Discussions about Lebanon’s energy sector have been overshadowed by political and financial corruption; the environment, climate, health, and broader economic and policy implications are often sidelined. Lebanese citizens have adapted to an inconsistent power supply split between state and non-state providers. They have grown used to navigating poor road conditions in large vehicles, ignoring the overworked and heavily polluting public buses. Meanwhile, brightly lit homes contrast starkly with industries hampered by high production costs due to energy issues.
Over the years, the Lebanese Ministry of Energy has proposed numerous electricity plans, yet none have come to fruition for a myriad of reasons. The crux of the matter is that Lebanon has never established a holistic energy strategy. The discourse has mostly centered on electricity: its source and the state’s role in procuring it. In recent years, the spotlight has shifted to oil and gas as the primary electricity sources, capturing the nation’s political and public imagination. Renewable energies like solar and wind have received considerably less attention and enthusiasm, even though initiatives for both fossil fuels and clean energy were introduced simultaneously in 2013. Bureaucratic hurdles and political disputes have culminated in a severe power shortage, with neither gas nor renewables filling the void. The severe economic downturn that started in late 2019 only intensified the crisis, plunging some Lebanese areas into complete darkness.
Amidst this bleak backdrop, including the state’s inability to serve its citizens, many Lebanese sought alternative solutions, with solar energy emerging as a savior for many households. Today, domestic solar energy production stands at a whopping 1,000MW, a tenfold increase from a decade ago. Driven by dire necessity rather than genuine belief in renewables, these individual efforts have inadvertently placed Lebanon on the clean energy map, a shift that hints at a silver lining: Lebanon now has a chance to redefine its energy foundations, pivoting to more contemporary standards.
This paper delves into Lebanon’s energy trajectory, with an emphasis on recent shifts after the multifaceted economic, financial, social, and political crises. It will explore the tug-of-war between gas and renewables and shed light on the path forward.
Oil and Gas in Lebanon: A Historical Overview
Since its independence in 1943, Lebanon has embarked on a journey to mold itself into a modern state, laying down the bedrock for its economy. Between 1947 and 1967, efforts were made to tap into the oil sector. Early exploration endeavors spanned across seven locations in Lebanon in pursuit of the coveted “black gold”. However, the discoveries fell short of expectations. As a result, Lebanon shifted its economic vision towards a service-based, rentier economy, positioning itself as the hub of banking, healthcare, education, and tourism for the Arab region. The country also aspired to be the oil conduit bridging the Gulf to the Mediterranean, and thus the global market. Consequently, oil explorations were shelved, only to resurface after the civil war in 1990.
Under the helm of Prime Minister Rafic Hariri’s first government, dormant geological studies were unearthed, especially in the northern waters near the Syrian border. Yet, this resurgence was short-lived, reportedly due to Syrian intervention in Lebanon’s economic affairs. The nation’s focus shifted back to reestablishing itself as the Arab East’s service epicenter, ushering in the post-war reconstruction phase.
True reconstruction demanded more than just rehabilitating Beirut’s infrastructure; it called for the revitalization of institutions, and habitats, and dispelling lingering militia mentalities. While Beirut flourished, the rest of the country remained shrouded in darkness. Successive plans promised an uninterrupted electricity supply, but following the severe economic downturn in October 2019, Lebanon faced relentless blackouts. Both the state-owned Electricité du Liban and private generators, which power the country, leaned heavily on environmentally detrimental and costly resources, primarily fuel oil and diesel.
The early 2000s saw the oil and gas issue take center stage once more. The US Geological Survey’s studies of the eastern Mediterranean waters corroborated the presence of substantial oil and gas reserves in the region. Bolstered by significant findings from international oil giants like Shell, Noble, and BP, Lebanese authorities collaborated with their Norwegian counterparts to tackle the oil and gas dilemma in earnest. As geological surveys commenced, a foundational policy blueprint for the sector was drafted in 2007. Subsequently, the Offshore Petroleum Resources Law No. 132 was ratified in 2010, leading to the inception of the Lebanese Petroleum Administration in 2012. Then 2013 saw the announcement of the inaugural bidding round. However, essential decrees like model contracts, water segmentation into blocks, and the sector’s tax regulations remained pending until 2017. Finally, in 2018, Lebanon inked contracts with TotalEnergies, Eni, and Novatek. Fast forward to April 2020; these corporations undertook a landmark exploratory drilling in Block 4 located north of Beirut. Unfortunately, the venture proved fruitless, as no gas reserves were discovered.
