--- title: "Prospective Oil Wealth and Its Role in Lebanon's Economic Recovery | Ghazi Mahmoud" url: https://ghazimahmoud.com/en/articles/2025-03-05-60c23e/ lang: en description: "With Lebanon having completed its constitutional obligations by electing a president of the republic and securing parliament's vote of confidence for the new government, all the requirements for restoring the country's health have fallen due at once." --- [All articles](https://ghazimahmoud.com/en/articles/) # Prospective Oil Wealth and Its Role in Lebanon's Economic Recovery [Brig. Gen. (Ret.) Dr. Ghazi Mahmoud](https://ghazimahmoud.com/en/about/) 5 Mar 2025 · 6 min read [Energy, oil and gas](https://ghazimahmoud.com/en/articles/energy/)[The Lebanese economy](https://ghazimahmoud.com/en/articles/leb/)[The world economy](https://ghazimahmoud.com/en/articles/world/) With Lebanon having completed its constitutional obligations by electing a president of the republic and securing parliament's vote of confidence for the new government, all the requirements for restoring the country's health have fallen due at once. While state institutions and administrations are required to regain their effectiveness and pivotal role in running public utilities and providing services, Lebanon's economic revival remains an essential condition for the country's resurgence and prosperity. And while Lebanon has been suffering from a financial and economic crisis since the beginning of 2020, the devastating Israeli aggression came to exacerbate the crisis and increase the scale of the obligations ahead. The financial and economic crisis had led to an unprecedented collapse of the Lebanese economy, which the World Bank classified as one of the ten worst global crises since the mid-19th century. This crisis took its toll on financial and monetary stability, as the purchasing power of the lira collapsed, followed by the plundering of deposits and the collapse of the banking sector, subsequently exposing the losses of Banque du Liban, which amounted to nearly 76 billion US dollars. Meanwhile, the previous government's attempts were limited to measures that remained incapable of halting the collapse. On the other hand, the oil resources expected to be available in the Exclusive Economic Zone are returning to the spotlight, particularly following the initiative by President of the Republic General Joseph Aoun to ask his French counterpart, President Emmanuel Macron, to urge TotalEnergies to complete exploration operations. Notably, the French company stopped drilling in Block 9 before fulfilling the obligations stipulated in the exploration and production agreement, which obliges it to drill a new well in the same block to meet its commitments. The return of Lebanon's oil resources to the spotlight raises the question of whether their prospective revenues could contribute to solving Lebanon's financial and economic problems. This comes at a time when Lebanon has yet to discover productive wells despite attempts made in both Blocks 4 and 9, leading some to cast doubt on the availability of these resources beneath the waters of the Exclusive Economic Zone (EEZ) and elsewhere onshore in Lebanon, even as geological studies refute such claims and doubts. Indicators of the availability of these resources are not limited to the results of seismic surveys conducted by international companies on behalf of the Lebanese state. Indeed, survey results from the US Geological Survey (USGS), first announced in 2010 and subsequently reaffirmed in 2021, indicate that the eastern coast of the Mediterranean Sea, of which the Lebanese economic zone forms a part, holds no less than 280 trillion cubic feet of gas (TCFG), in addition to 2,207 million barrels of natural gas liquids (MMBNGL). The best evidence of the availability of commercial reserves in the Lebanese Exclusive Economic Zone is the keen interest shown by major international companies in participating in the first licensing round. That interest came after these companies reviewed the results of the seismic surveys carried out by the French company Geco-Prakla in 1993 and by Neos GeoSolutions in 2014, which also covered part of onshore Lebanon. However, the stabilization of oil and gas prices at low levels raised questions about the viability of working to extract undiscovered hydrocarbon resources, especially in countries where no discoveries have yet been made, particularly as doing so requires massive investments. This prompted many international companies to reconsider their priorities and confine their operations to specific areas, yet what happened with Lebanon cannot be placed among these considerations, falling instead within the context of political pressures. Conversely, relying on prospective revenues from expected oil resources to contribute to Lebanon's recovery is unrealistic, especially since gas