10/31/2013
A seismic vessel is pictured off the coast of Lebanon on September 24, 2012. Seismic surveys of Mediterranean waters off Lebanon's southern coast suggest they contain 12 trillion cubic feet of natural gas, Energy and Water Minister Gebran Bassil said. (Image credit: AFP/Getty Images via @daylife)
This week, Lebanon’sEnergy Minister Gebran Bassil announced that his country’s offshore gas potential could end up being even more plentiful than first announced, telling Reuters that “under a probability of 50 percent, for almost 45 percent of our waters has reached 95.9 trillion cubic feet of gas and 865 million barrels of oil.” Bassil’s comments present a rosier assessment than earlier studies. However, they shouldn’t be confused with actual progress when it comes to exploiting Lebanon’s claims to the new-found Eastern Mediterranean offshore bonanza. Instead, the new findings highlight just how much Beirut is missing out on due to a lengthy list of political and fiscal challenges, most notably a political paralysis that has frozen the exploration efforts in place for much of the year.
No New Cabinet, No Progress
While a ballooning public debt and an influx of refugees from Syria over the last year pose a significant challenge to providing the stability necessary to kickstart a massive new exploration effort, it’s the country’s political landscape that is presenting the largest obstacle to Lebanon getting in on the region’s natural gas rush.
For the last six months, Lebanon’s national government has been unable to agree on a new Cabinet, leaving the country in the hands of a caretaker government. Without a functioning cabinet in place, the government has been unable to pass two decrees that would allow final approval for proposed exploration blocs and production contracts. Originally planned for May 2nd, Lebanon’s licensing round has been delayed twice this year and is now scheduled for January 2014. Although the delay has been attributed to a variety of disputes between the country’s many political sects, one of the most prominent issues has been how gas revenues will be split.
While the delays pose an obvious economic challenge to Beirut, they could also cause more problems down that road as further instability continues to erode what little investment confidence the country has to offer. According to the Lebanese government, they have a list of 46 firms ready and approved to bid should the decrees pass, though it’s unclear how long they are willing to wait and how further delays will test their dedication to local efforts.
Furthermore, the longer Lebanon stalls on exploration efforts, the longer they will remain out of the regional discussion about export options currently being held between Cyprus, Israel and Turkey.
Still, even if Beirut is able to get a cabinet in place before the planned January licensing round, actual offshore activity poses a whole new set of problems.
Among Lebanon’s 10 planned exploration blocs, the county’s southernmost claims fall into disputed waters with neighboring Israel. Bloc 9 falls into a contested area between the two countries’ Exclusive Economic Zones, leading to charges from Beirut that Israel was capable of siphoning off Lebanese reserves from current offshore efforts. In response, Israel has appealed to the United Nations in hopes of settling the maritime border dispute, but has pledged action should Lebanon act on claims in overlapping, offshore territory.
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