[Oil & Gas Updates]: Weekly Roundup 17/12

Lebanon – Internal politics:

Rifaat Eid, the leader of the pro-Syrian regime Arab Democratic Party, which draws its support from the Lebanese Alawite community in Tripoli, has called for a better representation of his community at the political level. Speaking after yet another round of fighting between Sunnis and Alawites in Tripoli, which has left 17 dead and scores wounded before the Lebanese Army deployed in the region, Eid confirmed his willingness to disarm, provided the Alawite community’s rights are guaranteed, including the right to select its own MPs, to have a minister in each government and a representative in the Petroleum Administration.

Eid spoke at a press conference held on 11/12, days after Energy Minister Gebran Bassil revealed to the public that a large gas (and possibly oil) field was discovered off the coast of Tripoli. His remarks do not come as a surprise to the Lebanese who are used to this type of trade-off: willingness to abandon a rogue attitude in return for political guarantees, usually by conceding a wider institutional representation. In this case, and anticipating the lucrative opportunities that the oil and gas sector would generate, Eid, who interrupted his rather unusual trip to the US when clashes erupted in Tripoli, is seeking to avoid political marginalization by ensuring his community’s “piece of that cake”.

Lebanon – Good governance:

The issue of good governance in the petroleum sector is rarely debated in Lebanon. This, in itself, might not be surprising given that the sector is still at its inception phase. But the subject is increasingly being addressed by foreign diplomats and organizations. As mentioned in our last report (10/12), Angelina Eichhorst, Head of the European Union Delegation to Lebanon, insisted on transparency in her opening speech at the “Lebanon International Oil and Gas Summit” which was held in Beirut on 3-4/12, and on the management of the sector in a way that safeguards the environment and ensures the common good and long-term national interest. Beside her speech, and a presentation on corruption in Lebanon, there were few mentions of transparency and good governance during the two-day event.

On 5-6/12, Publish What You Pay, a global network of civil society organizations working to advance transparency in the extractive industries, organized a regional workshop in Beirut. In his opening speech, UK Ambassador Tom Fletcher noted that, to truly benefit the Lebanese people, the gas sector needs to be carefully managed. Revenues from extractive industries, he added, can deliver stability and prosperity, and promote peace, if well-managed [Link in Arabic].

Lebanon – Investments:

Negotiations between the Ministry of Energy and Water and the Spanish-Lebanese consortium, Abener-Butec, which won the bid to build the power plant in Deir Amar, have been unsuccessful. As mentioned in a previous roundup (03/12), the project was suspended by Energy Minister Gebran Bassil after failing to agree on the overall cost of the project. The ministry is now seeking to launch a new tender. But problems won’t end here. The consortium is now planning to file for compensation from the government.

Failure to award the contract to Abener-Butec, which has won the bid fair and square does not send the intended signals, ahead of Prime Minister Najib Mikati’s visit to Spain, scheduled at the start of 2013, during which he will seek to encourage Spanish investments in the country, notably in the oil and gas sector, as he has been doing on his official visits abroad.

Lebanon – Maritime border dispute:

Lebanese Energy Minister Gebran Bassil held two (separate) meetings on 14/12, with the UN Special Coordinator for Lebanon, Derek Plumbly, and the Cypriot Ambassador to Lebanon, Homer Mavrommatis, to discuss oil and gas issues, and particularly the maritime border dispute between Lebanon and Israel. Bassil’s office informed the media afterwards of his firm resolve to safeguard Lebanon’s rights. Ahead of a parliamentary election (scheduled in 2013), Bassil would like to be perceived as a minister who offers no concessions on Lebanon’s national interests.

Lebanon – Private sector:

The reaction of the Lebanese private sector to repeated reports that Lebanese waters may contain large reserves of oil and gas has so far been relatively restrained. Although many economic and financial actors are anticipating the prospect of gas extraction as a possible solution to the country’s financial hardships, most of them also know that things in Lebanon tend to take longer than expected and deadlines are rarely respected. The private sector has so far failed to grasp the importance of developing an oil and gas industry and is perceiving its advantages as being limited to the financial aspect (such as paying off the country’s huge debt), whereas the opportunities it provides are certainly much more important than that.