A mat­ter of clar­i­fi­ca­tion

Talks oil and gas with energy min­is­ter Arthur Nazar­ian

Executive Magazine - - Prospectivity - By Matt Nash

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,

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