Prospects for Good Governance in Lebanon’s Nascent Petroleum Sector
There is increased interest in oil and gas exploration offshore Lebanon, but the country lags behind Israel and Cyprus in developing its resources. There has been wide domestic criticism of the government's slow progress in developing Lebanon's petroleum resources, as symptomatic of the country's governance failure. However, in light of the state's weaknesses in the areas of control of corruption, rule of law and political stability, an accelerated path to the development of resources would have involved great risks.
From 2007 to 2012, Lebanon has gradually established the institutional and legal framework for the governance of the petroleum sector. Throughout this process, political parties have struggled to increase their influence over the sector - for instance in the Council of Ministers' appointment of members of the regulatory body or the parliamentary approval of the agreement with Cyprus on maritime boundaries. In the future, it is likely that further critical decisions will be stalled in the regulatory body (the Petroleum Administration) and the Council of Ministers, which memberships reflect the religious segments of Lebanese society. The political process of building coalitions of support for each milestone is indeed painstakingly slow, but it creates consensus around the policy outcome. And thanks to relatively high state administrative capacity and support from foreign technical advisors, the government has established an adequate framework for investment.
The critical weakness in the Lebanese governance system is rather in the risk of corruption. Strengthening processes of accountability, improving the disclosure of information regarding the sector and building capacity in auditing can alleviate this risk. And civil society can play an important, positive role in improving accountability by pushing for public disclosure of financial and operational data and holding decision makers to account.
The full article can be found at Energy Strategy Reviews (2013).