"Front Page" Organizes Talk on Oil & Gas to Map Out the Post-Tender Period

Front Page Communication pursued its efforts to highlight the latest developments in the oil and gas sector in Lebanon, with the organization on 7 December 2017 of a talk titled "The Lebanon Oil & Gas Exploration & Production (E&P) Tender, and the Vision for the Period After", at the Beirut Arab University (BAU), Debbiyeh campus, cordially hosted on the premises by BAU President, Prof. Dr. Amr Galal El Adawi.

The talk was attended by Prof. Dr. Adel Ahmed El Kordi, Dean of the Faculty of Engineering at BAU, MP and former Minister H.E. Mr. Yassine Jaber, Mr. Jean Riachi, Chairman and CEO of FFA Private Bank, Dr. Nasser Hoteit, Board Member of the Lebanese Petroleum Administration (LPA), Dr. Rami Harkous, BAU ChapterCoordinator at the Society of Petroleum Engineers (SPE), Mr. Yousef Arbid, President of the SPE-BAU Student Chapter,in addition to a large number of students, professors and interested parties.

The discussion session, moderated by Harkous, revolved around the following questions and points: "Is Lebanon's oil wealthreally considerable?The necessity to bear in mind that the current oil situation is not as it was in 2010-2012, and that the current internationalinterest in Lebanon's wealth is not equivalent to what it was in the past, in addition to the necessity of not ignoring what is happening around us in terms of discoveries in this field."

M. Youssef Arbid

Arbid opened the talk with a speech in which he emphasized the keenness of SPE-BAU to organize events aiming at raising awareness about oil and gas, pointing out that this educational institution is the only one that includes a chapter of the Society in Lebanon; he stressed that the latter opens the door for its members to participate in international sector-related competitions; he also encouraged petroleum engineering students in other universities to establish chapters of the Society in their universities, hoping they would soon be involved in the sector in preparation for a better Lebanon.

Prof. Dr. Adel Ahmed El Kordi

For his part, El Kordiconsidered that the talk was "of great scientific andinformationalvalue". He pointed out that students of Petroleum Engineering at BAU had ranked first at the Abu Dhabi International Petroleum Conference (ADIPEC) University Program, a global platform for exchanging experiences, in which students from 16 international universities from 8 different countrieshad participated with competing projects. He thenwent overthe historical course of the sector since 1926 when legislation was passed authorizing the exploration, exploitation and extraction of oil and minerals, even before studies had been made to determine the existence of any oil wealth in Lebanon.

In 2002, the government contracted "Spectrum" which conducted a three-dimensional research covering the entire Lebanese coastline and indicated in its report the potential for a substantial presence of oil and gas. The Norwegian company PGS subsequently completed the research,and work continued until 2006-2007. At this point, El Kurdiindicated that "estimates showed that Lebanon's consumption of oil derivatives reached 6.2 million tons in 2013, equivalent to some 5 billion dollars, knowing that this figure is rising annually at a rate between 4% and 5%."

While explaining that Lebanon lacks refining technologies, especially after the Tripoli and Zahrani refineries were closed down, he considered that the country is entering the oil and gas era after the closure of the licensing round, awarding the tender toa consortium of three international companies, namely Italy's ENI, France's Total and Russia's Novatek.

S.E.M Yassine Jaber

Similarily, Jaber considered that Lebanon "was very close to joining the group of oil producing countries" after the closure of the licensing round on October 12 and the choice of the above mentioned companies for oil and gas exploration on two proposed zones, namely Block 4, located opposite Batroun, and Block 9, in the far South.

He pointed out that theLPA had completed its report regarding the bids of the said companies, while the Minister of Energy and Water, Mr. Cesar Abi Khalil, along with the members of the Administration,had led the technical discussions with these companies during the past few days, and that he was "about to prepare a final report about this bid which will be sent to the Prime Minister; the latter is expected to decide about it so that the oil file moves practicallyforward towards implementation, following a significant slowdown imposed by political circumstancesover the past years."

On the other hand, Jaber stated that "the time had come to keep track of the post-discovery, exploration and production period so that proceeds would not be subjected to manipulation and greed, with the wealth ending up in the pockets of corrupt parties rather than being invested to raise Lebanon's economic level." He indicated that the Liberation and Development Bloc had submitted three bills to Parliament, whereas the Chairman of the Parliament's Public Works and Energy Committee, MP Mohammad Qabbani, had submitted another one with the aim of creating the legislative system for the nextperiod.

Jaber summarized these proposals, currently on the agenda of the joint parliamentary committees, by a billproposed for the establishment of the Lebanese Sovereign Wealth Fund, a bill aimed at establishing a General Directorate for Petroleum Resources and Assets in the Ministry of Finance, a bill for the establishment of the Lebanese National Oil Company, and lastly, a bill regarding the Onshore Petroleum Resources.

While he emphasized that these proposals may be subject to amendment "because we are reaching out to different opinions, experts and specialists", he indicated that there are other things required for the next period, such as the establishment of departmentsoffering Oil& Gasprograms at technical colleges, the enhancement of the judiciary's work and transparency, and the improvement of infrastructure.

M. Jean Riachi

For his part, Riachi hoped that the establishment of the sovereign wealth fund wouldensure the salvation of Lebanon. He explained that this fund receives money from specific sources, manages it and distributes it according to the applicable laws, noting that these streams may derivefrom oil revenuesor any other unrelated sources.

He pointed to the existence of two types of sovereign funds, the first being the stabilization fund, which covers for instancedeficits and stagnation periods, the other bearing the name of "long term investments of accumulated public savings" and managing the money for future generations. The function of these funds is, according to him, to ensure stability of the budget, noting that the largest fund in the world exists in Norway, followed by Abu Dhabi.

Riachithen went over the management of these funds which requires what is known as governance and focus on the importance of knowledge of the Fund's legal nature and its relationship to the State; he stressed that their management could be carried out in two ways, the first being the Manager Model in which a state-related natural person owns the Fund but mandatesmanagement to another body, and the second being the Investment Company Model, in which a company or body is created to own and manage the assets.

Finally, Riachi gave the example of the Norwegian Fund, which is considered worldwide as a "complete success", at a time when a newspaper article recently stated that its management was actually poor; he also mentioned the example of the Malaysian Fund, which had lost billions of dollars due to fraud and to serving the interests of powerful people.

Dr. Nasser Hoteit

The last word was for Hoteit, who considered "it was time to sign the agreement with the companies that won the bid"; the exploration plan should then be sent about two months later,with drilling expected to start between March and September 2019 and results expectedto be seen starting 2021.

While he considered the local market as the most important market, he pointed out that the profits offered by companies to Lebanon are not only "serious and encouraging", but also better than those in Cyprus, Egypt and Israel because "the market is there and ready".

He further stated that "if we managed to reform the Public Administration's work, we could save $ 3 billion annually", and stressed the importance of focusing on building a sustainable economy through the energy sector because unemployment rates in Tariq el Jdide, Hay al-Sellom,Hayal-Ghadeer, Akkar and Tripoli, for instance, havereached around 50% among youth groups; he also emphasized the importance of focusing on "maximizing production" rather than merely seeking to sell; as it provides greater returns to the sovereign fund, and createsspecializationsthat encourage the companies engaged in exploration to recruit young people.

The student winners of the first prize at the Abu Dhabi Conferencewere then honored by the Faculty of Engineering Dean, Prof. Dr. El Kordi: MohamadKhoder, Hussein Chouekani, Ahmad Meanna, Slayman Al-Abdallah, in addition to their tutor, Dr. Rami Harkouss.