As Lebanon starts exploratory drilling for oil and gas, after a <a href="https://www.thenationalnews.com/world/us-news/2022/10/11/lebanon-israel-maritime-deal-marks-historic-moment-for-enemy-neighbours" target="_blank">major agreement</a> settled its maritime border with Israel, experts have warned that any bonanza would not benefit ordinary Lebanese unless reforms take place. Drilling in the country's offshore Block 9 began on Thursday, with a consortium led by France's TotalEnergies and including Italian company ENI and QatarEnergy. While result are due in 67 days, experts say Lebanese struggling with among the worst financial economic crises since the mid-19th century should not pin their hopes on hydrocarbons solving their problems. “It is essential to differentiate between the interests of Lebanon as a nation and the objectives of the political class, which, so far, are the ones benefiting from the entire process”, said energy policy expert Laury Haytayan. Caretaker Energy Minister Walid Fayad told <i>The National </i>that while the drilling commencement was a positive step, any discovery of reserves would not in itself drag Lebanon out of its economic crisis – especially if no reforms are implemented. Lebanon's US-mediated <a href="https://www.thenationalnews.com/mena/lebanon/2023/08/24/lebanon-starts-search-for-offshore-oil-and-gas/" target="_blank">maritime border agreement</a> with Israel, signed in October 2022, establishes a clear boundary in the Eastern Mediterranean for the first time. Negotiations at one point had risked spilling over into conflict between Israel and its arch-enemy Hezbollah, the Iran-backed Lebanese armed group that has extensive control over southern Lebanon. The deal between the two countries – technically still at war – is the result of more than a decade of US-led efforts to settle a dispute over potentially abundant oil and gas reserves claimed by both parties. Two years after the deadly <a href="https://www.thenationalnews.com/mena/lebanon/2023/08/10/lebanons-stalled-beirut-blast-inquiry-highlights-politicised-and-dysfunctional-judiciary/" target="_blank">Beirut blast,</a> the same political class that is widely held responsible for the deaths of more than 200 people in the August 2020 explosion was back on the negotiating table with Washington. “Right from the start, this deal favoured the Lebanese political class,” said Ms Haytayan. “Negotiating with Israel was a strategic <a href="https://www.google.com/search?sca_esv=559959589&q=manoeuvre&spell=1&sa=X&ved=2ahUKEwjjr9rrnPiAAxXOWqQEHRo1AdUQBSgAegQICBAB">manoeuvre</a>, aimed at boosting their international image, especially when their credibility was at its lowest amid the economic collapse.” <a href="https://www.thenationalnews.com/mena/lebanon/2023/08/17/lebanons-presidential-divisions-widen-as-le-drians-dialogue-formally-proposed/" target="_blank">Lebanese politicians</a> have cast the potential discoveries as a rare glint of light in a country experiencing dark economic times – now in their fourth year. Before visiting the drilling rig earlier this week, influential parliamentary speaker Nabih Berri said that “in this darkness comes a day of joy”. Caretaker Prime Minister Najib Mikati said it was a “bright page in history”. “All political parties are trying to claim the legacy of the project to turn Lebanon into an 'oil country',” Ms Haytayan said. The Free Patriotic Movement party sought to secure a deal before its founder Michel Aoun's term as president ended in October 2022. It could then cite this as a legacy of his presidency. Meanwhile, Mr Berri, head of the Shiite party Amal Movement, has positioned himself as the guardian of Lebanon's sovereignty in the deal. As for Hezbollah, the deal is viewed as a way to lift Lebanon out of its financial woes without an International Monetary Fund deal – and the critical reforms it involves, Ms Haytayan said. “Unfortunately, this situation will likely perpetuate the status quo, injecting dollars to prop up the system, while fuelling corruption networks and maintaining a facade of stability that undermine the general interest”, she added. It is not certain if any natural gas reserves will be discovered. And if they are found, that would lead to further investigations about the quality and whether the quantity is viable. “In the oil and gas industry, predicting the content of a well is inherently uncertain,” said Marwan Abdallah, executive director of the Organisation for Petroleum and Energy Sustainability, a group that seeks to promote good governance and transparency in Lebanon's oil and gas sector. “Currently, discoveries have been made in Israel and Cyprus, suggesting potential in Lebanon's vicinity.” “If gas is found, there are multiple scenarios, one where the quantities only meet local needs and another one where there are enough available for export.” Mr Abdallah said that export, given the status of war with Israel and the sanctions on neighbouring Syria, would be complicated for Lebanon, although not impossible, if exemptions were negotiated. In any case, this would need investment to build the infrastructure necessary for domestic gas use and, if Lebanon were to export, to build new pipelines. Mr Abdallah asked: “Who will invest and how would Lebanon attract foreign investment?” He estimates that it would take about five years for Lebanon to start producing oil and gas, if commercially viable reservoirs are discovered. “We need to plan ahead,” he said. However, Mr Abdallah is doubtful of the political class's ability to effectively manage <a href="https://www.thenationalnews.com/business/economy/2023/08/25/lebanon-years-away-from-realising-benefits-of-potential-oil-and-gas-finds/" target="_blank">these resources,</a> citing the state's lack of capacity and the pervasive issues of corruption and political patronage. The economic crisis has been blamed on decades of corruption and mismanagement by the Lebanese elite. There are fears that similar problems could pop up again with the political establishment also appropriating oil and gas revenue for private or political gains. “We find ourselves seeking solutions from the very individuals who previously failed to establish a good governance,” Mr Abdallah said. One example is the electricity sector. It is beset by a chronic deficit contributing billions of dollars to the country's debt, political bickering over murky contracts and a decade without a single new power plant – while the nation endures crippling blackouts. Mr Abdallah asked: “What assurance do we have that these individuals will demonstrate greater efficiency in the future?” Lebanon's legal framework includes measures against mismanagement and corruption. In 2017, the country ratified a law to regulate public private partnerships. A year later, the government also enacted the Transparency in the Petroleum Sector law, intended to increase openness in oil and gas processes. In 2021, a Public Procurement Law, which was applauded by the international community for laying the grounds for more transparency in the public sector procurement, was passed. “These are on paper, but in reality, they are incomplete in their implementation”, Mr Abdallah said. Mr Fayad, who was part of the delegation that visited the rig earlier this week, offered cautious optimism alongside frank realism. “It's definitely positive,” he told <i>The National.</i> “Now, on its own, does it put Lebanon back on track? “No, it requires all the needed legislation and executive decisions. This does not solve the financial [crisis], the finance sector problems.” He spoke after it was announced that a 3D survey of an offshore area known as Block 8, which neighbours Block 9 to the west, would commence soon. Mr Fayad is hopeful hydrocarbon deposits worth billions of dollars could be found in Block 9. Asked if reforms are needed to ensure that no revenue is “lost”, Mr Fayad said, “100 per cent, of course” – while adding that, “it's all complicated”. The Block 8 survey will be carried out by British firm Geoex MCG and Egyptian company Brightskies Geoscience. They will carry out the operation under the authority of the Energy Ministry, in an area of about 1,400 square kilometres.
