Gas and oil won’t make Lebanon happier – Daily Star

October 11, 2013 12:16 AM
By Imad Atalla

A responsible and happy citizenry forms the fundamental underpinning of a happy nation. How does gas and oil figure in the happiness equation?

Gas and oil are the latest drama in Lebanon, Israel and Cyprus. While all three states, for different reasons, are failed products of imperial Europe, Lebanon – a gravely distorted democracy with regional ailments – may be the one to gain the least and lose the most from gas and oil discoveries offshore.

Still buried under water, gas and oil are yet scarcely resources that pay. Instead, they have already fueled monkey-shine politics in the tradition of all Lebanese public affairs. Hence their discovery has chiefly provoked nepotism among the usual oligarchs-cum-politicians who are experts in organized looting.

Any honest direction or genuine effort to extract the damned natural resource is frustrated when the good, the bad and the ugly must share decision-making at the highest levels of the unaccountable executive, legislative and judicial branches and departments; but dividing up the national pie is at stake. Observers in this pseudo-country are mesmerized, to say the least, by the ability of the Lebanese political establishment to achieve new records of abuse.

In this miserable condition of political leadership, it is no surprise that the ultimate power of governance is wasted upon creating a state of perpetual confusion, rather than resolving the chief issue of concern to citizens: the national and individual pursuit of happiness.

While eternal happiness is the desire of the next Al-Qaeda-inspired, oil-financed suicide bomber, a majority of citizens do not care to meet him in heaven. Nor will the Lebanese reach nirvana with the discovery of oil destined to finance the already bloated pockets of the stalwarts of March 8 and March 14 across the sectarian gamut.

No, the chief concern of the citizen is happiness and economic well-being, while the gas and oil discovery might well lead to new-old oil authoritarianism, a derivative of the kind mastered by Gulf states since the 1920s. A gas- and oil-producing Lebanon, like Saudi Arabia, Iraq, Qatar and Nigeria, is not exactly energy-rich Norway. Without transparency and good governance it is a disaster in the making. Similarly, gas and oil minus real citizen participation adds up to the potential of making people’s lives and future worse.

Consider this: Lebanon’s public debt has been swallowing national income since the 1990s, and private banks continue to gain it all. Enter the discovery of oil, which will eventually see the light of production. Gas and oil might very likely create runaway government spending, and more looting. A spending binge fueled by gas and oil will further increase the pressure on the debt and its servicing. Even in the presence of gas and oil, private banks shall necessarily continue to make enormous profits; ditto for an even bigger real-estate bubble. You will not see investments in human capital, science, technology creation, or research and development.

Arab Gulf states are experts on vacant, mega-real estate projects, binge spending, and dictatorial brilliance. In their current efforts to subdue Lebanon’s political factions and apply all sorts of financial and economic sticks and carrots, they may force a capital flight out of the Lebanese economy, thus exacerbating the oil curse.

In such a scenario, domestic gas and oil might recreate and reinforce the Arab model of governance and economic policy in Lebanon: that is, reliance on gas and oil without real economic growth and without sustained increments of the national happiness index.

The notion of happy citizenry does not mean turning society into a mob of sentimentalists. The peoples of this tortured and tired region need a dose of practical happiness: social and economic. A happy nation yearns highest for responsibility, good governance and communal living, just like a successful business depends on skilled and happy staff to please its customers. From a top-bottom perspective, Arab government patriarchs, who have aligned their self-interests with those of global powers, are a yawn behind the Arab citizen’s hand, ruining the taste for simple, wholesome, happy living.

But the equation works well from the bottom up. The character of happy citizens could inform the national character. If the private citizen and the public servant were as competent at delivering good services as the average politician is at robbing the public, then the market and the nation together would be at a much higher level on the happiness scale. Unfortunately, in Lebanon and across the region, national happiness seems to be an ever elusive promise. Gas and oil may be yet another retardant on the path to happiness.

Imad Atalla is managing partner at He wrote this commentary for THE DAILY STAR.

A version of this article appeared in the print edition of The Daily Star on October 11, 2013, on page 7.

