TBY talks to Wissam Zahabi, Chairman of the Board of the Lebanese Petroleum Administration (LPA), on making the investment climate attractive for foreign companies and becoming self-sufficient in energy.
What strategy do you take to attract foreign investors to Lebanon?
From day one, we structured our strategy around attracting leading companies with technical expertise, long experience in deep offshore, financial strength, and with a good record track in QSHE. Once the strategy was in place we started working on putting the regulatory framework together to guarantee the targeted companies about the secure environment for investments in the country. We want companies to come and invest here for 30-40 years, and they need investment returns and to see that the legal framework will not change from one day to the other just because the government wants it to. We cannot fight the regional instability that characterizes the Middle East; however, as an authority we can reduce the impact here. The LPA is committed to offering investors a comforting investment climate in Lebanon.
Apart from the taxation system, what other legislation can render Lebanon more attractive for investors?
We do not seek any form of upfront payments from companies before they enter the market as we do not want them to feel like there are barriers here. The oil system greatly depends on prices, quantities, and the capital destined for expenditures, which turns it into a progressive system whereby companies will be happy to make money when things are happening. We have a strong private sector in Lebanon, strong engineering and legal firms, and people with experience in business, all of which minimize the risks for multinationals. We have also carried out seismic surveys, mapping out 80% of potential reserves with 3D seismic data available for companies to check their prospects for exploration beforehand, also reducing the risks for investment.
Do you plan to connect Lebanon to the pipelines coming from the Gulf to Europe?
There is an existing pipeline running from Egypt to Jordan, Syria, and Lebanon all the way up to Turkey called the Arab Gas Pipeline. Right now, the prospects are not positive due to the situation in Syria and the high expenses. There is also talk of regional cooperation to build a pipeline linking countries such as Cyprus, Israel, and maybe even Egypt to provide gas to Europe, but so far it is just an idea. The LPA has conducted studies on our export options; however, this has to wait until we make a discovery and options actually materialize.
Lebanon is in need of investments in infrastructure. What are the major opportunities investors can find in this regard?
The energy sector is the best sector to invest in Lebanon right now. This not only involves oil and gas but an entire energy chain in need of processing facilities, reservoirs, pipelines, power plants, renewable energy projects, distribution networks, and transmission. There has been a great level of underinvestment here for the past 15 years, which provides a valuable opportunity for local and foreign investors. There is a great need for investments and more services for the industry, which will come with time once we start awarding tenders to move forward with these projects.
How many years will it take for Lebanon to be energy self-sufficient?
If there is good political will, we could be self-sufficient in five years. Once we build a pipeline to the shore and provide good quality natural gas, all the power plants could operate on natural gas. I recently signed a MoU with the Association of Industrialists to make progress in putting the oil and gas process in place. Once we are able to export energy, it will transform the dynamics of the country.
What role will the LPA play to ensure projects become a reality and fulfill objectives?
We are currently working on upcoming plans for the next four to six years and are preparing the regulatory framework for health, safety, and the environment. We are also increasing cooperation programs with multinationals, countries with previous experience in the field, and with institutions to attract investments, expertise, and supervision.