Doubts have been raised and criticisms continue to be made concerning Lebanon’s choice of upstream petroleum fiscal terms and strategies to award oil and gas licenses. This is not surprising given the fact that it is a completely new experience for Lebanon, a country often stuck in stalemates stemming from political disagreements. What complicates the situation further is the fact that there is no one ideal strategy that Lebanon can follow. There are, however, some internationally recognized guiding principles. Policymakers should look closely at the experience of other countries and learn from both their successes and their failures. But every country is unique and must tailor the choice of strategies to its own needs, objectives, and conditions.
 
It seems there has been an overemphasis in the debate about Lebanon’s petroleum fiscal regime on a single instrument: The royalty. Some have condemned the ‘low’ royalty rate the country has opted for, especially when compared with Israel. One possible explanation for such a stance is the limited understanding of what a fiscal regime actually encompasses. A royalty is only one instrument on a long list of fiscal and quasi-fiscal instruments. Additionally, Israel has selected an arrangement, the so-called concessionary system, which has an overall different composition and functioning from the Production Sharing Agreement that Lebanon has opted for.

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