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Please, steal our money

If and when oil and gas begin to flow, civil society won’t be ready

by Executive Editors

Although it’s been nearly 18 months since Lebanon’s first licensing round for oil and gas exploration was launched, its closing date has been postponed four times — each time pushing back exploration and potential exploitation of the coveted resources. But despite the numerous opportunities afforded by these delays, the country’s nongovernmental organizations have barely feigned interest in the nascent sector.

This is a grave mistake. The industry is not only massively broad and complex — encompassing everything from geology and mechanical engineering to finance and international relations — but also notoriously dirty. Luckily, civil society may get another chance: all expectations are that the licensing round’s close will be delayed yet again. If this postponement stretches into early 2015, as some reports rumor, then civil society does have a chance to catch up. But Lebanon’s NGOs have not another moment to waste.

[pullquote]Several NGOs state they need to wait and see the closing of the licensing round and the signing of contracts before considering drafting a project proposal for oversight[/pullquote]

The sale of seismic surveys results covering most of the country’s exclusive economic zone has already generated revenue for the government. While dazzled by eager politicians with grandiose plans to spend gas revenues, which were also staggeringly estimated in the billions of dollars, the so called tiny, unimportant details of data revenues went unnoticed by Lebanese NGOs, media outlets and other civil society groups.

Since early 2013, when the last publicly announced figures emerged, the government’s share of the data sales stood at approximately $33 million. This figure is by now certainly higher. Only a handful of insiders — politicians and government officials — know the status of these funds, while almost no one else has inquired to their whereabouts. For all we know, the money may have already been siphoned off.

Meanwhile, the Lebanese Petroleum Administration (LPA) has already tendered and awarded a contract for its upcoming commercial conference in October. That’s right: government agencies are already entering into deals with no oversight from civil society.

Incredulously, several NGOs state they need to wait and see the closing of the licensing round and the signing of contracts before considering drafting a project proposal for oversight. This is not only idle, blindly irresponsible behavior — as the LPA’s conference shows, contracts are already being signed — it approaches the level of gross negligence.

Moreover, the Strategic Environmental Assessment (SEA) for offshore exploration highlighted a number of environmental concerns, but the full contents of the report remain closely guarded. While the LPA and Ministry of Environment acknowledge strict environmental protection measures will be an integral part of exploration and production contracts, without seeing the SEA, civil society has no idea what protection measures should be in the contracts. As one Ministry of Environment official put it, publishing the SEA is “essential to transparency” (see “Sailing away from responsibility“). Environmental NGOs, also adopting a lackadaisical approach, invite an increased risk of environmental disaster to Lebanon’s already massively polluted sea when they do not demand publication of the SEA.

Sure, the LPA has expressed interest in adopting transparency initiatives and engaging with civil society. That’s fine and nice, but the very same agency blocks media access to roundtable discussions and fails to respond to interview requests. If civil society does not demand a seat at the table now, the sector will almost surely sink into the pockets of corrupt politicians.

[pullquote]Monitoring activity must commence now — not after contracts are signed, but today[/pullquote]

Perhaps Lebanese NGOs simply do not grasp the complexity of this emerging sector. NGOs that are sincerely interested in advocating for contract or revenue transparency, environmental protection, workforce education, sustainable economic development — to name just a few issues — need to recognize the steep time investment, in terms of training and expertise, required to prepare their organizations.

And yet monitoring activity in this nascent sector must commence now — not after contracts are signed, but today. This is the only way that civil society can have a say in what is included in contracts, or how revenue mechanisms are set up, or question the environmental safety measures being put in place.

An example from Madagascar may be instructive. In 1998, Malagasy NGOs were included during the contract negotiation of an infrastructure project to rehabilitate roads. The inclusive bidding process resulted in an estimated 25 percent drop in construction costs. The companies did not have to waste money on bribes, while the government had no need to allocate public funds on higher bids to pay for kickbacks.

Likewise, companies recognize they can benefit their bottom line by partnering with NGOs to gain access to a wealth of knowledge about local communities, mitigating political risk and protecting brand reputation. The threat of NGOs campaigning for the environment or to expose acts of corruption and illegal activities has resulted in major oil companies embracing transparency measures as a preemptive strategy to mitigate reputational risk.

There is now an opportunity to help shape an entirely new sector and adjacent industries. Assuming the licensing round is yet again extended, NGOs will get another chance to catch up to the companies, politicians and other insiders who know and control the new sector. They must take the opportunity. Otherwise, the only chance for Lebanon’s oil and gas sector to begin transparently will slip irrevocably from sight, creating a rash of more difficult problems in the coming decades. If Lebanese NGOs are not up to the task, they should at least have the decency to tell everyone, “Hey, not our problem.”

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Executive Editors

Executive Editors represents the voice of the magazine.

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