Anti-cor­rup­tion law needed for oil and gas

Bill could be pushed through par­lia­ment as emer­gency leg­is­la­tion

Executive Magazine - - Economics & Policy - By Jeremy Ar­bid

Al­most a year has passed since

EX­EC­U­TIVE first re­ported on a new draft law aim­ing to stamp out cor­rup­tion at var­i­ous points along the life cy­cle of an oil and gas project. It is an un­der­stand­able de­lay given that par­lia­ment has only rat­i­fied emer­gency laws and, af­ter an over three year wait, cab­i­net has yet to pass two de­crees needed to move Le­banon’s first off­shore li­cens­ing round for­ward.

An early July meet­ing be­tween the coun­try’s Speaker of Par­lia­ment Nabih Berri and leader of the Free Pa­tri­otic Move­ment Ge­bran Bas­sil, whose party has dom­i­nated the early stages of de­vel­op­ing the oil and gas file, raised con­cerns over a pos­si­ble ‘back-room deal’ [see cover story page 14] over the sec­tor’s fu­ture and, pos­si­bly, the fate of po­ten­tial con­tracts and hoped-for rev­enues. If the need for strong anti-cor­rup­tion rules for this sec­tor was not ap­par­ent be­fore, it is now.

That there is sus­pi­cion over the so-called deal be­tween Berri and Bas­sil hardly comes as a sur­prise. This is an in­dus­try that has proven mostly opaque in much of the world and Le­banon is a coun­try that, ac­cord­ing to a rank­ing by global watch­dog Trans­parency In­ter­na­tional, is deemed mostly cor­rupt. The an­ti­cor­rup­tion law, pro­posed by MP Joseph Maalouf in 2015, prom­ises an in­jec­tion of trans­parency on the award­ing of bids and sub­con­tract­ing, as well as rev­enues flow­ing to the govern­ment’s cof­fers.

In an in­ter­view dis­cussing up­dates to the draft law, Maalouf tells Ex­ec­u­tive he will have a for­mal draft pre­pared by the end of July to present to the Par­lia­men­tary Com­mit­tee on Pub­lic Works, En­ergy and Water for re­view and, he hopes, ap­proval. Upon com­mit­tee ap­proval the pro­posed leg­is­la­tion would be sent to other com­mit­tees and joint com­mit­tees for dis­cus­sion. Speaker Berri, Maalouf told Ex­ec­u­tive last year and again now, is very sup­port­ive of the anti-cor­rup­tion law. He hopes that high pri­or­ity sta­tus might be enough to cham­pion the bill as emer­gency leg­is­la­tion.

E

In the past, the in­di­ca­tion was that Speaker Berri wanted the off­shore blocks to be smaller and that he wanted to of­fer all of them at once for bid­ding. Prior to this in­ter­view, we were told that the Speaker has changed his mind and agreed to the blocks as the size that they cur­rently are and agreed to what they call grad­ual li­cens­ing. What’s the dis­tinc­tion?

There’s a dif­fer­ence be­tween grad­ual li­cens­ing and of­fer­ing the blocks. You can of­fer all ten blocks and then you li­cense them grad­u­ally based on what pre­qual­i­fied com­pa­nies come back with and based on the terms around each block, and on the var­i­ous 3D scans that were done. So you would de­ter­mine based on which com­pany is in­ter­ested in which block to de­velop cer­tain pri­or­i­ti­za­tion cri­te­ria and you would li­cense the blocks ac­cord­ingly.

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