Lebanon must develop gas infrastructure
Lebanon expects to set up offshore rigs by the end of 2015
Lebanon’s Energy and Water Minister has spoken of the importance of developing Lebanon’s gas producing infrastructure and securing long term buyers for Lebanese gas.
“It is probable that we have natural gas in our waters. This is why we should develop the main infrastructure to produce gas and secure long term markets for it, which necessitates the completion of the first round of licensing in order for Lebanon not to lag behind compared to neighboring countries,” he said during the Oil and Gas Lebanon’s National Wealth Forum held at Ecole Superieure des Affaires.
The forum, which was organized by ESA in collaboration with the Forum for National Dialogue and the Mouvement des Entreprises et Representations Economiques Francaises au Liban, aims to shed light on the prospect of gas and oil in Lebanon.
Nazarian said the Energy and Water Ministry had achieved a study for creating the 174 km coastal gas line that stretches between Tripoli and Tyre and which is considered to be the backbone of gas infrastructure in Lebanon. “The ministry is still waiting for the approval by Parliament on the law for funding this line creation,” he said. “The ministry is finalizing the assessment of the offers for biddings and tenders for stocking liquid gas in north Lebanon.”
He added that his ministry prepared a draft law for tax amendments related to oil activities. “We have also distributed the draft law to all parliamentary blocs to take their technical opinions. The adoption of this law by Parliament before going into biddings and tenders by companies will constitute a great step ahead,” he said.
Nazarian vowed to pursue his ministry’s efforts in the field of oil and gas exploration despite all the prevailing political difficulties. “The political difficulties in Lebanon have not prevented us from achieving the first round for oil and gas production and exploration,” he said. “The Energy and Water Ministry will pursue its efforts despite all political difficulties to achieve social and economic development.”
The minister reiterated his call upon the government to pass the two main decrees that are needed for the completion of the first licensing round. “The current government should preserve Lebanon’s credibility in this regard by adopting the two main decrees that are related to the first round of licenses as well as the TORs which would enable these companies to present their biddings and tenders to acquire oil licenses in Lebanese waters,” he said.
Nasser Hoteit, president of the Lebanese Petroleum Administration, said that if the two decrees were passed by Parliament as expected in May 2014, then Lebanon would have rigs in its waters starting end of 2015 or beginning of 2016.
He said the main focus of LPA is to ensure working opportunities for Lebanese youths. “We should have a very strict goal which is to ensure working opportunities for our people by hiring 80 percent of Lebanese staff,” he said. “After exploration, international firms must be obliged to train the local staff abroad.”
Hoteit said that if Lebanon finds out 5 trillion cubic feet of natural gas on its territories then Lebanon would not export gas.
“But if we have between 5 TCF and 10 TCF then we can export to the regional market. However if we have 10TCF, we can think of exporting to foreign markets such as Europe and Asia,” he added.
“These are the internationally adopted rules and regulations.”
Energy expert Roudi Baroudi also gave a presentation, saying that some geologists estimate that the East Mediterranean could supply from 10 percent to 15 percent of Europe’s oil and gas needs in 2025. “That’s why we can become an important player if we know how to play it,” he said.
Baroudi said that the political gridlock was paralyzing Lebanon’s government from top to bottom.
“Cabinet life is short. We do not have a presidential election and we have dozens of senior security and civil service posts that have been vacant,” he said.
“The Constitutional Council, which is the most important thing, has been also sidelined so Lebanon’s claim to uphold the rule of law is severely weakened,” he added.
“All that we really need is to get a unanimous political consensus to move forward.”
For his part, economist Marwan Iskandar wondered how some people can ask about whether Lebanon will be fully able to benefit from this new wealth and how oil and gas revenues would be spent.
“We are in a country which has $64 billion in public debt and which needs to organize itself in the next seven years for it not to have a $100 billion of debt. This is far more important than considering what we are going to do with the money when we have it,” he said. “Let us begin to use gas for electricity generation which we can do within 18 months and we can save money.”
Iskandar said that it took Israel around seven years to develop its gas fields and that Lebanon requires about the same amount of time to do the same.
“I am afraid that in seven years’ time, the price of gas will not be that significant. Let us hope that it will be economical enough for us to pay our own requirements and let us not delude ourselves with the hundreds of billions and what we are going to do with them,” he said.