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Feud over gas licensing widens as groups quarrel over mechanism – Daily Star

October 15, 2013 12:28 AM
The Daily Star

BEIRUT: Lebanon’s efforts to tap its offshore gas and oil reserves received another setback over the weekend as the two main political groups that make up the caretaker Cabinet quarreled openly over the mechanism for gas tenders.

Caretaker Health Minister Ali Hasan Khalil, a member of the Amal Movement’s political bureau, blasted caretaker Energy and Water Minister Gebran Bassil for refusing to put up for auction all 10 of Lebanon’s gas blocks off the coast.

Khalil also suggested that Bassil may have bowed to external pressure when he designated only five of the 10 blocks.

He further accused the energy minister of favoritism for starting an onshore gas survey in his hometown of Batroun, rather than another part of the country.

Khalil noted that Amal was not demanding that all 10 blocks be fully operation in one shot.

“We are only saying that we let international oil firms select some of the 10 blocks. Let us open all of the blocks and let them [companies] choose some of them,” the minister explained.

This view was also backed by Britain-based survey firm Spectrum, which said that opening all 10 blocks for bidding was more advisable.

Bassil, however, insisted that the Petroleum Administration had already designated the five blocks that would be put up for auction, adding that most countries do not auction off all of their blocks in the first round of tenders.

His press office said he would hold a news conference Friday to explain in a scientific manner why it was advisable to auction only five of the 10 blocks.

Regarding the location of the selected fields, Khalil also questioned why Bassil refused to open gas blocks near the Israeli maritime border for auction, hinting that the minister may have heeded the advice of some foreign powers.

Lebanon and Israel are at loggerheads over an 850 kilometer area that contains a rich gas field in the Exclusive Economic Zone.

Oil firms have made it clear they are not willing to explore in the disputed territorial waters, according to Spectrum.

Lebanon has sought the help of the U.S. and the U.N. to demarcate the disputed zone in order to determine the where the maritime border falls.

Diplomatic sources have told The Daily Star that the U.S. is mediating between Lebanon and Israel in an attempt to reach a solution over the disputed territory.

The discord between Khalil and Bassil has complicated efforts to hold an urgent meeting of the caretaker Cabinet to pass two decrees still needed to proceed with exploration and set a model for revenue sharing.

Bassil has postponed the auction from Dec. 10, 2013, to Jan. 10, 2014, to give officials ample time to pass the two decrees.

A version of this article appeared in the print edition of The Daily Star on October 15, 2013, on page 5.

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5 facts about Israel’s energy sector – Jerusalem Post

09/25/2013 01:02

In 2013, the gas is expected to add an entire percentage point to economic growth.

The turmoil in Egypt, which had for years supplied Israel with natural gas, demonstrates the importance increased energy independence plays for moderating the waves of geopolitical uncertainty in the region. It would give Israeli industry a reliable, cheap fuel that would bring down production costs, giving the country a competitive edge.

Bank Hapoalim’s Mani Cohen offers The Jerusalem Post a primer on Israel’s natural gas find.

1. Gas has been long coming

Gas developments in Israel did not happen overnight.

The gas development began in 1999-2000, with the discovery of the Noa and Mari B reserves off the coast of Ashkelon. Mari B has been supplying gas to the Israel Electric Corporation for the past decade. In 2009, the Tamar reserve was discovered off the coast of Haifa, containing about 238

(billion cubic meters). The following year, the Leviathan reserve, with 535 was discovered.

2. There are smaller reserves you’ve never heard of

Aside from the big fish in the sea, a slew of smaller gas reserves have been discovered.

Among them: Dalit, Tanin (“crocodile”), Dolphin, Carish (“shark”) and Samson.

3. There is plenty to go around

Current estimates put the total gas reserves at 900 But Israel looks to only need an estimated 500 in the coming years.

That leaves plenty for export.

4. Forty percent is heading abroad – for now

In June, the government approved a 40% (360 export limit for the gas. However, strong opposition still exists on how much should be kept for local usage, and the decision is headed to the high court next month. That could change the outlook for how the gas would be divvied up.

5. Developing gas takes a lot of cooperation

A slew of companies have partnered to tap Israel’s natural- gas reserves. In addition to Noble, the primary developer, the local companies partnered in the Tamar and Leviathan fields are Avner, Delek Drilling and Ratio Oil.

This article was produced in conjunction with Bank Hapoalim.