Lebanon to restart oil, gas licensing round and it smells fishy

In its first sitting since being formed in December, Lebanon’s new cabinet passed two decrees on Wednesday defining the blocks and specifying conditions for production and exploration tenders and contracts. In a record time, the ministers went over 600 pages document and passed those decrees. Was the deal and the shares been distributed before hand? How can a new government that barley met, ministers didn’t even have the time to look at their own ministries, can go over 600 pages in couple of hours? When did ministers have the time to study the file? Many of them just returned from Christmas and New Year vacation !!

It doesn’t sound right to me. Yet, the country needs to start the offshore digging in order to know how much oil and gas the fields will produce. In addition, the country’s economy is near collapsing. the public debt is around US$ 69.02 billion (2015 numbers). Add to that the cost of hosting 1 million Syrian refugees. Oil and gas will create jobs and hopefully will lift the economy, pay the debt and make the living of the Lebanese people with fewer burdens.

The problem is not the quantity of oil and gas, it’s the political system we have and corruption. In our current status, public funds are mismanaged and mostly stolen. Lebanon doesn’t have the tools, laws and clean people in the right place to avoid what happened in other countries. Vast sums of money from national accounts in some oil- and gas-producing countries evaporated.

Lebanon that we have today will not be able to control theft, bribery and state-wide corruption. I’m pretty sure that the current political system will mishandled the oil and gas sector and the squanders of the potential revenues. According to Transparency International 2015 report,  Lebanon ranked 123 out of 168 countries. The country scored 28 over 100 in public sector corruption.

Before digging, we must have a change in the political representation. Those who are corrupt can’t and shouldn’t be allowed to handle the oil and gas file. So we need the following:

  • New fair electoral vote
  • Clean elections
  • New government based on election results
  • Transparency laws
  • Methods to end corruption and misuse of funds and public resources
  • Laws that allows the public access to information
  • Establishing a company that represents the country in the agreements with companies who will be doing the exploration and excavation.
  • Sending students and workers to get training in the sector of oil and gas.
  • The company that will represent the country should open specialized university to teach students skills that will be required for the industry.
  • Limit the numbers of foreigners and force the companies to use mainly Lebanese workforce

 

While Israel Seeks to Turn Gas to Gold, Lebanon will turn it to certain pockets.

Israel seeks to turn gas to gold according to the AP story published today. In short Israel is setting a plan for a national investment fund that would tap an anticipated natural gas bonanza to fuel both an export-geared economy and provide a nest egg of $10 billion in under a decade for future generations. Some of the revenues would be invested in strategically critical targets such as education and health. Lebanon will use the revenue from oil excavation primarily to lower public debt according to Lebanon’s Prime Minister Najib Miqati. Public debt in Lebanon rose to $55 Billion Dollars in 2010. In 1992, Lebanon’s national debt was around 4382 billion Lebanese pounds (around 2.9 billion dollars). Late Prime Minister Rafiq Hariri took office and since then the debt kept Mushrooming in alarming rate. By 1997, the net public debt of the gross domestic product (GDP) have  increased more than 100%. There are many reasons for such increase, they are complicated and connected. You had the Syrian regime occupying Lebanon and taking cuts from every deal done in the country. You have the development initiated by Late Prime Minister Hariri. You have corruption on every single level, …..

Developing Lebanon, I should say reconstructing downtown Beirut, and the corruption of the Lebanese political system are the one to blame for the $55 Billion Dollars deficit. If we look at what was called “development” of Lebanon, all we see is new fancy building in downtown Beirut with couple of new bridges. Lebanese still get around 4 hours of electricity per day, no water system, no infrastructure, no sewer systems, no recycling plants, ….. nothing. Just few new buildings and bridges. Oh and by the way, the new buildings are owned by a company called Solidere that was formed by Rafiq Hariri himself through a parliament decree  …. oh well this is another story to talk about.

Add to all that the corruption. Or as Lebanese call it “Shatara” (cunning). If you are not “cunning” in Lebanon they call you stupid. This “cunningness” is at its top level in the Lebanese political system. You see politicians arguing on TV all day and behind the scenes they will be wheeling and dealing with each others and use their “shatara” to fill their bank accounts.

To solve our debt problem, Lebanon needs implement several solutions and modifications. The problem resides in the fact that all these modifications require political and administrative reforms that the political class could not want or not afford to operate in the present situation. Why would they change a system that is making them millionaires (some billionaires).

With gas and oil extraction, they found the solution for the debt, they will use the revenues to pay it off. For sure, they will pocket millions of these revenues. They already setup companies in order to suck all the profits to themselves.

So while Israel is setting up its future generation, Lebanon will be setting up its politicians and their families. They will be doing it twice. The first by paying a debt that they accumulated and stole part of it. the second by allowing them to rip the benefits of the revenues to their own companies.

What will the Lebanese say? He doesn’t care as long as the deputy, the minister, the za3im, the leader, …. hires his son for few hundred dollars per month.