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ENERGY TECH
Lebanon's prospects of gas bonanza slip further away
by Staff Writers
Beirut, Lebanon (UPI) Jan 9, 2013


With Lebanon's long-awaited auction for exploration licenses in the gas-rich eastern Mediterranean postponed because there's no functioning government, time may be running out for the tiny country to grasp what's likely to be its last chance for economic salvation as it slips once more toward sectarian savagery.

Energy Minister Gebran Bassil was supposed to hold the auction Friday, but on Wednesday he postponed it -- for the third time -- to April 10 after political rivalries blocked the caretaker government of Prime Minister Najib Mikati from convening to endorse two decrees authorizing the bidding for exploration blocks in Lebanon's maritime exclusive economic zone.

"This is the last time bidding will be delayed," he declared, although it was far from clear why that should be so since the political paralysis gripping the nation is not expected to end anytime soon.

Bassil insisted the auction will take place on the appointed day, even if the cabinet has not by then approved the two decrees that will demarcate which of Lebanon's 12 exploration blocks will be drilled first and establish production-sharing contracts.

He gave no clue how this might be legally achieved, but political rivalries between Lebanon's main Muslim and Christian sects that have repeatedly blocked approval of the auction, originally scheduled for May 2, 2013, are intensifying rather than diminishing.

This is largely fueled by the sectarian bloodbath taking place in neighboring Syria, and the confrontation between Saudi Arabia, champion of Lebanon's Sunnis, and Iran, which supports the powerful Shiite Hezbollah movement which brought down the Beirut government in March 2013.

Mikati's designated successor as prime minister, newspaper publisher Tamam Salman, has not been able to form a new government. That has left the telecoms billionaire in charge of a caretaker administration with virtually no executive powers.

The caretakers' bewildering failure -- given the energy riches at stake -- to push through the vital decrees stems in part from political factions opposed to Bassil, a Maronite Catholic who many believe only got the energy portfolio because he's the son-in-law of Michel Aoun, the former army commander and wartime acting president who leads the Maronite Free Patriotic Party, Lebanon's largest Christian party.

The FPM is allied with Hezbollah in a cross-sectarian political partnership that would have been unthinkable a decade ago.

This exists primarily because in Lebanon the president must be a member of the Maronite sect, the country's largest Christian group, and Aoun badly wants to be president. If he succeeds, Hezbollah will be pulling the strings of his administration, a political first.

Elections are scheduled for May -- a month after Bassil says the gas program will start rolling.

However, by blocking the gas exploration, even though it would rescue Lebanon from a $60 billion national debt that's growing alarmingly as the tourism and banking-based economy flounders, Aoun's rivals could prevent him from securing a major political coup, a potential election-winner.

Bassil says seismic surveys of 45 percent of Lebanon's exclusive economic zone show it has at least 96 trillion cubic feet of gas -- more than three times the volume so far discovered off southern neighbor Israel -- and 850 million barrels of oil.

The U.S. Geological Survey reported in 2010 that the Levantine Basin, which covers Lebanon, Syria, Israel, Cyprus and the Gaza Strip, contains 123 tcf of recoverable gas plus 1.7 billion barrels of oil.

Last April, Beirut prequalified 46 companies for exploration drilling, 12 as operators and 34 as non-operators. And that's about as far as the process got.

The operating companies include Exxon Mobil of the United States, Total of France, Royal Dutch Shell, Statoil of Norway, Repsol of Spain, Eni SpA of Italy and Brazil's Petroleo Brasileiro SA.

Some are becoming impatient with the delays while their concerns about the deteriorating security situation, with a series of deadly suicide and car bombings around Beirut in recent weeks, are deepening.

Meantime, Beirut commentator Matt Nash wryly observed although everyone's anticipating huge energy riches, and a rejuvenated economy they should take note of what happened to Brazil.

It "thought it was swimming in liquid gold only to be woefully disappointed," he wrote. "I don't mean to say the two cases are exactly the same, but Lebanese politicians -- and the public in general -- should take heed."

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