When Lebanon moves forward toward extracting its potential oil and gas resources in the country’s coastal waters, it will do so with the intention of powering industrial manufacturing and investing in infrastructure for small and medium sized enterprises (SME) integrating them with operating oil companies, creating an industry of support and ancillary service companies.
The Lebanese Petroleum Administration (LPA) has repeatedly indicated this intention in its vision for Lebanon’s oil and gas sector, saying the crown jewel is not the lucrative extraction of resources, but rather encouraging manufacturing, industrial localization and SME integration.
Difficulty to localize
Though revenue from the sale of potential petroleum resources could be significant, the lasting value might come in powering industrial manufacturing and encouraging the integration of SMEs into an oil and gas value chain. “It is a very large area of opportunity and — when we talk about SMEs — quite a large chunk of revenues depend on the services provided,” says Georges Chehade, a partner with Strategy& and the firm’s leader of the energy, chemicals and utilities practice for the Middle East. “There will be a lot of opportunities to localize,” he adds.