and oil production takes three to five years from the moment a productive well is discovered in the area under exploration. Moreover, in the first years of production, the bulk of the financial revenues from these resources goes to the company holding the exploration and production licence to recover its costs, known as "cost oil", whereas the remaining oil, known as "profit oil", is shared between the company and the state holding the rights. Nevertheless, that does not preclude shedding light on the desired role these revenues could play, once realized on the one hand and properly managed on the other. What matters is not the volume of revenues so much as preserving them and putting them to optimal use, for the financial collapse in Lebanon did not stem from a scarcity of resources, but rather from the mismanagement of the financial resources that were available throughout the period preceding the crisis. It is worth noting that oil and gas continue to play a pivotal role in global energy production and transport, given the energy density they generate compared with alternative energy sources, making them more efficient in powering vehicles and factories. Oil and gas also remain less costly than renewable energy, in addition to the existence of vast global infrastructure for their distribution and use, including refineries, ports, pipeline networks and tankers, which makes transitioning to other sources costly and complex. Demand for oil and gas will remain high in sectors such as air and maritime transport and heavy industry until further notice. Perhaps the first positive outcome expected from the extraction of Lebanese gas and oil, once it takes place, is the possibility of using it domestically to generate electricity, reducing its cost and curbing reliance on fuel oil imports on the one hand, while narrowing the balance-of-payments deficit, considered one of the causes of the financial crisis, on the other. Prospective oil and gas revenues could also generate foreign-currency inflows, bolstering Banque du Liban's reserves thereof and preventing another collapse in the value of the Lebanese lira. Furthermore, the oil and gas sector could create new direct and indirect jobs across several fields, such as engineering, transport, services and other areas. Moreover, should a surplus in oil and gas revenues be achieved, it could be used to pay down part of the public debt, helping to restore confidence in the Lebanese economy. If gas and oil revenues are invested in a credible and transparent manner, they are bound to contribute to easing Lebanon's financial and economic crisis. Success in doing so, however, depends on shielding this sector from political quota-sharing and curbing wasteful spending, which rentier revenues such as those from oil and gas often encourage. In other words, good governance must be adopted in managing revenues and investing them in productive sectors, especially export-oriented ones. Given the positive indicators regarding the availability of oil wealth in the Exclusive Economic Zone (EEZ), Lebanon must accelerate steps to extract gas and oil wherever they may be available, onshore or beneath the sea, and develop its resources at the earliest possible opportunity. In working toward Lebanon's economic recovery, one cannot wait until prospective oil and gas revenues materialize. Still, action must be taken as soon as possible to organize a third licensing round that opens participation to medium-sized companies, preventing a repeat of the sole bid submitted by the consortium of TotalEnergies, QatarEnergy and Eni in the second licensing round designated for Blocks 8 and 10, widening the circle of competition and improving the terms Lebanon can secure. Translated from Arabic with AI. [Read it in Arabic](https://ghazimahmoud.com/articles/2025-03-05-60c23e/) ## Published in - [Channel 23](https://ch23.com/Article/247577/الثروة-النفطية-المرتقبة-ودورها-في-تعافي-لبنان-الاقتصادي) - [MTV Lebanon](https://www.mtv.com.lb/news/1554082) - [Lebanon Files](https://www.lebanonfiles.com/2025/articles/باقلامهم/الثروة-النفطية-المرتقبة-ودورها-في-تعا/) - [OZ Arab Media](https://ozarab.media/الثروة-النفطية-المرتقبة-ودورها-في-تعا/) - [Lebanese Army Magazine](https://www.lebarmy.gov.lb/ar/content/الثروة-النفطية-المرتقبة-ودورها-في-تعافي-لبنان-الاقتصادي) ## More on energy, oil and gas [All articles on this subject](https://ghazimahmoud.com/en/articles/energy/) [27 Feb 2025 · The New Lebanese Government and the Rise in Electricity Supply · OZ Arab Media ](https://ghazimahmoud.com/en/articles/2025-02-27-a12f6e/) [19 Feb 2025 · The New Government and Increasing the Electricity Supply · MTV Lebanon, Channel 23 ](https://ghazimahmoud.com/en/articles/2025-02-19-ad5296/) [13 Feb 2025 · Lebanon’s oil wealth in the spotlight again · OZ Arab Media ](https://ghazimahmoud.com/en/articles/2025-02-13-6bd72e/)