The Oil & Gas sector of Lebanon: What we need to know with Dr Carole Nakhle

Below are some key takeaways:

• Zooming in solely on the oil and gas sector in Lebanon without taking into consideration the wider economic structure, policy and prevailing institutional quality is like driving a car while fixating our gaze on the front of that car only.
• The oil and gas sector cannot flourish sustainably in the absence of robust economic and energy policies as well as strong rule of law and institutional framework.
• One of the main problems related to the management of the sector is that, right from the start, it has been highly politicised.
• Lebanese politicians have placed too much emphasis on the potential bonanza that could accrue to the country from the sector, thereby not only building unrealistic expectations but also becoming further distracted from badly needed economic reforms.
•  It is true that transparency is crucial but it is not sufficient to produce accountability in the public sector. It takes several robust pillars to build a strong bridge; transparency is only one of them.
• A sovereign wealth fund is not sufficient to build and support sustainable economic development. A sound fiscal management—which has been lacking in Lebanon—is a necessary condition for an effective revenue management even without a fund. A fund, however, cannot properly function without sound fiscal management already in place.
• The discussion about establishing a national oil company (NOC) has been premature in Lebanon; most of the few successful NOCs in the world were established several years after the first discovery was made. Lebanon can therefore easily wait and focus on more pressing priorities.
• The failed outcome of the first exploratory well is a common feature of exploration activity the world over.
• The future of the sector in Lebanon not only depends on what is happening within the country but also in global oil and gas markets.