Transparency Legislated

New rules aim to keep Lebanon’s oil and gas sector clean

Starting next year, major players in the oil and gas industry will have some extra financial reporting to do. Any company listed on a European Union member state stock exchange (whether or not it is registered in the EU) or domiciled there will have to publish payments to foreign governments on a project-by-project basis beginning January 2016. A similar rule is under development in the United States as well, although it will likely not go into effect until later. The 2013 EU directive – according to a European Commission (EC) press release – is the result of campaigning in the late 1990s and early 2000s by civil society organizations around the world for more transparency in an industry long associated with bribery and corruption, particularly in impoverished but resource-rich developing countries. The goal of these measures, as the EC puts it, is to “provide civil society in resource-rich countries with the information needed to hold governments to account for any income made through the exploitation of natural resources, and also to promote the adoption of the Extractive Industries Transparency Initiative (EITI) in these same countries.” Unlike the new legal requirements for industry, the EITI is voluntary and puts the onus to report on governments. Some countries, however, are making the initiative’s requirements mandatory by codifying a commitment into law.

The 2010 law governing offshore sets a maximum limit for the exploration phase at 10 years.

Given that Norway – which is not an EU member state – is currently implementing a similar reporting rule on its own, half of the 12 companies currently pre-qualified to drill as operators offshore Lebanon would be legally required to do project-by-project reporting if and when exploration and production begins here (three more companies are based in the US and could have similar reporting requirements in the future). This international push for transparency would go a long way toward making the bribing of Lebanese officials more difficult for international oil and gas companies operating in the country. This would alleviate the fears of corruption that local businessmen and politicians with industry ties, like Fouad Makhzoumi, have.

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