The Future of Energy in Lebanon: Maritime Border Negotiations
As Lebanon grappled with escalating financial, economic, social, and political turmoil – heightened by widespread protests and the catastrophic Beirut port explosion in 2020 – few could have anticipated that the ruling political class would seek American intervention to broach maritime border negotiations with Israel. Yet, on 1 October 2020, the speaker of the Lebanese Parliament unveiled the initiation of American-led mediation between Lebanon and Israel. The inaugural meeting transpired on 14 October 2020 in Naqoura, along the Lebanon-Israel border. This mediation continued until October 2022, culminating in a successful agreement demarcating the maritime borders between the two sides. This paved the way for TotalEnergies, in alliance with Eni and Qatar Energy, a new associate, to recommence hydrocarbon explorations in Lebanese waters. Following the ratification of this border agreement, the CEOs of the three corporations arrived in Lebanon on 30 January 2023 to formalize the amended exploration and production contracts. It was unveiled that the exploration drilling in Block 9 was slated between the third and fourth quarters of 2023. By the end of August, a drilling vessel had anchored at Block 9, initiating the pursuit of oil and gas.
Upon the future conclusion of the exploration drilling, three potential outcomes are possible:
Scenario One: No Discovery – The absence of oil or gas is a plausible scenario in the industry, especially when only one well is drilled, thus presenting a low success rate. In this eventuality, TotalEnergies would publicize the findings, subject to validation by the Lebanese government. Subsequently, the corporations operating in Block 9 might declare their intention to embark on another drilling expedition, retain the field, or relinquish it back to the Lebanese state.
Scenario Two: Minimal Discovery – Should oil and gas be detected, but in quantities deemed negligible, the operating firm could classify the find as nonviable, potentially necessitating further drilling. Companies would then need to articulate their future aspirations for the block and consider partial or complete abandonment of the project.
Scenario Three: Significant Discovery – If drilling yields a substantial find, the company would announce a potential discovery ripe for development and production. Additional drilling might be essential to gauge the discovery’s magnitude and procure detailed field data. In such an event, the company is obligated to notify the Lebanese government regarding the reservoir’s location — whether it’s exclusively within the Lebanese economic zone or shared with Israel.
Upon a significant discovery within Lebanon’s territorial waters, companies are obligated to adhere to the exploration and production agreement signed between them and the Lebanese state. This necessitates the submission of a detailed business plan outlining the development and production strategy of the identified oil and gas to the Lebanese government for endorsement.
In scenarios where the discovered reservoir straddles the border between Israel and Lebanon, the involved companies must enforce the stipulations of the maritime border demarcation agreement between the two sides. Consequently, TotalEnergies would need to finalize a financial accord with Israel, determining Israel’s stake in the shared field, facilitating the field’s development from the Lebanese end.
For the Lebanese people, however, the pressing questions revolve around when energy production would start and the country would begin to reap the subsequent benefits. These urgent concerns, while valid, cannot be addressed fully without first assessing the business plan presented by the companies to the Lebanese authorities. Key determinants influence the production timeline, such as:
- The optimal production platform tailored for the discovery;
- Infrastructure requirements, either for domestic utilization or exportation;
- The essential timeframe for executing the requisite tasks; and
- Budget allocation for developing the oil field.
Without clarity on these elements, pinpointing the exact time when production would start remains speculative. However, gauging Lebanon’s potential gains from the oil and gas discovery can be surmised more definitively. Given the prevailing governance culture and the nation’s multifaceted political, institutional, and economic landscape, the broader Lebanese public might only see limited benefits. While the ruling elite might reap political and economic gains, this does not guarantee any degree of inclusive national prosperity. The situation could deteriorate to a point where Lebanon might not even capitalize on the discovered gas for electricity generation, particularly if the state struggles to secure funds for needed infrastructural developments, or if the Electricité du Liban cannot procure gas for power generation.
