Matt Nash

Drill, baby, drill

Parliament will discuss draft laws to allow for the exploration of oil and gas off Lebanon’s coast once again on July 26. Even if MPs reach an agreement, however, the odds are stacked high against drilling – and the future profits it would bring – actually happening anytime soon.

The two competing draft laws under discussion both stem from an ongoing project run by the Norwegian Agency for Development Cooperation (Norad), Mohammad Qabbani, head of parliament’s Public Works and Energy Committee, told NOW Lebanon.

While not discussing the draft laws, Ivar Aarseth, a senior advisor to Norad who has worked in Lebanon, said the project began in 2007 and is scheduled to end in 2011, though it has been extended in the past. The law is an absolute necessity, Aarseth said, before any company would risk exploring, let alone drilling, off Lebanon’s – or any country’s – coast.

Qabbani said the two draft laws are nearly identical, but two major stumbling blocks persist, namely: who will control a state fund to administer future revenues from any oil or gas discovered, and how an oil and gas administration will be created.

Dividing roughly along March 14-March 8 lines, some MPs want the president to control the fund and an oil and gas administration established within the Ministry of Energy and Water. Qabbani said he and his allies in the Lebanon First bloc want the oil and gas administration to be an independent body, and they say the constitution bars the president from holding an executive position, which he would have to as head of the fund.

While talk of an oil and gas law has been ongoing since at least 2007, it made the news again at the beginning of the summer, and votes on it have been repeatedly postponed. The law, however, is necessary for Lebanon to begin exploring for resources – likely natural gas – that more and more evidence suggests are there.

Three earlier studies of the waters off Lebanon suggest there’s either oil or gas, a March study by the US Geological Survey found an estimated 122 trillion cubic feet of recoverable gas in the Levant basin (stretching from Syria south to Gaza), and several of Lebanon’s neighbors are currently pumping gas from the Mediterranean.  

An approved law would outline how Lebanon actually drills for these resources, Qabbani said. This apparently not-so-contentious issue involves bringing together a consortium of three well-known international oil companies so they “supervise themselves” and will be less likely to allow someone “to use the corruption in Lebanon” to mar the exploration and recovery process, he added.

The law would also create a special fund – modeled on the one used by Norway – to at least partially invest and save resource revenues, though the exact percentages of what gets saved, what gets invested in Lebanon and what pays down the country’s enormous debt will be decided later, Qabbani said.

Both Qabbani and Aarseth said that it would take upwards of 10 years, if not more, for Lebanon to begin taking in revenues from any natural resources once companies are selected to begin further surveys, exploration and drilling. Qabbani said that, in line with international practices, the companies would sign agreements that gave them a large portion of the initial revenues to recoup their investment, and the government would take a larger percentage over time.

It does, of course, remain to be seen if companies would risk drilling near such a war-prone country as Lebanon. And, even with the law, there is still one more labyrinth Lebanon has to navigate before easily recovering offshore resources – the overlapping claims on the seafloor in the close-knit Eastern Mediterranean.

The UN Convention on the Law of the Sea, the primary legal document governing rights to underwater resources, says coastal states can lay claim to the seabed up to 200 nautical miles (370 kilometers) offshore.

While the convention established an arbitration court to settle disputes, in general, it calls for states to hammer out maritime borders in treaties, two lawyers based outside Lebanon who are familiar with maritime laws said on condition of anonymity because they are not authorized to speak with the press.

The treaty route has essentially become the international standard for drawing boundaries, the lawyers said, leaving states little recourse (they can file suit with the International Court of Justice, though this is not very common) when they do not speak with their neighbors or when neighbors have not signed the convention (which, in Lebanon’s case, includes Israel, Syria and Turkey).

Lebanon wrote an agreement with Cyprus, Qabbani said, but has not ratified it for fear of angering Turkey, which, Cypriot Ambassador to Lebanon Kyriakos Kouros said in an interview last year, harasses Cypriot ships exploring for resources around the island.

The highest-profile dispute Lebanon has, of course, is with Israel. Early last year a consortium of oil companies, including America’s Noble Energy, found a “giant” field (named Leviathan) that may hold 16 trillion cubic feet of gas, which Noble said it will begin to drill by the end of this year.

Beirut said the gas is partially Lebanese and it will be defended. Israel, through Infrastructure Minister Uzi Landau, shot back more explicitly, saying “We will not hesitate to use our force and strength to protect” the resources.

A map published by Noble shows the company’s licenses from Israel cutting northwest from the coastal border of the two states, seemingly into Lebanese territory.

The English-language website of the Israeli daily Yediot Ahronot reported that Israel, instead of using the coastal border as the UN convention dictates, chose the town of Metula, north of the coastal border approximately parallel to the Lebanese city of Tyre.

The Israelis have also put buoys into the sea, drawing Lebanon’s ire and prompting Beirut to complain to the UN, the Financial Times reported. Qabbani said Lebanon would “unilaterally” submit maps to the UN detailing what it thinks are its maritime boundaries.

However, the lawyers noted that generally when dealing with maritime borders, the UN does little more than urge states to discuss these issues face to face.