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Oil and gas should fuel negotiations

Hydrocarbons provide a major reason to resolve Lebanon’s political vacuum

by Zak Brophy

In recent years there have been significant strides made in Lebanon’s incipient oil and gas sector. This has in no small part been down Gebran Bassil, the caretaker minister of energy and water. His interpretation of the rules and regulations may have at times been somewhat flexible and his rhetoric hyperbolical, but there is no denying that he has gotten the show on the road. 

The passage of the offshore petroleum resources law and the Petroleum Administration regulations, the creation of the Petroleum Administration, the launch of the first licensing round and the pre-qualification of 46 international oil companies (IOCs) all have been the major landmarks in this journey. This momentum all threatens to come to a shuddering halt, however, as the political apparatus of the country descends into a debilitating funk.

A timetable was set at the beginning of the licensing round that would see the first contracts between the government and the IOCs signed in early 2014. However, if the decrees pertaining to the delineation of the offshore blocks and the revenue sharing model are not passed by September, then the government simply cannot proceed. The resignation of Prime Minister Najib Mikati in March has rendered the Council of Ministers — Lebanon’s cabinet — toothless to do little more than manage its day-to-day business with its caretaker status, impotent to pass new laws. Herein lies Bassil’s dilemma. Eyeing this fast approaching dead end, the minister is calling for an extraordinary cabinet meeting to push the decrees through. 

  Israel’s recent discovery of the Karish gas field near the disputed maritime border with Lebanon has been cited as a further reason for the Lebanese to get their act together and cooperate in this domain at least. Both President Michel Sleiman and Mikati, who remains in office as caretaker prime minister, have expressed their intention to hold an urgent session so the two decrees can be passed and the Committee of Legislation and Consultations has also given the green light — so Bassil may get his way yet. There are however other issues dividing the body politic — most notably, the dispute over the leadership of the armed forces in which the leader of Bassil’s Free Patriotic Movement Party, General Michel Aoun, is a key protagonist — that threaten to overshadow the oil and gas sector and therefore delay any consensus on a meeting.

Even if Minister Bassil is successful in pushing through the pending decrees, there are reasons to be wary of charging full steam ahead in what pretty much amounts to a political and legal vacuum in the country. In late May, Parliament voted to extend its mandate, in the first such move since the end of the civil war in 1991. Since then not only has that institution been crippled but Lebanon’s highest judicial court, the Constitutional Council, has also been seriously debilitated. 

The Constitutional Council was meant to be invulnerable to an otherwise highly corrupted body politic. However, when it was called upon to offer its verdict on the highly contentious vote by the majority of the parliamentarians to extend their own terms in office it succumbed to the same fetid forces that bastardize pretty much every institution in the nation. With several of the judges hamstrung by their loyalties to political and sectarian leaders, the 10-member council did not have a quorum and failed to convene, despite four callings. The separation of powers in Lebanon was further tarnished and the court stripped of its import. 

“This is the most sacred body in the nation… The vacuum we are seeing is a red flag to everyone who is following what is going on in the Lebanon; politically, militarily or commercially,” Roudi Baroudi, an independent energy and environmental consultant and secretary general of the World Energy Council, recently said. 

The state is inherently weak in Lebanon, and the nation is no stranger to political voids. That is reflected by its crumbling infrastructure, rampant corruption and nepotism, which permeates every area of public life. A similar mismanagement of the nascent oil and gas sector would not only line the pockets of the rich at the expense of the poor but would actually blight the whole economy. 

The efforts to push ahead with the oil and gas sector are understandable but, in the words of Baroudi, “it is essential we get our house in order first.” The vital importance of this sector should not be used as an excuse to sidestep the flawed institutions of power but rather as a reason to try to fix them.


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

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Zak Brophy

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

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