The preliminary reports that Lebanon may have large deposits of oil and gas off shore has caused relief and at the same time some anxiety.


The relief is natural as many Lebanese hope the new windfall would nearly wipe out all of their financial problems and above all cancel the country’s $51 billion public debt.

Oil means Lebanon may become an OPEC member. It also means that Lebanon’s gross domestic product would far exceed the current $33 billion.

But experts have started asking who will manage the oil and whether powerful politicians insist on having an indirect stake in any company or institution formed in the future.

This concern became very obvious Monday when the parliamentary committee on energy was deeply divided on who should run the oil sector. Will it be the energy and water minister or a regulatory body formed by the Cabinet?

The Energy and Water Ministry does not have a real department for oil with the exception of some employees hired years ago.

The joint parliamentary committee formed to discuss the draft oil law presented by Energy and Water Minister Jebran Bassil made some progress on this subject but postponed any debate on the formation of a sovereign fund which absorbs all the revenues from oil.

Bassil accepted the idea of forming such a fund but warned that the energy minister must have an opinion on this matter.

“I am not a mailbox. I must have an opinion concerning the fund. But at the same time I don’t want to exclude other parties from this subject,” Bassil said on Tuesday.

He added that the committee will not make any compromises on the issues of oil, gas, resistance and water. We will try to accomplish the oil law as soon as possible,” he stressed.

But the head of the parliamentary energy committee Mohammad Qabbani had another opinion on the issue.

“There is no real consensus on this subject [oil] and we don’t want ministers who will impose their opinion on this matter,” he said, alluding to Bassil.

Qabbani argued that the oil minister was not entitled to have the last word on any matter raised by the proposed oil fund.

He said this was too much power for one person and no one could make unilateral decision when it comes to oil funds.

Qabbani insisted that the entire Cabinet must give the final opinion on the oil fund and not the minister alone.

Speaker of Parliament Nabih Berri insist on discussing and approving the draft oil law in the Parliament as soon as possible because Israel may start oil exploration in Lebanese territorial waters very soon.

This view was supported by Hizbullah and some opposition groups in the parliament.

However, the March 14 Forces, and most notably the Future movement preferred further discussion in the Cabinet and in parliamentary committees before giving the final seal of approval by the Parliament.

However, experts warn that even if the oil draft law is passed in the coming few weeks this does not mean that Lebanon can immediately start drilling for oil.

“This is a very long process and it could take between 10 to 15 years before Lebanon really starts drilling for oil,” an oil expert said.

Bassil said earlier that once the law was passed, the ministry would hammer out a book of conditions before giving a tender for international oil companies to drill off shore.

In addition, the government would subsequently decide whether it will have a big or small stake in the operation, or be inclined to sell the off-shore oil wells at a hefty price to international companies.

According to seismic and 3D studies conducted by a Norwegian company, Lebanon maybe sitting on 18 billion oil barrels.

The current value of this wealth, with the price of oil $70 a barrel, is close to $1 trillion.

Source Osama Habib The Daily Star