Fueling Lebanon’s oil delusions

Country’s politicians pretending hydrocarbons will solve everything

Those attending the official launch of Lebanon’s first licensing round for offshore oil and gas exploration on Tuesday may have been forgiven for thinking they had walked into a Gebran Bassil fan club convention.

The session opened with an unintentionally comical animated video of the minister’s fantasy for a future Lebanon. During “A father’s journey… A nation’s dream”, the viewer was led by the minister of energy and water as he guided his son through a utopian vision of Lebanon freed from so many of the ills that currently burden this dilapidated country. 

See also: Gebran Bassil – Lebanon's divisive power player

The car seller of Kabul

In this glorious vision the minister’s hometown of Batroun had been protected and developed as a picture postcard of Lebanese heritage, Beirut had a modern metro system, a sleek railway sped along the pristine coastline liberated from the existing “private infringements”, Beirut river was covered in a solar roof and children played in parks where waste mountains had once stood.

This beautiful hallucination was of course enabled by the great gas wealth of Lebanon and the tenacious efforts of Minister Gebran Bassil. “I looked at my son. I wanted to tell him that I was sorry. Now I hope he understands that the years he was deprived from his father’s presence were not in vain,” the minister’s voice-over chimed.

Back in the real world

Without wanting to be a killjoy, perhaps a dose of sobriety would be of use here. First, Lebanon has no proven commercially viable gas reserves. The adverts that flanked Bassil’s podium read, ‘Our country now has oil for the transport network, army, social services etc.’ are quite simply not true. So far what Lebanon has is indications of significant deposits of potentially commercially viable gas, but until companies start to dig we cannot be certain that it exists and in what quantities.

But let us ignore these doubts and run on the assumption that Lebanon is actually sitting on a treasure trove of gas reserves that will flood into the nation’s piggy bank in the coming decades. It is lovely to assume that this will be a panacea to the nation’s travails but such a reality is far from assured. Indeed, without major reform it threatens to compound an already faltering nation. 

Will billions in dollars really translate into bullet trains, public beaches, a powerful army and a sustainable social security program for the elderly? This dream, which we all covet, will surely be impeded by the very structure of the body politic in which Gebran Bassil is very much entrenched.

The fact is that the public institutions of this country have been gutted of real substance, while the ministries of government are treated as little more than bargaining chips for financial and political influence to be traded among an anachronistic elite. Instrumental in this arrangement is the almost complete power afforded to ministers over institutionally weak ministries.

In Minister Bassil’s vision for the future the Turkish power ships no longer exist and Zouk power plant emissions have been reduced by 90 percent. Back in the real world things have already started to go awry, with the first barge shutting down its turbines during its first month on Lebanese shores.

The manner in which the $360 million deal was agreed between the government and the Turkish firm, Karkey Karadeniz Elektrik Uretim, is perhaps indicative of some of the fundamental problems that threaten to undermine the huge potential for development.

Firstly, there was almost no transparency surrounding the deal, with one senior member of government telling Executive it was a “black box”. From the first furlong there were problems as the fine print, in what is in essence a public-private-partnership (PPP) deal, was bungled leading to delays over payment agreements and delivery.

The fact is that while there is a PPP law in parliament there is scant enthusiasm from the ministers and their patrons to pass the legislation. The fear is that it would undermine the almost complete control each minister has over his dominion, along with the money spent and earned within. A more transparent process, involving numerous stakeholders and resulting in a genuine partnership between the government and private enterprise, would rock this steady boat.

So while the minister’s vision includes a gas coastal pipeline the current day reality gives another indication of what obstacles lay ahead. The project proposal for this pipeline is sitting in parliament but the government doesn’t have the $450 million it needs to pay for it and is highly unlikely to find it soon. With the PPP law in place the government would be much better set to tap into private sector wealth. The investors are ready and waiting, the government is not.

Gebran Bassil may like to see himself as the shepherd that will lead Lebanon to much brighter days, but the reality is that the fate of this hydrocarbon jamboree is much bigger than him and, if managed badly, could prove disastrous for Lebanon. This is not scaremongering, but rather a sober reflection on the state of the country’s hydrocarbons. The minister can do all the dreaming he likes, but without reform those dreams will turn to nightmares.

 

Zak Brophy is Free Speech Radio News’ Lebanon correspondent and a freelance business journalist

Zak Brophy was Executive's Economics and Policy Editor from 2011 until 2013.

*

Top