Following the government’s decision to award oil and gas offshore contracts to the Total-Eni-Novatek consortium, a hazardous rush to adopt a set of new legislation has ensued, which will prove decisive for Lebanon, not only in the coming years, but for future generations. Kulluna Irada wrote an op-ed on this topic urging for a proper transparent process to review the proposed onshore bill and alleviate major concerns over land-grabbing and environmental threats.
On the sidelines of Kulluna Irada’s work with the Lebanese Oil and Gas Initiative (LOGI) around the establishment of a sovereign wealth fund (SWF) for Lebanon’s potential resources from this sector, and following the recommendations written by international expert Andrew Bauer on this subject, Kulluna Irada and LOGI produced a short Q&A video presenting all the information related to SWFs.
Following the government’s decision to award oil and gas offshore contracts to the Total-Eni-Novatek consortium, a hazardous rush to adopt a set of new legislation ensued. The four laws, hastily written, could have determined the establishment of the Sovereign Wealth Fund, the National Oil Company, and the Directorate for Petroleum Assets, and finally a law on the onshore petroleum regulation. Kulluna Irada fully supported The Lebanese Oil and Gas Initiative’s (LOGI) claim that there was absolutely no rush to pass these laws and launched, in 2018, a campaign with a short satirical video to raise awareness about the governance of the oil and gas sector in Lebanon and to demand a national strategy before setting the laws. The campaign went viral, accumulating more than one million views on social media platforms, and was key to stop the ratification of the laws, which still haven’t been adopted.
In 2018, A proposed draft of the Lebanese Sovereign Wealth Fund (SWF) bill was submitted to the Lebanese parliament joint committees for revision. Kulluna Irada and the Lebanese Oil and Gas Initiative (LOGI) prepared a paper detailing their position in this regard and urging the Lebanese parliament not to review the current draft law for the establishment of the SWF before developing a consensual over-all strategy for the oil and gas sector as well as a fiscal strategy and fiscal rule.
As Lebanon races to enter the new oil producers club, decision-makers display a dangerous tendency to put all hopes on this uncertain sector and label it as the economic savior. Kulluna Irada’s Director of Public Policies, Sibylle Rizk, and The Lebanese Oil and Gas Initiative’s (LOGI) Executive Director, Diana Kaissy, wrote an op-ed in Executive Magazine in this regard.
The Government of Lebanon is unlikely to see any hydrocarbon revenues over the next decade. The most optimistic projections are that oil and gas revenues would start to be collected at least seven to eight years from now and will not exceed two percent of GDP even at peak production. These projections are conditional on a commercial discovery being made this year and there being no delays in field development, both of which are improbable. Additionally, Lebanon’s latest energy plan calls for a large proportion of any commercial gas discovery to be earmarked for domestic energy production. In short, revenue estimates remain highly speculative and could be negligible. Kulluna Irada and The Lebanese Oil and Gas Initiative worked with natural resources expert, Andrew Bauer, to produce a report on the issue as well as on the potential creation of a special fund to allocate hydrocarbon revenues to underfunded expenditure items.