En­vi­ron­men­tal im­pact

An up­date to oil & gas en­vi­ron­men­tal pol­icy

Executive Magazine - - Contents -

Five years ago, Le­banon was ready to in­vite com­pa­nies to ex­plore for oil and gas off­shore. A law or­ga­niz­ing off­shore ex­plo­ration had been passed, an en­vi­ron­men­tal study—known as a Strate­gic En­vi­ron­men­tal As­sess­ment (SEA)—to study and mit­i­gate the ef­fects of ex­plo­ration on the en­vi­ron­ment had been pre­pared, a had been reg­u­la­tor ap­pointed, and the bid round an­nounced. Then politics got in the way. The gov­ern­ment could not agree on is­su­ing needed de­crees to move for­ward, and the li­cens­ing round was, ef­fec­tively, put on ice.

Around this time last Jan­uary, the bid­ding round was awo­ken from its cryo­genic slum­ber. The needed de­crees were is­sued and a roadmap to ac­cept­ing bids laid out. By De­cem­ber 2017, the gov­ern­ment awarded two sep­a­rate ex­plo­ration li­censes, for Block 4 and Block 9, to a con­sor­tium of com­pa­nies made up of France’s To­tal, Italy’s Eni, and Rus­sia’s No­vatek. At the end of Jan­uary, con­tracts were signed.

EN­VI­RON­MEN­TAL CON­CERNS SET OIL AND GAS BACK

But dur­ing the li­cens­ing round’s four-year hi­ber­na­tion, the fac­tors af­fect­ing oil and gas ex­plo­ration changed. New ex­ploratory data be­came avail­able, and the Min­istry of En­vi­ron­ment is­sued new rules re­quir­ing and stan­dard­iz­ing SEAs.

In May 2017, an anal­y­sis of the SEA found that it con­tained too many prob­lems to be an ef­fec­tive plan­ning tool. The re­port, pub­lished by the Le­banese Oil and Gas Ini­tia­tive (LOGI), urged the gov­ern­ment to over­haul the SEA, and to do so in par­al­lel with the li­cens­ing round. Its au­thor, en­vi­ron­men­tal con­sul­tant Kle­men Str­mšnik, sum­ma­rized the re­port’s find­ings in a Jan­uary email to Ex­ec­u­tive: “The SEA was not fully im­ple­mented and was based on a lack of data. Stake­holder in­volve­ment was limited, and the SEA re­port was not pre­sented to the pub­lic through pub­lic con­sul­ta­tions. Ad­di­tion­ally, na­tional leg­is­la­tion on SEAs was sub­stan­tially changed, and the cur­rent SEA re­port sim­ply does not sat­isfy the stan­dards set by new en­vi­ron­men­tal leg­is­la­tion. [There­fore], it does not pro­vide all needed an­swers and can­not rep­re­sent a sound de­ci­sion-mak­ing tool.” (Full dis­clo­sure: The au­thor of this ar­ti­cle is a co-founder of LOGI and sits on its board of di­rec­tors.)

Given Le­banon’s track record on other na­tional en­vi­ron­men­tal prob­lems, such as waste man­age­ment, wa­ter pol­lu­tion, and the de­struc­tion of wildlife habi­tats, it is easy to doubt the state’s ca­pa­bil­i­ties to reg­u­late and en­force en­vi­ron­men­tal mea­sures on large multi­na­tional oil and gas com­pa­nies. And it is worth re­mem­ber­ing that in­ad­e­quate reg­u­la­tion can have huge fi­nan­cial costs for pe­tro­leum com­pa­nies, and cat­a­strophic con­se­quences for ecosys­tems. BP, which was re­spon­si­ble for the Deep­wa­ter Hori­zon spill in the Gulf of Mex­ico in 2010, has had to pay a to­tal of $67 bil­lion for the spill, the Fi­nan­cial Times re­ported in Jan­uary. Ac­cord­ing to the Na­tional Ocean Ser­vice, a US gov­ern­ment agency, the Deep­wa­ter Hori­zon dis­as­ter killed 11 work­ers and spilled 134 mil­lion bar­rels of oil into the Gulf over nearly three months, killing thou­sands of marine mam­mals and sea tur­tles. LOGI’s SEA cri­tique painted a por­trait of a reg­u­la­tor un­con­cerned with en­vi­ron­men­tal pro­tec­tion, and its rec­om­men­da­tion was clear: Plug the data gaps, ad­dress new en­vi­ron­men­tal rules, im­ple­ment rec­om­men­da­tions found in the orig­i­nal SEA, and do more to get the pub­lic’s feed­back.

Assem Abou Ibrahim, head of the Le­banese Pe­tro­leum Ad­min­is­tra­tion (LPA)’s Qual­ity, Health, Safety, and En­vi­ron­ment De­part­ment, told Ex­ec­u­tive that some rec­om­men­da­tions have al­ready been ad­dressed: In 2013, the gov­ern­ment is­sued de­crees as part of the Pe­tro­leum Ac­tiv­i­ties Reg­u­la­tions, defin­ing the SEA’s scope in line with the new en­vi­ron­men­tal rules, and, in 2016, the LPA pub­lished a Na­tional Oil Spill Con­tin­gency Plan—a guide­line to pre­vent and re­spond to oil spills.

In De­cem­ber, Ex­ec­u­tive in­cor­rectly re­ported that the gov­ern­ment would be com­mis­sion­ing a new SEA from scratch and that such a con­tract would be di­rectly awarded. This is not the case. Some sec­tions of the SEA will be up­dated and the work car­ried out by the LPA with sup­port from the Euro­pean Union. “Based on our as­sess­ment of all these de­vel­op­ments and their ex­pected im­pli­ca­tions on the SEA study, the Min­istry of En­vi­ron­ment agreed with the LPA’s eval­u­a­tion for not mod­i­fy­ing the scope of the ex­ist­ing SEA but rather to im­ple­ment some up­dates to sec­tions af­fected with the cur­rent in­for­ma­tion avail­abil­ity and to in­te­grate the var­i­ous man­age­ment and plan­ning ini­tia­tives into a com­pre­hen­sive plan,” says Abou Ibrahim, “The SEA will as well be an op­por­tu­nity to fur­ther en­gage with af­fected stake­hold­ers. We are cur­rently as­sess­ing the pos­si­bil­ity for ini­ti­at­ing the SEA up­date work through a tech­ni­cal as­sis­tance project im­ple­mented at the LPA and funded by the EU.” He added that the SEA up­date should take around four months to fin­ish, with an ex­pected com­ple­tion date to­ward the end of Q2 2018, ahead of ex­ploratory drilling be­gin­ning in 2019.

JEREMY AR­BID is the co-founder of the Le­banese Oil and Gas Ini­tia­tive (LOGI) and a mem­ber of its board of di­rec­tors , in ad­di­tion to Eco­nom­ics and Pol­icy Ed­i­tor at Ex­ec­u­tive Mag­a­zine.

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