The Lebanese petroleum expert Nicolas Sarkis recently uploaded a video on his Youtube channel exposing the outrageous corruption nested in the petroleum domain in Lebanon. He says that he had never seen, in any other country in his 40 or so years of work in petroleum, the amount of corruption that he saw first-hand in Lebanon.
The Lebanese Petroleum Administration is responsible for everything petroleum in Lebanon.
It was established on the 4th of December 2012 and is an independent public institution mandated to manage the upstream offshore petroleum sector in Lebanon.
It actively undertakes planning, regulatory, and supervisory roles across the petroleum industry, and plays critical roles during the initial licensing phase, as well as the many phases that follow.
Recently, caretaker Prime Minister Saad Hariri extended the terms of reference of the LPA, which had expired last year. This, as implied by Mr. Sarkis, is not a good thing, and it threatens the offshore natural resources of Lebanon.
According to the petroleum expert, the majority of the current six members of the LPA have nothing to do with petroleum; they have no experience in the field and are not eligible to work in the administration or the domain of offshore resources as a whole.
Like all public jobs in Lebanon, these six experts were chosen based on sects and religious denominations. The minister of power at the time of their employment handpicked the employees.
Lebanon’s 2010 offshore petroleum resources law states that national petroleum companies should be created to help the state reach the supposed goal of becoming the main player in the processes leading to the production of its petroleum.
This goal is realized with the assistance of an international agreement called the Production Sharing Agreement.
The agreement states that any country that hasn’t discovered its petroleum resources, or has discovered them but hasn’t initiated the production process due to insufficient capital and/or a lack in the required expertise and tools, can accept to have foreign companies involved in the search and evaluation processes.
If none is found, the country is not required to pay the companies. If petroleum is found, on the other hand, the country and the foreign company become partners in the process of extraction and production, with the government owning a share of at least 40%.
As per the agreement, the country then pays back its share of expenses involved in the production process from the profit it receives after the petroleum had been extracted. This agreement is used in more than 70 countries around the world and is supposed to be in use in Lebanon as well, according to the law.
But in Lebanon, that is of course not the case. After the Lebanese Offshore Petroleum Resources Law was passed in 2010, several decrees were issued to complement it, as is normal for any law.
But what’s not normal is the fact that an article in one of the decrees says: “The state has no [participation] share in the first licensing round.”
The law in Lebanon explicitly states that the country does, in fact, have a share in the entire process of production with the implementation of the Production Sharing Agreement… Confused? Let me explain:
This simply means that some government employees took it upon themselves to issue decrees that clearly broke the Offshore Petroleum Resources Law and unrightfully abolished Lebanon’s right to have a share in the first licensing round of its own petroleum. As Mr. Sarkis boldly said, the only word that can be used to describe this act is forgery…
The Council of Ministers at the time of PM Tammam Salam’s cabinet refused to approve the forged decrees for the clear unlawfulness present in them. Specifically in article number 5 of decree number 43.
However, after the resignation of PM Salam later on, and the election of the next government, the very first article discussed and approved in the first session of the Council of Ministers was article number 5 of the 43rd decree! The whole decree forgery issue was kept a secret from the public for obvious reasons.
The extension of the terms of reference of the LPA, which previously introduced the unlawful article number 5, means that it will remain in control of Lebanon’s petroleum. It also means that foreign companies and, more dangerously, fake companies will take advantage of the country’s offshore resources…
In addition to introducing the article, the LPA, which works directly under the supervision of the Minister of Energy and Water, was also responsible for the approval process of the foreign companies that apply to work on Lebanon’s petroleum. Numerous companies were approved by the administration.
The administration also defined two categories of petroleum companies: operators and non-operators, with the operators being those which can undergo the practical work involved in the production process, like digging hundreds of meters down seabed at vast depths that could reach 2000m or more.
Here’s the problem: There are approximately 15 or so companies in the world that can perform such feats, including the French Total and its likes.
The LPA approved 53 foreign companies to undergo the exploration and extraction processes, including the aforementioned top companies. Fifty-three foreign companies approved, but not a single national petroleum company was approved to be created in Lebanon, to produce the petroleum of Lebanon!
The details of the process are, briefly, as follows:
A legitimate world-class operator company requests to work in Lebanon.
The LPA approves the request on one condition: the operator must be accompanied by two non-operating (actually fake) companies that claim about 10% of the profit.
To put it more clearly, some very well-known Lebanese politicians and able businessmen are putting their hands on Lebanon’s petroleum to take the industry’s billions of dollars of profit for themselves and depriving the Lebanese of their right to use it to revive their country’s disastrous economy.
The aforementioned decree allows the Lebanese government to do one thing: Ask the foreign companies to accept the assignment of a Lebanese supervisor to keep an eye on the work in progress. The supervisor attends the companies’ meetings and accordingly files reports to the Minister of Energy and Water… What a marvelous achievement!
The only resource that can give Lebanon a chance to get back on its feet is petroleum. And now this chance is being taken away by the greedy individuals who only selfishly care about their interests and disregard those of their suffering Lebanese people.
Source: The 961