A matter of clarification

Talks oil and gas with energy minister Arthur Nazarian

While Lebanon opened its first offshore oil and gas licensing round in May 2013, international companies have not yet been able to submit bids because cabinet has not approved two necessary decrees (one outlining the tender protocol and model exploration and production sharing agreement, and another delineating offshore blocks up for bid). In April 2014, shortly after Prime Minister Tammam Salam formed his government, cabinet appointed a ministerial committee to study the draft decrees before approving them. The committee finished its work in July and sent the draft decrees back to the Lebanese Petroleum Administration (LPA), an advisory body with regulatory powers which reports to the Ministry of Energy. In a written response to Executive’s questions for this report, the LPA says the updated drafts of the decrees have been submitted to the prime minister “along with a request to put them on the council of ministers’ agenda.” Executive sits down with Minister of Energy and Water Arthur Nazarian to discuss the decrees, state revenues from seismic data sales, transparency and whether or not Israel is stealing Lebanon’s gas.

The government has been receiving revenue from the sale of seismic survey data. How much revenue does the government have from these sales to date?

I don’t think these are the questions you should ask. Governmental officials can ask, no problem. The audit court can ask. But this is not public information. Am I allowed to ask you how much money you have in your bank account?

No, but…

This is the same thing. This is not public information. We cannot say we have this much or we have that much revenue. This is state secrecy. But any government official or the audit court can ask, that’s no problem. Anyway, it’s in an account in the central bank. Of course, it is all transparent.

If you say so. Are there any plans for how to use the money?

Not for the time being, no.

A ministerial committee was formed on April 2, 2014 to study two decrees prepared in early 2013 necessary to move forward with the first licensing round. The committee submitted decrees back to the LPA in July of this year. It met twice, correct?

We met two or three times. But individually, the LPA went to each one of the committee members and met with them or their advisors. If [members or their advisors] had some questions or clarifications, the LPA answered. It was all discussed.

Can you tell us what specific changes to the decrees resulted from the committee’s comments and questions?

There were too many comments from variuos ministers to give a specific answer. The Ministry of Finance had financial questions. The Ministry of Environment had some environmental concerns. Each ministry had comments. Some of them were incorporated, some of them were not because they contradicted the LPA’s professionally drafted recommendations.

So, was this more of a learning exercise for the various ministers or did they have numerous relevant comments which resulted in substantial changes to the decrees?

Not every minister is an expert in the oil and gas industry, so it was a learning experience. But some of them had their own advisors who knew about the subject, so there were some informed questions or clarifications. Some changes to the decrees were made, but not, of course, substantial changes. The LPA drafted the decrees, and they are knowledgeable on the subject so the decrees were already well drafted. The LPA also had assistance drafting the decrees from foreign experts, the Norwegians for example.

There is an article in the pre-qualification decree that allows a non-qualified company to partner with a qualified company to pre-qualify as a joint venture (see story page 30). MP Joseph Maalouf calls this a loophole that invites the possibility of corruption and says it must be closed,