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BEIRUT: Former Prime Minister Fouad Siniora said Lebanon will soon join the club of oil and gas producing countries thanks to the latest seismic 3D surveys off the Lebanese coast which proved the existence of a substantial amount of gas.
"The U.S. geological survey has estimated for the first time that the Levant basin province in the eastern Mediterranean region is comparable to some of the other large provinces around the world as it holds around 122 trillion cubic feet of natural gas and 1.7 billion barrels of undiscovered, recoverable oil. The Exclusive Economic Zone of Lebanon falls entirely within the Levant basin. This will provide a great opportunity for Lebanon to diversify its sources of growth and empower its economy to make a sustainable leap into the range of high income countries," Siniora told an energy conference in Nicosia, Cyprus.
He added that in addition to enhancing sustainable growth, the possible discovery of oil or gas would help Lebanon achieve higher energy security.
"Unlike most countries in the region, Lebanon currently imports all petroleum products for the transportation sector, electricity generation, heating, industry and other sectors, and hence suffers from a high level of energy dependency," Siniora said.
He added that Lebanon is a country whose most valuable asset has always been its human capital rather than its natural resources, its free and open political and economic system and its knowledge-based economy rather than its export of physical products.
"Despite suffering from long years of war, and continuing domestic instability, Lebanon has nevertheless managed to achieve by today the highest GDP per capita among Arab countries outside the six oil exporting countries of the GCC. This is the most glaring witness to the strength as well as to the resilience of the Lebanese economy," Siniora said.
He stressed that the good prospects of significant oil or gas discoveries carry the potential of elevating the Lebanese economy to a qualitatively higher level of growth and regional development, besides contributing toward addressing the problems of the large deficit and the debt burden that has been accumulating over the past three decades.
"The possible discovery of oil or gas would have a positive effect on the government finances and on the economy. That could potentially be significant not only on the revenue side but also on the expenditure side, mainly by reducing the cost to be incurred by, and in turn the cash deficit of, the electricity company. Besides, it helps in reducing the cost of production for the various economic sectors of the country thus rendering Lebanon more competitive," Siniora argued.
He noted that 50 percent of the electricity generated in Lebanon is from the combined cycle gas turbines mostly running on gas oil rather than on natural gas, which results in a high cost for each kilowatt generated. Additionally, small single cycle power plants are still running on imported gas oil rather than on natural gas.
"A modest effort to reduce the cost of producing electricity in Lebanon has been achieved by my government that managed to secure the importation of natural gas from Egypt via the Arab pipeline passing through Jordan and Syria; still, the quantities of natural gas are not enough to run even one of the two 450 MW combined cycle power plants. In this regard, Lebanon has been exploring the possibility to cooperate with some neighboring countries, specifically Syria, Iraq and Turkey in order to agree on building the pipelines and ultimately make it possible to import additional quantities of Russian and Iraqi natural gas," Siniora said.
He emphasized that in case commercial gas discoveries are found offshore, at least two-thirds of the electricity currently generated in Lebanon will be based on natural gas, and, most definitely due to cost saving differentials, the other existing power plants will be gradually converted to natural gas as well. New power plants of at least 1,000 megawatts that will be built on that basis, since shortage in the electricity sector is estimated to be more than 1,500 megawatts.
Government At Fault For Lebanon Being Shortchanged in EEZ agreement
BEIRUT: The head of the Parliamentary committee for Public Works, Transport and Energy MP Mohammad Qabbani said Friday that the government is to be blamed for the mistake that occurred following the demarcation of the maritime Exclusive Economic Zone between Lebanon and Cyprus.
"Cyprus is not the one to be blamed in this matter," Qabbani told reporters after concluding a meeting of the parliamentary committee he heads.
He stressed that Lebanon's objection to the Cypriot-Israeli agreement on oil and water territorial borders demarcation was due to a mistake made by the Lebanese side.
Under the current agreement, Lebanon's share of the EEZ within the maritime territories would be less than what Beirut would legally get.
"The finalized point of intersection between the three is point 23 and not point one as was mentioned in the agreement between Lebanon and Cyprus," said Qabbani pointing to a map.
Earlier this week, the newly appointed Foreign Affairs Minister Adnan Mansour called the agreement between Cyprus and Israel a "violation of Lebanon's sovereignty."
"This agreement is a violation of Lebanon's sovereignty and economic rights and threatens peace and security in the area," Mansour said, following reports that Israel was conducting offshore drilling for oil and gas in the Mediterranean, some of which might fall in Lebanese territories.
Cyprus signed a memorandum of cooperation with Israel for surveying and mapping in joint research energy projects in December 2010.
Qabbani also said that the Lebanese government lacks the legal and scientific documents required in negotiations. "But we agreed on a roadmap to use in our negotiations with Cyprus," said Qabbani adding that the committee also agreed on establishing a team of legal, diplomatic and engineering experts to be part of the bilateral talks.
"There is a huge misunderstanding and there should be a whole new study to clarify this matter related to the maritime borders," Qabbani told The Daily Star in a telephone call.
Sources close to the briefing of maritime borders told The Daily Star that an error on the part of the Foreign Affairs Ministry was the reason behind the selection of a wrong point for the Exclusive Economic Zone.
Read more: http://www.dailystar.com.lb/Business/Lebanon/2011/Jun-25/Siniora-Lebanon-will-join-oil-and-gas-producing-club.ashx#ixzz1QLBt6D2u
(The Daily Star)
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