Lebanon’s Oil Drilling: Will the Benefits Reach the Masses?

Lebanon has embarked on a significant journey as it begins exploratory drilling for oil and gas following a groundbreaking maritime border agreement with Israel. While this development holds promise, experts caution that the rewards of this potential oil bonanza may not trickle down to the average Lebanese citizen without essential reforms. This blog post delves into the complexities surrounding Lebanon’s foray into offshore drilling and the concerns that only the elite may reap the benefits.

Exploratory Drilling Commences

Lebanon’s offshore Block 9 recently witnessed the commencement of exploratory drilling led by a consortium that includes France’s TotalEnergies, Italian company ENI, and QatarEnergy. The results of this drilling are eagerly awaited, with expectations high for a significant hydrocarbon discovery. However, experts emphasize that the Lebanese people should not place all their hopes on this discovery alone to alleviate the country’s dire economic crisis.

A Nation vs. Political Class Interests

Energy policy expert Laury Haytayan highlights the need to differentiate between the interests of Lebanon as a nation and the objectives of the political class. To date, it is often the political elite who have benefited from such processes, leaving the wider population without substantial gains. Caretaker Energy Minister Walid Fayad underscores that while drilling initiation is a positive step, it alone cannot rescue Lebanon from its economic turmoil without concurrent reforms.

A Complicated History: Lebanon’s Maritime Border Agreement with Israel

Lebanon’s maritime border agreement with Israel, brokered by the United States and signed in October 2022, marked a significant breakthrough. It delineated a clear boundary in the Eastern Mediterranean, resolving a long-standing dispute over potential oil and gas reserves. This diplomatic achievement, however, has been viewed skeptically by some experts who believe that it primarily favored Lebanon’s political class. Negotiating with Israel was seen as a strategic move to bolster the image of political leaders during a period of credibility crisis amid economic collapse.

Political Parties and Their Stakes

Lebanese politicians from various parties are keen to capitalize on the potential oil discoveries as a beacon of hope in a country grappling with economic challenges. Each party seeks to claim the legacy of transforming Lebanon into an “oil country.” For instance, the Free Patriotic Movement sought to secure a deal before the end of its founder Michel Aoun’s presidential term. Parliament Speaker Nabih Berri positioned himself as the guardian of Lebanon’s sovereignty in the agreement, while Hezbollah sees this as an opportunity to address financial woes without an International Monetary Fund (IMF) deal and the associated reforms.

Uncertainties Surrounding Discoveries

The oil and gas industry is fraught with uncertainties, and it remains uncertain whether significant natural gas reserves will indeed be discovered. Even if reserves are found, further assessments are required to determine their quality and commercial viability. Predicting well content in the industry is inherently uncertain. While neighboring countries like Israel and Cyprus have made discoveries, Lebanon’s specific potential is still being evaluated.

Challenges on the Horizon

Exporting any discovered resources could be complicated due to Lebanon’s status of war with Israel and sanctions on neighboring Syria. This would necessitate substantial investments in infrastructure for domestic gas use and, if exporting, new pipelines. The critical question remains: who will invest, and how will Lebanon attract foreign investment?

Private and Political Gains vs. Public Welfare

One of the most significant concerns is whether Lebanon’s political class can effectively manage these valuable resources. Historically, corruption and political patronage have plagued the nation’s governance. With decades of mismanagement and corruption blamed for Lebanon’s economic crisis, there is a legitimate fear that oil and gas revenues could be appropriated for private or political gains. Seeking solutions from those who have previously failed to establish good governance raises legitimate doubts about the future.

The Importance of a Legal Framework

Lebanon does have legal measures in place against mismanagement and corruption, but their effective implementation is questionable. Laws regulating public-private partnerships, transparency in the petroleum sector, and public procurement are commendable on paper but incomplete in practice. The challenge lies in translating these regulations into meaningful actions that ensure transparency and accountability.

Conclusion: A Long Road Ahead

While Lebanon’s journey into offshore drilling holds the promise of significant economic benefits, the road ahead is fraught with challenges. Experts emphasize the need for reforms to ensure that the gains are not concentrated within the elite but benefit the entire population. The Lebanese people are cautiously optimistic about the prospects, but the nation must navigate complex geopolitical, economic, and governance issues to make the most of this opportunity.

In conclusion, Lebanon’s oil drilling venture is a complex undertaking with profound implications for the nation’s future. It is imperative that the interests of the broader population are safeguarded, and meaningful reforms are implemented to ensure equitable distribution of the potential benefits.

Check out the latest news in our Global News section

Stay updated on environmental data and insights by following KI Data on Twitter