Five years ago, Lebanon was ready to invite companies to explore for oil and gas offshore. A law organizing offshore exploration had been passed, an environmental study—known as a Strategic Environmental Assessment (SEA)—to study and mitigate the effects of exploration on the environment had been prepared, a regulator had been appointed, and the bid round announced. Then politics got in the way. The government could not agree on issuing needed decrees to move forward, and the licensing round was, effectively, put on ice.
Around this time last January, the bidding round was awoken from its cryogenic slumber. The needed decrees were issued and a roadmap to accepting bids laid out. By December 2017, the government awarded two separate exploration licenses, for Block 4 and Block 9, to a consortium of companies made up of France’s Total, Italy’s Eni, and Russia’s Novatek. At the end of January, contracts were signed.
Environmental concerns set oil and gas back
But during the licensing round’s four-year hibernation, the factors affecting oil and gas exploration changed. New exploratory data became available, and the Ministry of Environment issued new rules requiring and standardizing SEAs.
In May 2017, an analysis of the SEA found that it contained too many problems to be an effective planning tool. The report, published by the Lebanese Oil and Gas Initiative (LOGI), urged the government to overhaul the SEA, and to do so in parallel with the licensing round. Its author, environmental consultant Klemen Strmšnik, summarized the report’s findings in a January email to Executive: “The SEA was not fully implemented and was based on a lack of data. Stakeholder involvement was limited, and the SEA report was not presented to the public through public consultations. Additionally, national legislation on SEAs was substantially changed, and the current SEA report simply does not satisfy the standards set by new environmental legislation. [Therefore], it does not provide all needed answers and cannot represent a sound decision-making tool.” (Full disclosure: The author of this article is a co-founder of LOGI and sits on its board of directors.)
Given Lebanon’s track record on other national environmental problems, such as waste management, water pollution, and the destruction of wildlife habitats, it is easy to doubt the state’s capabilities to regulate and enforce environmental measures on large multinational oil and gas companies. And it is worth remembering that inadequate regulation can have huge financial costs for petroleum companies, and catastrophic consequences for ecosystems. BP, which was responsible for the Deepwater Horizon spill in the Gulf of Mexico in 2010, has had to pay a total of $67 billion for the spill, the Financial Times reported in January. According to the National Ocean Service, a US government agency, the Deepwater Horizon disaster killed 11 workers and spilled 134 million barrels of oil into the Gulf over nearly three months, killing thousands of marine mammals and sea turtles. LOGI’s SEA critique painted a portrait of a regulator unconcerned with environmental protection, and its recommendation was clear: Plug the data gaps, address new environmental rules, implement recommendations found in the original SEA, and do more to get the public’s feedback.
Assem Abou Ibrahim, head of the Lebanese Petroleum Administration (LPA)’s Quality, Health, Safety, and Environment Department, told Executive that some recommendations have already been addressed: In 2013, the government issued decrees as part of the Petroleum Activities Regulations, defining the SEA’s scope in line with the new environmental rules, and, in 2016, the LPA published a National Oil Spill Contingency Plan—a guideline to prevent and respond to oil spills.
In December, Executive incorrectly reported that the government would be commissioning a new SEA from scratch and that such a contract would be directly awarded. This is not the case. Some sections of the SEA will be updated and the work carried out by the LPA with support from the European Union. “Based on our assessment of all these developments and their expected implications on the SEA study, the Ministry of Environment agreed with the LPA’s evaluation for not modifying the scope of the existing SEA but rather to implement some updates to sections affected with the current information availability and to integrate the various management and planning initiatives into a comprehensive plan,” says Abou Ibrahim, “The SEA will as well be an opportunity to further engage with affected stakeholders. We are currently assessing the possibility for initiating the SEA update work through a technical assistance project implemented at the LPA and funded by the EU.” He added that the SEA update should take around four months to finish, with an expected completion date toward the end of Q2 2018, ahead of exploratory drilling beginning in 2019.
Jeremy Arbid is the co-founder of the Lebanese Oil and Gas Initiative (LOGI) and a member of its board of directors , in addition to Economics and Policy Editor at Executive Magazine.