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Oil and Gas Conference: “How to ensure the highest Return on Investment through Good Governance”


On April 7th 2016, Haigazian University hosted the second Oil and Gas student conference-debate organized by Front Page Communication in collaboration with Forum for National Dialogue (FFND) and Lebanese Broadcasting Corporation (LBCI). Under the general umbrella of the Lebanon's National Wealth, this event, along with past and future ones, aims to raise awareness of the importance of good governance in the Lebanese oil and gas sector. The focus of this conference entitled "How to achieve the highest rates of profitability in investment through governance", was to emphasize the need to defend the rights of the Lebanese citizens in protecting their national wealth, by treading the path of good governance and proper legislation.
The conference was attended by the Minister of Energy and Arthur Nazarian, MP Ghassan Moukheiber, President of Haigazian University Rev. Dr. Paul Haidostian, Dean of the Faculty of Business Administration and Economics at the University Dr. Fadi Asrawi, President of the Lebanese Petroleum Administration Mr. Wissam Zahabi, Chairman of the Lebanese Transparency Association Mrs. Nada Abdel Sater Abou Samra, Dr. Samih Azar, professor at the Faculty of Business Administration and Economics, and President of the Forum for National Dialogue and National Dialogue Party, Mr. Fouad Makhzoumi, in addition to an audience of interested citizens and students.

Rev. Dr. Paul Haidostian
Following the national anthem, President Haidostian delivered a welcoming speech in which he shed light on the concept of energy as a key towards of spiritual, intellectual, and practical continuity. "We need a sustainable plan to benefit from this resource", stressed Haidostian, raising the audience's attention to the detrimental effects that this venture may have should it be limited to the Economics and political sectors, with no plans for sustainable development or accountability. He further pointed out that "the future of the Lebanese oil and gas sector, as viewed from perspective of our universities and society, puts first and foremost the importance of principles of honesty and good social values," both of which play prominent roles, even in the field of oil and gas.

H.E. Mr. Arthur Nazarian
Minister Nazarian spoke of the major challenges relating to governance, such as the legal framework, financial system, institutional framework, a decision-making mechanism related to petroleum activities, the involvement of all the components involved in this sector and fostering cooperation between ministries, academic institutions, civil society, and others. He also called for the "participation of Lebanon in global initiatives related to accountability and transparency in the Oil and Gas sector."
Furthermore, Nazarian revisited the need to assign revenues arising from petroleum activities to be placed in a sovereign fund.  "Re-launch the licensing cycle and creating incentives to attract global companies to work in Lebanon cycle are crucial in order to ensure sustainability of petroleum resources and national wealth", stressed Nazarian. He went on to urge against "wasting opportunities, but to seek to preserve what is left of our state's credibility," explaining that "the road to good governance of the oil and gas sector is long, and will only be achieved through a number of steps, including the dissemination of knowledge and staying abreast of the capacity of the local Lebanese community."
 

Dr. Fadi Asrawi
"Is Lebanon's wealth considered a blessing or a curse?", asked Asrawi, noting that "some studies showed that natural resources in weaker states can make them targets to powerful counterparts." Should this become a curse, Asrwai presented a number of solutions that can resolve this problem, including "transparency, simplification of the tax policy, drafting investment laws and plans, spreading awareness and knowledge, as well as the contribution of young people to put pressure on the government, thus contributing to the success of oil sector or its failure."

M.P. Mr. Ghassan Moukheiber
For his part, Moukheiber highlighted that "Lebanese citizens are expecting a lot from the development of the oil and gas sector, but at the same time they are fearful of having this blessing turn into a curse. Indeed, they consider that their state is fundamentally corrupt and suffers from an almost complete interruption in decision-making processes."
However, he brought forward several points can play a positive role to promote this sector, such as "activating the overseeing of parliamentary activities, adopting a set of necessary legislations to counter corruption via prevention and control, introducing a new law to declare assets and illegal wealth, creating a national anti-corruption body, as well as promoting and supporting the activity of existing regulatory bodies with low reach or efficiency."
Moukheiber then moved on to discuss the existing gaps, such as "improving the effectiveness and independence of the oil sector's governing body, and the requirement for special provisions to combat corruption". He further pointed out the need to set a defined the mechanism of action for the sovereign fund, and that harmony between the government and the people, coupled with the availability of accountability platforms, can together result in positive outcomes.
 
Mr. Wissam Zahabi
Zahabi presented a detailed breakdown of the legislative system of the petroleum sector. He further explained that "governance of the oil and gas sector involves the House of Representatives, the Council of Ministers and Minister of Energy and Water, the oil sector's governing body, as well as citizens, civil society organizations, academic institutions, the private sector, and the Ministries of Finance, Environment, Defense, Interior, Foreign Affairs, Public Works and Transport, Work, Health, Economics and Management Development."
According to Zahabi, the main objectives of the oil and gas sector are to "attract the best qualified investor to carry out petroleum activities in the long term, maximize economic benefit for the state through licensing, earning the trust of citizens, maintaining and managing expectations, promoting local potential and its positive feedback on the economy, gradual capacity building and enabling the concerned authorities to carry out their role and to strengthen accountability.”
Furthermore, Zahabi summarized the most important challenges related to governance and transparency from the legal and financial viewpoint, the institutional framework, the development of strategies and plans, accountability, as well as transparency and revenue management. He then concluded by stressing that the decision-making process in the petroleum sector includes "licensing, exploration, development, production and finally decommissioning."
 
Mrs. Nada Abdel Sater Abou Samra
Abdul Sater began her speech by asking, "When we say "profits", are we actually talking about providing profit for the investor? In her opinion, asking "whether petroleum resources are a blessing or a curse" is an invalid claim because "the curse has long existed among the Lebanese, and this is represented in the corrupt system that steals our money, pollutes our air and buries us in garbage". Indeed, "this resource is a blessing for Lebanon", confirmed Abdul Sater, "along with the human capital of the country itself", she added.
Abdul Sater later explained the dispute, which took place in 2010 during the discussion of the Fund. "It was a political dispute over who will take over this fund, and which religious sect will control it, which consequently led to the stalling and an explicit postponement of the establishment of the Fund."
 "The Petroleum Administration is headed by highly competent and specialized individuals" said Abdul Sater, "which should give the citizens enough reason to never give away their rights, particularly when it comes to the oil and gas sector. On the other hand, politicians' duties are to manage the state and its resources and to do so in a transparent manner."
 
Dr. Samih Azar
Azar presented a scientific account of the oil and gas sector, stressing that it provides annual revenues of up to 11.83%, in addition to counteracting inflation.
 

Mr. Fouad Makhzoumi
Mr. Makhzoumi concluded the conference with his speech, pointing out that "when Lebanese complain of problems that surround them, they tend to forget that they were the ones who elected the ruling political class". He then asked the audience asking them: "What about you? How will force your government to carry out its duties? The future is in your hands, and it is awaiting your immediate action."
He explained that the Lebanese economy is currently suffering and in an extremely fragile state, and this is attributed to the recent political discourse particularly with Gulf countries, which left Lebanon at the disadvantaged end. Makhzoumi highlighted that the creation of a lobby of successful businessmen and economists with international reach can put pressure on the government to improve the future, "so that we are not forced back to square: re-electing the same representatives."

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