The Oil & Gas sector in Lebanon

Categories: Energy and Natural Resources, Fossil Fuels, Oil

Price: $2,000

Description

This guide provides an overview of the current status and planned development of the downstream and upstream sectors of the Lebanese oil and gas industry. The downstream sector comprises the commercial side of the business, such as the importation of fuel for producing electricity, the petrol station sales of gasoline to motorists, or the distribution of LPG to households and businesses. The upstream sector, which consists of the process of extracting hydrocarbons and refining them, is just starting to become active.

The import segment of the downstream sector is dominated by a limited and stable number of importers, united in the Association of Petroleum Importing Companies (APIC). Barriers to entry and exit are high due to the cost of building sea-side terminals, which are the prerequisite for receiving shipments. This is especially true for LPG, the transport and storage of which requires special technical and safety measures.

There is a gentleman’s agreement between the public and the private sectors regarding who sources which petroleum products. The State exclusively imports gasoil for the public power sector as well as private consumption, in addition to the heavy fuel oil destined for the EDL. Private companies supply fuel oil to the industrial sector and import the remaining petroleum products into the local market. The private sector is marked by overcapacity in the storage, transport, and retail distribution of petroleum products, a factor which has stimulated competition.

In addition to undertaking a part of the importation itself, the state authorities also set weekly prices for petroleum products, and prepare the regulatory framework within which the sector operates. The day-to-day monitoring of the quality of hydrocarbon products and their storage is carried out by two public entities. The Consumer Protection Service at the Ministry of Economy and Trade verifies the quality of gasoline or diesel and the content of LPG bottles at the request of consumers and through its own spot checks. It also carries out the calibrations of fuel trucks and their tankers, and of balances and weighbridges at LPG bottling plants. The Industrial Research Institute (IRI), which is linked to the Ministry of Industry, inspects tanks and cylinders containing petroleum products. The IRI laboratory is also equipped to test product samples.

The upstream hydrocarbon sector is currently taking off with the exploration of the country’s offshore territory and a first bidding round. Commercial gas discoveries in Israel and Cyprus have provided an extra impetus for conducting seismic surveys which confirmed that the country is sitting on substantial oil and gas reserves. Public authorities have a pivotal role in shaping the new sector. The fundamental hydrocarbon law has already been adopted, but executive and supplementary laws and regulations are required.

The decision of the Minister of Energy and Water, which needs to be endorsed by the Council of Ministers, will be central in defining the blocks and awarding the licenses for each stage of hydrocarbon development, including reconnaissance, exploration, and production. The Petroleum Administration will oversee the operations of the foreign oil companies. To administer the country’s hydrocarbon revenues efficiently, the Government and Ministries must choose an appropriate fiscal regime and carefully manage the repercussions of opening an upstream hydrocarbon sector on the rest of the economy.

This guide examines the environmental impact of both the downstream and upstream hydrocarbon sectors. In the downstream sector, electricity generation is the main cause of greenhouse gas emissions, followed by land transport and industry. A switch to natural gas as a fuel is possible in all three areas and would reduce these emissions dramatically. In the upstream sector, environmental risks mainly revolve around drilling, which is a complex undertaking in the Eastern Mediterranean. The waters are deep, and the seafloor beneath them can hold various gas combinations with different pressures. A first Strategic Environmental Assessment evaluating the potential effects of the new upstream sector and formulating appropriate safeguards has already been carried out.

