Oil & Gas Middle East – November 2018

(Jacob Rumans) #1
19

LEBANON FOCUS

oilandgasmiddleeast.com NOVEMBER 2018


power plants on gas and to use it for some indus-
tries,” Chbat says, noting that it is a small market.
In such a small market, the effect of gas produc-
tion would be substantial. The cost of electricity
generation would drop to 11-12 cents per KwH,
Chbat estimates, still higher than the 9 cents per
KwH that the government charges residents.
But reducing fuel expenditure could give the
government more breathing room to update power
plants and work to increase capacity—Chbat says
the state would need to “move to above 20 hours [of
electricity] a day to be able to justify an increase in
tariffs.”
The hope is that improved service from EDL will
motivate residents to rely solely on EDL’s supply,
instead of using black market generators, which
are not metered and weigh down EDL’s supply and
performance.
If gas discoveries are more than enough to
saturate the market, Lebanon has a few options:
send gas to Egypt through existing pipelines to be
liquefied and exported by ship, or build a Lebanese
pipeline under 250km transporting gas from off-
shore Lebanon and Syria to Turkey, where it could

connect to the Eurasian pipeline network.
Depending on discoveries in Cyprus, where in
early October Eni, Total and Exxon were invited
to bid for its offshore Block 7, Lebanon could have
another option. If Cyprus has large amounts of
recoverable gas, it is expected to invest in LNG
infrastructure, which Lebanon could use to liquefy
its gas for export.
But the potential for Lebanon’s energy sector
could be even bigger. “Initially, we were under
the impression that it was purely gas,” Chbat says.
“Now, the oil story is coming in more vigor for
offshore Lebanon, with the possibility of having a
mixture of oil and gas.”
Lebanon’s entrance into the regional oil and gas
sector could mark a turn in its economy, providing
new job opportunities, a new revenue stream for
the country and cutting national debt. But issues
persist. The IMF in February 2018 pointed out cor-
ruption as a key obstacle to economic reform.
Oil and gas production might not cause immedi-
ate, sweeping change, resolving deep-rooted issues
like corruption, political strife or neighbouring con-
flicts. But it could keep the lights on for a change.
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