Major Setback for Lebanon’s Oil and Gas, by Carole Nakhlé
▻http://lcps-lebanon.org/featuredArticle.php?id=297
For many years, 2020 will be remembered as the year that brought the world economy on its knees and oil markets with it. The COVID-19 pandemic has caused unprecedented challenges to countries over the world. Economies, which until recently were considered robust, have been hit hard and their recovery pattern looks patchy. For a country like Lebanon, with its economic structures already dissolving and engulfed by a self-inflected major domestic crisis, the impact is much more severe.
The negative results from the exploration activity that oil giant Total and its partners carried out in Block 4 in Lebanese waters add another strong blow. It is true such an outcome is common in the industry particularly in hardly explored provinces. However, under the current gloomy oil market conditions, exploration spending will be significantly curtailed, further delaying Lebanon’s eagerly and long-awaited dream of joining the busy club of oil and gas producers. Even when, and if, that materializes, it will not be an easy ride for Lebanon in an already highly competitive market.
The government cannot and should not pin its hope on the oil and gas sector to salvage its failing economy and should immediately tackle the root causes of the domestic turmoil irrespective of the state of the oil and gas industry.
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The negative results from the first exploration in Block 4 do not mean game over for Lebanon. It means however that unless the situation in global oil markets changes drastically, investing in exploration activity in the country will become more precarious.