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Lebanon’s Oil Industry Heading into Troubled Waters

Lebanon’s Oil Industry Heading into Troubled Waters

Oil and natural gas from Lebanon’s yet to be exploited fields in the Mediterranean Sea are heading into troubled waters experts in Beirut predict. Unless the Lebanese government adopts stern transparency measures, wide-ranging corruption and gross unaccountability, rampant in the Lebanese political system, could cause the country to see important revenues diverted from the state coffers into private bank accounts.

A symposium organized in the Lebanese capital this past weekend by the Sam Houston University’s Global Center for Journalism and Democracy in association with the Beirut-based Samir Kassir Foundation brought together a number of local and international experts and about 25 young Lebanese journalists, some of whom expect to be assigned to cover the oil and gas sector, once a number of political roadblocks are removed and drilling actually begins.

Regional political complications, such as the state of belligerency that exists between Israel and Lebanon despite an armistice signed between the two countries that dates back to the founding of the modern state of Israel, has delayed the start of exploitation of the resources. While Israel said it was ready to begin drilling operations in the Eastern Mediterranean, Hezbollah, who is represented in the Lebanese government, demands that a settlement regarding Israel’s continued occupation of some parts of Lebanese territory precedes any drilling.

Related article: Deeper & Smarter: The Subsea Oil & Gas Growth Outlook

In question is the village of Ghajjar and the area known as the Shebaa Farms, a point where the borders of Syria, Lebanon and Israel converge.  Israel has been occupying these zones that the Lebanese rightfully want to reclaim. Israel insists that the Shebaa Farms are Syrian, not Lebanese, while Syria has remained silent over the issue. But during a private interview with controversial Lebanese political leader, Gen. Michel Aoun a few years ago, the leader of the Free Patriotic Movement told this reporter that he had served in the Shebaa Farms as a young lieutenant in the Lebanese army.

Lebanon, much like a number of other countries in the region, suffers from acute corruption among top government officials. The eventual exploitation of the underwater oil and gas fields will bring unprecedented income to Lebanon, placing the second-smallest Arab country on the same level of richness as the oil producing nations of the Gulf, some experts predict.

However, unless the correct formula on how to process the new influx of money is found, the country’s new source of income could bring more problems than solutions.

Most of the experts attending the three-day session in Beirut believe that getting government ministers who will be put in charge of running the country’s oil and natural gas industry to introduce clear lines of accountability and transparency so as to prevent the disappearance of state funds will be a real challenge.

In the end it is very likely that some under the table settlement will be reached as the oil companies, eager to start operations moving ahead will revert to using one system that has rarely failed, especially in the Middle East: bribery.

In addition to the political worries, many in Lebanon also worry over the effects that off shore drilling will have on the region’s environment and on Lebanon’s already polluted waters where in many instances raw sewage and garbage is just dumped into the Mediterranean Sea.

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“Oil companies, driven by the quest of high profit, tend to have little regard for the environment,” said Chris Van Orsdel, a government affairs specialist and policy analyst who has worked in natural resource management, environmental protection and disaster recovery.

“You do not want a drilling company to come here (to Lebanon) and use methods that would not be allowed to use in the United States or in the United Kingdom,” said Van Orsdel. “Because they do this in countries such as Brazil,” added the environment specialist. .

At the end of the day Lebanon’s new oil could be both a blessing and a curse. As Laury Haytayan, a senior associate with the Revenue Watch Institute said, “It’ not as though people expect that things may go wrong. People know things will go wrong.”

By Claude Salhani

Claude Salhani, a specialist in conflict resolution, is an independent journalist, political analyst and author of several books on the region. His latest book, 'Islam Without a Veil,' is published by Potomac Books. He tweets @claudesalhani.




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