On the flip side, companies might opt to collaborate with regional counterparts, harnessing shared facilities and leveraging existing infrastructure for gas exportation. A prevalent approach currently under consideration involves the deployment of a floating platform for liquefying gas, a strategy being advanced by the American firm Chevron in collaboration with Israel and Cyprus. Such technologies allow corporations to bypass potential technical and political impediments associated with pipeline construction or cross-border pipeline access. The region’s intricate political dynamics often hinder corporate ventures, rendering them economically unfeasible and stalling execution plans.
The Lebanese Ministry of Energy announced on 19 October 2023 that the exploratory drilling in Block 9 led to no discoveries. The absence of a significant discovery, despite encouraging samples from the site, has left many in suspense about the future course of action in this block and its neighboring ones. The ministry’s statement remained ambiguous regarding the continuation of the involved companies’ activities or the potential relinquishing of Blocks 4 and 9 back to the state.
Several anticipated developments loom on the horizon:
- The consortium of TotalEnergies, Eni, and Qatar Energy is expected to unveil their strategic plan for their Lebanese operations, given the unfruitful exploration in Block 9. They might abandon Blocks 4 and 9 entirely; partially retreat from both blocks while committing to further drilling; or forego Block 9 entirely while pledging renewed efforts in the other block.
- The companies are in the process of finalizing their comprehensive report on Block 9, which will subsequently be presented to the Lebanese government.
- The Lebanese government’s verdict is eagerly awaited regarding the proposals tendered by TotalEnergies and its associates for Blocks 8 and 10, located in southern Lebanon. The government might accept the offers outright; grant approval with certain stipulations, especially pertaining to drilling technicalities; or dismiss the proposals in their entirety.
The lackluster outcome from Block 9 undeniably places the government and the dominant political parties in a precarious position, compelling them to reevaluate their economic growth strategies. Previously, the administration had hinged its hopes for economic recovery on the oil and gas sector, viewing it as a panacea for the beleaguered economy and a justification for evading needed structural reforms. With this card now rendered obsolete, the government is cornered into considering genuine reforms and potentially seeking assistance from the International Monetary Fund.
Conversely, this exploration setback offers environmental advocates an opportunity to revitalize the discourse surrounding the viability of oil and gas investments. Given the increasingly uncertain future of this sector in Lebanon, it might be time to pivot towards sustainable alternatives and reconsider the nation’s energy blueprint.
Lebanon’s Energy Dilemma: Politics, Popular Mood, and the Push for Renewables
Lebanon’s intense fixation on its oil and gas prospects has inadvertently overshadowed the crucial discourse on its energy future, particularly regarding renewable energies. The media, heavily influenced by political narratives, has predominantly centered on the allure of hydrocarbons, leaving renewables in the backdrop.
In 2013, while licensing rounds for both fossil fuels and renewable energy were initiated, the nation’s spotlight was glaringly on the former. Media channels were buzzing with discussions on oil and gas contracts, regulatory frameworks, and economic implications. Political affiliations more often than not drove the stance on these issues, either in support or opposition. In stark contrast, the conversation on renewable energies, their regulatory environment, and the role of the Ministry of Energy, was strangely absent.
The establishment of the Lebanese Petroleum Administration, intended as a regulatory body for the oil and gas sector, drew substantial attention. The discourse on its formation, member competencies, and salaries overshadowed any discussion of renewable energy governance.
The introduction of the Offshore Petroleum Resources Law, especially under the stewardship of the Free Patriotic Movement, transformed the conversation around energy from a technical to a political one. For the Free Patriotic Movement, oil and gas represented a monumental “legacy project”, and they positioned it as a historical achievement. Consequently, the opposition, in a bid to counter the Free Patriotic Movement, also delved more deeply into the topic, making oil and gas the dominant subject of public discourse. This fervor was amplified by the overarching belief, propagated by the ruling class, that these resources would be Lebanon’s economic panacea.
