Lebanon is preparing to sell exploration rights for the first time in early 2013 amid concerns that its warlords and political groups could descend into sectarian strife as they vie for a piece of offshore wealth.
These groups fought a 15-year civil war and remain at odds more than two decades later. Royal Dutch Shell is among companies expressing interest in bidding for a license.
Prospects of substantial gas and oil reserves
offshore, onshore and near the coast in Lebanon are quite high, said experts speaking at the Lebanon
International Oil and Gas Summit 2012, as ongoing seismic surveys reveal even more promising geological structures.
"It could be a curse or a blessing for Lebanon given the sectarian divides that exist," Sven Behrendt, managing director of political risk-management company GeoEconomica.
Carole Nakhle, an energy economist and director of Crystal Energy, said: "You are on your way to hell or heaven, so proceed with caution."
Bickering between Lebanon's two main rival political groups, divided along the lines of opponents and supporters of Syrian President Bashar Assad,
led to delays in passing an oil and gas law and appointing the Petroleum Administration board that will oversee the country's energy industry.
Spats over natural resources aren't uncommon, said Angelina Eichhorst, head of the European Union delegation to Lebanon. "Too often the explorations have brought conflict, corruption and environmental degradation," she said. "Surely the Lebanese government will take necessary steps to avoid this."
Lebanon began preparing for the oil-licensing round and the exploration amid a power struggle between the pro-Assad March 8 coalition and the anti-Assad March 14 group.
It took months of negotiation before the oil and gas law was passed in 2010 and even more time was needed to appoint the petroleum board as the two groups sought to wrest favorable conditions. The six board members, chosen from Lebanon's most six most prominent religious sects, were named last month.
The Iran-backed militant group Hezbollah,
which fought a war with Israel in 2006 and is considered a terrorist organization by the US, has vowed to protect the Lebanon's offshore resources.
Israel's then-minister of national infrastructures, said in June 2010 his government was willing to use force to protect its undersea gas finds.
Lebanon's feud with Israel
"is unlikely to become a stumbling bloc," said Paul Salem, director of the Carnegie Endowment for International Peace's Middle East Center in Beirut. "There seems to be an understanding to avoid drilling in the disputed area," he said in an interview at the forum.
The Lebanese government should begin the exploration process as soon as possible, said Solon Kassinis, director of the Energy Service in Cyprus's Ministry of Commerce, Industry and Tourism. "Don't delay, take what you have and reserve your right for a future settlement of the dispute with Israel," he said at the conference yesterday.