Table of Contents

1. Demand
1.1 Demand structure for different petroleum products
1.1.1 Gasoline
1.1.2 Electricity fuels: Diesel, gasoil, and heavy fuel oil
1.1.2.1 Diesel
1.1.2.2 Gasoil
1.1.2.3 Fuel oil
1.1.3 Jet fuel
1.1.4 Bitumen
1.1.5 Liquefied Petroleum Gas (LPG)

2. Supply
2.1 Supply structure for different petroleum products
2.1.1 Gasoline
2.1.2 Diesel
2.1.3 Gasoil, fuel oil, and bitumen
2.1.4 Jet fuel
2.1.5 Liquefied petroleum gas (LPG)
2.2 Import routes
2.2.1 Pipelines
2.2.1.1 Oil pipelines
2.2.1.2 Gas pipelines
2.2.2 Maritime route
2.3 Storage
2.3.1 Public
2.3.2 Private

3. Energy Cost and Pricing
3.1 National energy bill
3.2 State price management
3.2.1 Taxes
3.2.1.1 Excise tax
3.2.1.2 Customs duty
3.2.1.3 Value added tax (VAT)
3.2.2 Technical margins
3.2.3 Company profits
3.2.4 Impact on the consumer

4. Distribution
4.1 Gasoline distribution market
4.2 Petrol stations
4.2.1 Company angle
4.2.2 Regulatory angle
4.2.3 Consumer angle
4.3 LPG bottling plants
4.4 Transport by truck

5. Energy Conversion
5.1 National electricity company
5.1.1 Power stations
5.1.2 Cost of State electricity production
5.2 Private generators
5.3 State energy policies

6. Downstream Environmental Aspects
6.1 Current environmental status
6.2 The 2006 oil spill
6.3 State environmental policies
6.3.1 General policies
6.3.2 Transport sector
6.3.3 Petrol stations
6.3.4 Generators

7. Natural Gas as an Alternative Fuel
7.1 Gas-fired power plants
7.1.1 Financial advantages
7.1.2 Environmental advantages
7.2 Sources of liquefied natural gas (LNG)
7.3 Liquefied natural gas (LNG)
7.3.1 Onshore terminal
7.3.2 Offshore terminal
7.4 Gas distribution pipeline network
7.5 Other uses for natural gas

PROSPECTS FOR THE DEVELOPMENT OF GAS AND OIL RESERVES

8. Seismic Explorations
8.1 The Eastern Mediterranean
8.2 Status in neighboring countries
8.2.1 Israel
8.2.2 Palestine
8.2.3 Cyprus
8.2.4 Turkey
8.3 Early explorations
8.4 Recent explorations
8.4.1 Offshore 3D seismic surveys analysis
8.4.2 Onshore surveys
8.5 Seismic results
8.6 Blocks delineation

9. Legal Aspects
9.1 Maritime border delineation
9.1.1 International basis
9.1.2 Application in the Eastern Mediterranean
9.1.3 Border with Cyprus
9.1.4 Border with Israel
9.1.5 Border with Syria
9.2 Offshore Petroleum Resources Law
9.2.1 Decree on drilling rights
9.2.2 Roles and qualification criteria
9.3 Petroleum Administration
9.4 Licensing
9.4.1 Reconnaissance licenses
9.4.2 Exploration and production license awarding process
9.4.3 Exploration and Production Agreements (EPAs)
9.5 Prequalified firms
9.5.1 Prequalified operators
9.5.2 Prequalified non-operators
9.5.3 Consortiums formed

10. Financial Management
10.1 Investment considerations
10.2 Upstream oil companies
10.3 Fiscal model
10.4 Sovereign wealth fund
10.5 Economic impact
10.6 Avoiding the resource curse
10.7 Export

11. New Stakeholders
11.1 Local staff
11.2 Downstream oil firms
11.3 Petroleum services firms
11.4 Advisory services firms
11.5 Energy-intensive industries
11.6 Natural gas feedstock industries

12. Upstream Environmental Aspects
12.1 Environmental risks of offshore drilling
12.2 International environmental legislation
12.3 National environmental legislation

Appendices
I. Capacity of Thermal Power Plants of National Electricity Company
II. Glossary of Abbreviations
III. Approximate Conversion Factors
IV. Oil and Gas Primer
A. Types of Petroleum Products
B. Natural Gas
C. Liquefied Petroleum Gas (LPG)
D. Seismic Surveys
E. Exploration
F. Extraction
G. Production
H. Refining
I. Gas Pipelines
J. Liquefied Natural Gas (LNG) Transport