Lebanon: The Next Eastern Mediterranean Gas Producer?
In his presentation, Fattouh analyzed Lebanon’s energy prospects, including opportunities, risks and challenges. Currently, natural gas plays no role in Lebanon’s energy mix and the country relies entirely on liquid fuels, which are expensive, inefficient and polluting. At the same time, Lebanon faces a number of macroeconomic challenges including a high level of sovereign debt, as well as a persistent government and current account deficit. The development of Lebanon’s potential offshore resources could alleviate some of these issues. But the country faces a number of internal and external challenges, including a poor institutional framework, weak business environment, administrative inefficiencies and maritime delimitation disputes with Israel and Syria. Michael Leigh added that Lebanon also faced spill-over from the conflict in Syria as well as severe energy shortages and blackouts.
Fattouh emphasizes that any development of the offshore natural gas is unlikely until the next decade. In the meantime, Lebanon is looking to import natural gas, but its options are limited. When eventually offshore gas comes on stream, any quantities surplus to domestic requirements could be exported to other countries in the region, Turkey or Europe. Exports to relatively distant markets would require heavy infrastructure investment.. Short-term risks include further delays in the bidding process and resulting loss of interest by energy companies. Longer-term risks include border conflicts, instability, weak institutions, poor business environment, uncertainty over prices and lack of transparency in revenue management. Nonetheless if the present political impasse could be overcome gas could become a game-changer for Lebanon.