Liquid gold in the Levant?
Lebanon has the potential to become an oil and gas producing country, according to recent studies. Mohalhel Fakih reports from Beirut
Lebanon is preparing to launch international bidding and tendering for oil and natural gas exploration, after a British study showed that Lebanon has several promising sites scattered throughout its territorial waters.
"If there are no obstacles, we'll see petroleum or natural gas in five to seven years," Electricity and Water Resources Minister Mohamed Abdel-Hamid Beydoun told Al-Ahram Weekly.
The survey conducted by the British firm Spectrum discovered indicators that "strongly" suggested the presence of oil or natural gas in Lebanese territorial waters. Traces of oil were found in the seabed off the country's coast. The findings were not confined to one region, but rather "more than promising" results were found 20 kilometres south-west of Beirut and in an eight kilometres-square area near the northern coastal region of Batroun.
"The results are better than we thought," Mike Johnson, Spectrum's managing director, said. He told reporters in Beirut that satellite images have confirmed, "Oil is present here." And while Johnson said he did not expect Lebanon to be "another Kuwait or Saudi Arabia", he pointed out that the geological structure revealed by the survey of the Levantine Base, which is located for the most part within Lebanese territorial waters, is unique to the region and similar to that of countries like Angola and Nigeria.
"If this data were taken from Angola or Nigeria, oil companies would be fighting to come and invest... but because this area was never explored for oil before, we have to drill to say there's oil," Johnson said in Beirut.
Minister Beydoun said in an interview with the Weekly that more than six major international companies have purchased the study in the past two weeks. "It's a positive signal," Beydoun said.
Among those showing interest are companies from the Far East. On a recent trip to Lebanon, Malaysian Prime Minister Mahathir Mohamed said businessmen from his country "would like to see the results" of Spectrum's survey to examine the possibility of "conducting some exploration for oil or gas".
Now, however, it is up to the Lebanese government to speed up the process to allow drilling to start. A team of experts at the Water and Electricity Resources Ministry began drafting a law that would pave the way for an international tendering or bidding process so firms could begin exploration in the area.
"If we are not faced with any bureaucratic hurdles, legislation should be ready, and bidding or tendering could be launched in a year," Beydoun said. He expected drilling for oil and gas to begin in three years.
The implications of oil and gas exploration are significant for Lebanon, with the country's annual petroleum import bill currently at more than one billion dollars.
"In seven years, if we have [petroleum] capabilities, the [oil and gas import] bill will decrease and that will have a positive impact on our economy," Beydoun said.
Mounir Bouaziz, Shell Gas's vice-president for the Eastern Mediterranean and Levant region, recently said Lebanon was one of the highest consumers of energy in the Arab world.
Any homegrown oil deposits could drastically cut the import bill and save the state hundreds of millions of dollars. Lebanon has been struggling with a $30-billion public debt. Petroleum products account for more than 18 per cent of Lebanese imports. Beydoun argues that the energy sector in Lebanon could drive growth in the future. He said the exploration for oil and gas, coupled with the construction and rehabilitation of two oil refineries along the coast, and a project to pump natural gas from Syria and Egypt by 2006, would all spur growth.
"The energy sector will sort of create growth, and encourage industrial development," Beydoun said.
The Minister has just inked a $12.9-million contract with a Ukrainian firm, Ukrainian State Corporation, to build a pipeline to pump Syrian natural gas into Lebanon by the end of 2003. Lebanon has been switching over to environmentally friendly natural gas, which analysts believe will save Beirut some $100 million a year. It plans to import natural gas from Egypt, via a proposed pipeline running through Egypt, Jordan, Syria and Lebanon.
Beydoun had declared that drilling for "the black gold" at home over the next few years could put Lebanon on the "map of oil-producing countries". He did not expect a possible war on Iraq to sabotage energy projects in Lebanon.
"We have gone through major turmoil and problems in this region before, and nothing happened," he said. Lebanon augmented its fuel oil reserves for its power stations this month, in preparation for an expected war in the Gulf. The government bought $50-million worth of fuel oil reserves to run the country's electricity for an entire month in the event oil delivery disruptions occur. But Beydoun stressed that Lebanon's location along the Mediterranean will facilitate the country's continued access to suppliers.
