Governance
Lebanon Extended Its Oil and Gas Bids: What You Need to Know and Ask

Lebanon has again delayed bidding in its first offshore oil and gas licensing round, Minister of Energy Cesar Abi Khalil announced last week. Answering why, the Lebanese Petroleum Administration (LPA) stated in a letter that companies requested more time to compile the documents for application, and were confused over the tax rate at which to simulate their bids.

The explanations provided by the government do not paint a full picture. There are two underlying questions every Lebanese citizen needs to be raising to uncover the reality:

  1. Why is Parliament stalling to vote on the Petroleum Tax Law?

When the Minister of Energy announced his , there was plenty of time between then and the now delayed bid deadline to legislate a fix to the petroleum tax rate. We do not know why Parliament did not prioritize this legislation. Lawmakers need to be transparent by publishing the draft law it will vote on in late-September, and involve civil society in examining its merits. Our elected officials must answer why they failed to legislate, what are they disagreeing about, and they must do so not behind closed doors but in a public session.

  1. Will a 4-week extension be enough for companies to submit proposals?

A second reason for the delay, the LPA’s letter states, was that the potential bidders were requesting more time to compile their documents. What does that mean? To be sure, putting together an application for a petroleum exploration license is a complicated process, and it does take time for companies to negotiate amongst themselves the financial and technical details of a exploration consortium. But if the last five months were not enough for companies to get their bids in order, what difference will another few weeks make?

The government must manage expectations and send the right signals to citizens and companies. If the draft tax law is ratified during Parliament’s next legislative session September 19-20, is it realistic to expect that companies will be able to adjust their bids by the new deadline, October 12? Since the date to award contracts is scheduled for mid-November, is it reasonable to expect that deadline to be extended as well?

Let’s not downplay the situation. If Lebanon is looking at an extended delay then confidence to award contracts transparently is gone. The minister of energy must promise publicly to publish which companies have bid on which blocks, the LPA’s evaluation of the bids and the minister’s recommendation to Cabinet of the winning offers. We must have a paper trail to trace and we must have it in writing.

It is our right to know what is going on in a strategic sector that could shape the future of our country and be partners in shaping it. What is certain is that Lebanon cannot keep on extending unrealistic deadlines and be cryptic about the primary reasons.

 

About the Lebanese Oil and Gas Initiative (LOGI)

Registration number 13555 26/8/2014 decree number 11217 15/2/2014

LOGI is an independent non-profit based in Beirut. LOGI's mission is to help Lebanon maximize the economic and social benefits of its oil and gas wealth – and avoid the resource curse. You can learn more at:  www.logi-lebanon.org

Beirut Digital District, 1281, Ground Floor. Syriac Patriarch Street-Bachoura, Beirt-Lebanon

+961-1-640020

Contact information: Diana Kaissy, Executive Director, diana.kaissy@logi-lebanon.org

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