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Sat, 23 Nov 2019 01:22 GMT

Lebanon Becomes Oil Storing Country

Business

Enass Sherri - 7Dnews Beirut

Fri, 01 Feb 2019 17:06 GMT

Lebanon’s government has signed a contract with Russia’s energy giant, Rosneft, which is half owned by the Russian state, over its new role as an oil storing country.

The agreement is to help develop oil storage facilities in the port of Tripoli in northern Lebanon, which the country hopes will lead to more investments in the Lebanese oil and gas sector.

Lebanon’s former minister of energy and water, Cesar Abi Khalil, hopes this will boost Tripoli’s economic recovery, as it is not only considered to be the poorest city in Lebanon but also on the eastern Mediterranean coast as well.

The president of Rosneft, Igor Sechin, said that: “this agreement allows Rosneft to strengthen its presence in the Middle East, and to increase the efficiency of the current supply chain,” as well as contributing to the development of Russia’s international trade. Laury Haytayan, an expert in oil and gas governance in the Middle East and North Africa region (MENA), believes that this agreement is undoubtedly part of Russia’s plan to strengthen its presence in the region, and invest in Middle East oil. Russia’s energy investments in the region range from those in the Kurdistan province in Iraq, to the Zohr fields in Egypt, and it is expected to have a future role in Syria’s energy sector.

Haytayan told 7DNews that it is logical for Russia to start looking at Lebanon, specifically in light of the talks about the revival of the Kirkuk pipeline, which was Iraq’s largest crude oil export line.

With the expansion of Russian influence in the region, especially in Syria, the Tripoli refinery has become part of the Russian strategic circle, which aims to benefit from the region’s oil and gas potential. The refinery was established in 1940 to refine the crude oil coming into Lebanon from Kirkuk – Iraq through Syria, but it is currently not operating. This investment in the refinery becomes more important to the Lebanon oil sector as the Russian company Nova Tech has won tenders for two Lebanese oil fields.

The existence of Russian interest in this sector does not mean that Lebanon will not benefit at all, Haytayan noted. Lebanon’s transformation into an oil storing country is important, especially since the current global economic and political conditions mean that Lebanon’s presence on the sea is usefully strategic, as it could remove the need for a pipeline, by providing an easy access to the port of Tripoli.

Haytayan also sees this as an opportunity to revive the economy of Lebanon’s south. However, she noted that this depended on whether the agreement prioritized the Lebanese worker.

However, Haytayan believes that it is too early to say that Lebanon has become an oil producing/storing country. Even though the country signed two agreements for exploration and production of oil and gas in its waters, with France’s Total, Italy’s Eni, and Russia’s Nova Tech, last year. But, coupled with this new agreement, this indicates that Lebanon will have a role to play in the oil sector in the future. As for today, Tripoli’s refinery will simply store the oil, but future plans to start refining oil there may bring the country back to its former role as both a gateway to large regional oil deposits, and to being a major source of storage, or to even surpass that role, and become part of the oil production field themselves.

Middle East Russia