitive fiscal regime, and actively promote our energy potential where it matters.
On both fronts we can directly affect, there has been some progress though we would have preferred a more rational and dynamic approach.
Finalizing the legal framework
In its March 8, 2017 meeting, the cabinet approved the petroleum tax law. With the adoption of the law by the parliament, expected in a matter of days or weeks (we are told), the legal framework governing the first licensing round would be complete.
We would have preferred to play it safe and hold off the relaunching of the tender and announcement of the roadmap until the whole framework is complete, in order to avoid making the same mistake we did in 2013. Another tender postponement due to an incomplete framework would ruin whatever credibility we have left. But, it seems authorities are confident there are no obstacles in the way. We hope they are right, because the obstacles in questions are never related to sector technicalities, but to deadlocks elsewhere. For example, a disagreement over today’s hot issues, such as the budget, electoral law or the reconfiguration of power after the elections, would have direct implications on political decision-making in other sectors, including oil and gas.
Promoting the tender
The Minister of Energy and Lebanese Petroleum Administration invited international oil and gas companies to a consultation workshop on February 23, to introduce the first licensing round. We were pleased with the participation of some of the most active companies in the Eastern Mediterranean. No doubt we would have been able to attract more companies had we finalized our legal framework on time, but interested companies can still get in touch with the LPA and ask questions related to the bid round up until August 15.
Earlier this month, the Minister of Energy and a number of LPA members participated in an event in London to promote the tender. We hope it is the first in a series of events. The Ministry of Energy has yet to announce the organization of roadshows abroad targeting potential investors – An element that shouldn’t be neglected in any marketing strategy, given our profile and the experience of the last few years.
Once the legal framework is complete, we look forward to a more active and aggressive marketing campaign promoting the country’s energy potential to investors abroad, and a more precise identification of relevant international events necessitating high-level Lebanese official participation.