By Patrick Galey
The Daily Star

BEIRUT: Lebanon is gearing up for a long-term oil and gas production program although the looming diplomatic crisis with Israel over each country’s share of undersea fossil fuels threatens full-scale conflict, a collection of diplomats and academics were told Thursday.

Experts on the issue voiced varying degrees of optimism and trepidation, following the government’s decision this week to commence drilling.

“Oil and gas are an exceptional opportunity for the prosperity of Lebanon, but it could also be a curse in terms of squandering and corruption,” Sami Atallah, director of the Lebanese Center for Policy Studies, told a roundtable debate in Downtown Beirut.

“We have concerns of corruption lingering. The Lebanese government should know the real cost [of drilling for fossil fuels], not the cost provided by [exploration] companies,” he added.

Israel has jumped the gun on Lebanon in terms of extracting deep sea oil, contained within two major fields spanning both countries’ maritime territory in the eastern Mediterranean. Lebanon’s Exclusive Economic Zone contains thousands of square kilometers of the Tamar and Leviathan gas fields, and Lebanon has filed a complaint to the United Nations over what it sees as Israeli attempts to unlawfully extract Lebanese natural resources.

Walid Khadduri, adviser of the Middle East Economic Survey, said Israel could be ready to begin oil production as early as 2013. Lebanon, by comparison, has still not selected drilling sites or decided on which companies are going to provide the necessary expertise.

Khadduri added that the ongoing dispute over EEZs “will lead to various conflicts.”

The main issue Lebanon and Israel’s territorial claims lies with the lack of a mutual sea border. In the case of border disputes, the U.N. can recommend a “unitization agreement” between two quarreling states. The nature of the Israeli-Lebanon conflict renders such an agreement isn’t feasible.

Ibrahim Saif, senior associate at the Carnegie Middle East Center, said that negotiations over the disputed slither of sea would be “tough. The states in this issue are not talking to each other.”

Khadduri added that “international authorities are needed to step in here.” The U.N., according to diplomatic sources, would be willing to demarcate a maritime border in a bid to speed up both countries’ production capabilities.

Lebanon’s first draft law for petroleum exploration and production was drafted in 2005, although affirmative action in this regard has been stymied by successive administrative changes and political infighting.

Ali Berro, a lawyer of Energy Law and Policy, worked on the initial petroleum legislation and was upbeat Thursday about Lebanon’s chances of harnessing the potentially lucrative worth of subsurface oil and gas, saying that, if managed correctly, its share of fossil fuels could last 30 years.

“Oil is a blessing and a curse at the same time. It should be viewed as an asset, not a source of revenue,” he said.

He added that the state had set a 10-year deadline for oil exploration, placing it almost a decade behind Israel, and that revenue for the country would be generated, based on the Petroleum Law, through royalties and a percentage of export profit.

A version of this article appeared in the print edition of The Daily Star on October 21, 2011, on page 2.

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