However, this enthusiasm masked a critical reality: countries with weak governance structures often see their fortunes decline despite rich oil and gas reserves. Such nations tend to spiral into corruption, autocracy, and even conflict. The genuine potential of gas as a cleaner energy source becomes secondary in this grand narrative.
The political class’s apparent disinterest in renewable energies is striking. Despite available studies highlighting Lebanon’s potential in renewables, political will and actionable policies have been conspicuously absent. Public enthusiasm for renewables, specifically solar energy, has surged not due to government foresight but out of sheer necessity. With the government’s electricity cuts and heightened fees, the public, driven by desperation, has turned to solar energy. The rising demand for electricity has fueled a surge in solar energy adoption, with its usage skyrocketing from 100MW to approximately 1,000MW. Data from the Lebanese Center for Energy Conservation indicates that Mount Lebanon leads in solar energy utilization at 34%, followed closely by the Bekaa and the south, each at 22%, the north at 16%, and Beirut at a modest 6%. While we await comprehensive studies detailing this growth in the solar market, it is evident that this shift stems more from necessity than from governmental foresight or intervention. However, this shift underscores a pressing concern: an inequitable energy transition, where only those with means pivot to renewables, leaving the less fortunate in the dark.
Today, Lebanon finds itself in a dire state, grappling with profound financial, economic, and political crises. Yet, within these challenges lies an opportunity to build a better future, particularly in the energy sector. The Lebanese Center for Energy Conservation, the nation's official body on renewable energies, must be subjected to rigorous scrutiny by official oversight bodies, including parliament and civil society organizations. This is essential to ensure transparency and accountability in the center's projects and studies.
If it is decided that the Lebanese Center for Energy Conservation will continue to play a central role, it's imperative to equip it with the necessary resources and capabilities. Projects funded by donor countries should receive strong support. Climate finance is available, and Lebanese authorities should work to eliminate obstacles to project financing. By maintaining the current progress and focusing on individual achievements, the renewable energy sector can be developed, ensuring a fair and equitable transition for all citizens.
Recommendations for Lebanon’s Energy Future
- Coordinate an Energy Strategy: With fuel oil and diesel dominating electricity production and increasing competition from solar energy and potential natural gas, there’s a need for a diversified energy supply. However, Lebanon’s approach lacks coordination. The Ministries of Energy and the Environment, in collaboration with private entities and civil society, must engage in systematic discussions to determine Lebanon’s energy trajectory. Given the uncertain future of gas, now is the opportune time to revisit the energy plan with all stakeholders.
- Reassess Lebanon’s Energy Needs: Due to demographic shifts and the economic situation, a comprehensive survey is essential to understand Lebanon’s evolving energy requirements. This would involve developing a vision for the electricity sector in line with current realities and assessing the need for new power plants.
- Promote Renewable Energy Laws: Expedite the adoption of renewable energy laws, emphasizing the decentralization of such energy sources. This would facilitate funding for clean energy projects, bolstering local economies and ensuring a cleaner environment.
- Manage Solar Equipment Waste: Enact legislation regarding the disposal of used solar panels and equipment. This will prevent environmental harm from their indiscriminate disposal.
- Enforce Environmental Standards for Oil and Gas: If Lebanon becomes an oil and gas producer, enforce stringent environmental standards on producing companies, emphasizing reduced emissions of harmful gasses, particularly methane.
- Plan Sovereign Fund Timing: Initiate the sovereign fund related to oil revenues only when Lebanon is on the verge of receiving oil and gas revenues. This avoids prematurely establishing a fund, which could lead to unnecessary operational costs and further strain the national treasury.
- Separate Energy from Politics: Distance narrow political interests from energy issues. For Lebanon to capitalize on opportunities and attract financing for clean energy projects, it must commit to profound financial, institutional, and economic reforms. This will incentivize both local and global sectors to invest in the future of energy.
The views represented in this paper are those of the author(s) and do not necessarily reflect the views of the Arab Reform Initiative, its staff, or its board.