ENERGY INTERNATIONAL RISK ASSESSMENT (EIRA)
AN INDEPENDENT MONTHLY REVIEW
February 1
VOLUME 2
ISSUE 2
 
Lebanon Dreams Of Energy Boom Amid Political Turmoil

The bomb attack carried out on January 21, 2014 by the Al Nusra Front in Lebanon, which is next of kin of the same name Al Qaida-linked group in neighbouring Syria, was targeting the Shiites. It elevated the hostilities to new heights and perpetuated the cycle of political violence. No matter how sinister it may sound, this terrorist act was hardly a surprise for Lebanon which is historically torn apart by sectarian enmity. What came as an unexpected move was the sudden statement just a couple of days later by former premier Sa’ad Hariri, exiled in France since 2011. Hariri announced he was ready (and eager?) to form a new government with Hezbollah to pull out of a 10-months stalemate after the resignation of Prime Minister Najeeb Mikati in March last year.

The heresy and at the same time the statesmanship maturity of the initiative by the prominent Sunni politician, so much apparent to his brothers in faith, is revealed in at least three facts not to be overlooked in the appraisal.

First of all, Sa’ad Hariri is the son of former Prime Minister Rafik Hariri who was murdered by a car bomb in 2005. The assassination was allegedly undertaken by Hezbollah, and currently in the Hague Sa’ad Hariri is participating in a trial in absentia of four Hezbollah members charged with his father’s killing. The Shiite influential organization with strong positions on the ground in Lebanon denies the accusations, and the final verdict has not been spelled out yet.

Second, in 2011 Sa’ad Hariri was ousted from power by Hezbollah’s political bloc, and, since then, for security reasons he was shuttling between France and Saudi Arabia. Several of his close associates were assassinated in the last two years with Hezbollah believed to be the most likely culprit. On 27 December 2013, a car bomb explosion in Beirut killed former Minister Mohammad Chatah who was an adviser to Sa’ad Hariri and a member of the March 14 movement which is vehemently against Syrian government and in favor of the Sunni insurgents.

Third, the “mother of all battles” waged in Syria between the Sunnis and the Shiites exacerbated the animosity of the two communities in Lebanon. While the March 14 coalition supports the opposition in the Syrian civil war, Hezbollah sent its paramilitary platoons to help Shiitebacked President Bashar Al Assad.

However, irrespective of the outcome of the court hearings in the Hague, and dismissing the involvement in the proxy war in Syria, Sa’ad Hariri sent an olive branch to the arch-rivals. He pledged to be ready to share power with Hezbollah and expressed belief they can come to an acceptable compromise.

The need for a compromise became more apparent since the Syrian hostilities started to ruin the already shaky stability in Lebanon and present a grave threat to its survival as a unified state. All previous attempts to bridge ideological and confessional discrepancies between main actors turned to be futile.

The solid proof of Sa’ad Hariri’s serious intentions to find a solution to the political deadlock was his subsequent appeal to Samir Geagea, his ally coming from the Christian camp, to reconsider his opposition to forming a government with Hezbollah and accept the urgent need to preserve Lebanon as a state.

Mr. Hariri made it clear that there were preconditions to this strange marriage: “I will not accept (that Hezbollah hold) the veto-wielding (power)” in the future cabinet. He also made it clear that power sharing will not give Hezbollah a legal clout to continue its involvement in the civil strife in Syria. Hariri said he wanted Lebanon to remain neutral at a time of detrimental regional calamities.

The timing of Hariri’s bold move can be attributed to the first albeit not very fruitful contacts in Geneva between the warring parties in Syria, and the rapprochement between the United States and Iran (see also “Iran: the brave new giant the West would love to nurture”, EIRA Newsletter Volume 2 Issue 1, 2014).

A no less essential motive is the need to prop up the economy, budget (burdened with a weighty debt) and growth prospects by putting in place a legal framework for the exploration of the hydrocarbon resources in the Lebanese offshore sector of the East Mediterranean. In order to kick-off the exploratory works, the Lebanese authorities must adopt and enact two pieces of legislation in the form of decrees. The first decree must enshrine the delimitation of the offshore blocks; the second should specify the model of the production-sharing agreement.

It is clear to Lebanese policy makers of all ideological feathers that in the absence of these two legal prerequisites foreign investors would be too hesitant to pursue a consistent policy of financial and organizational involvement.

Meanwhile, the stakes for the state of Lebanon and for the energy majors alike could be high enough. Preliminary estimations by the British geological surveyor Spectrum claim up to 25 trillion cubic feet of gas and from 440 million to 660 million barrels of oil are secured in the Lebanese corner of the Levant basin.

Last year, the lure of the hydrocarbon riches has already brought 52 major oil and gas companies to the pre-qualification round with 46 passing the contest. As announced recently, the first bidding round for the exploration of offshore fields is due to be opened on April 10, 2014. The standard timeline define the exploration phase to last five years with the production lifetime of 25 years.

However, after the two decrees are signed and sealed, another impediment might severely curtail the room for maneuver for Lebanon, the on-going dispute with Israel which claims rights to the same maritime area of 854 square kilometers.

On 21 December 2013, the Lebanese caretaker Foreign Minister Adnan Mansour accused Israel of planning to unilaterally demarcate its maritime border with Lebanon. Mansour said it was a direct violation of International Law and of the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

The UNCLOS allocates a 200 mile offshore area terms “Exclusive Economic Zone” for exploiting maritime reserves, and determines that if another sea-faring nation is located less than 400 nautical miles away a mutually acceptable border line should be drawn through negotiations. This is not an option for Lebanon and Israel because the two states are formally in a state of war and cannot sit down at the negotiation table to discuss anything before they settle down their hostilities.

Besides, there is another aggravating factor: Israel is not a signatory of UNCLOS which leaves the two sides without any legal guidelines and legal solid ground. All in all, the residue of sectarian violence, confessional animosity, political fractious environment, legal uncertainties and technical challenges amount to a formidable Molotov cocktail threatening to blow attempts by Sa’ad Hariri and similar pragmatic leaders to breathe life into the weakened and 

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Lebanon
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