What should Lebanon be doing about its nascent oil and energy industry?
Lebanon needs to re-assess its education sector and develop local content policies to generate benefits beyond the expected direct contribution of oil and gas wealth to economic growth, experts say. An emerging oil and gas industry would help Lebanon reduce its unemployment rates, which reach as high as 34 percent among the youth. But the government needs first to bridge the gap between future demand in the labor market and available qualified staff, said Patrick Gougeon, director of the ESCP Europe London Campus.
Gougeon’s remarks came during the Oil and Gas Lebanon’s National Wealth Forum held at Ecole Superieure des Affaires, in which high-profile political and economic figures shed light on the prospects of the gas and oil sector in Lebanon.
A number of Lebanese universities have already introduced new academic programs or expanded existing ones to cater to future demand in the oil and gas labor market, participants said.
For example, Saint Joseph University has developed a master’s program in oil and gas focusing on exploration, production and management, while the American University of Beirut has expanded several existing programs such as petroleum geology and petroleum engineering.
The positive impact of an emerging oil and gas industry on the labor market shouldn’t, however, be restricted to direct employment, despite its importance, economist Kamal Hamdan said.
“ Lebanon should develop local content policies to provide further value-added beyond the direct contribution of the oil and gas sector to the economy by linking it to other sectors,” Hamdan said.
Local content policies, which entail the development of a skilled work force and a competitive supplier base through technology transfer, could help create jobs in sectors such as transportation, downstream operations and the petrochemicals industry, according to Hamdan.
The technology transfer process, according to Gougeon, requires the involvement of local higher education entities with international technology providers looking to invest in Lebanon’s oil and gas sector.
According to the model exploration and production agreement, which the Lebanese government has yet to endorse, Lebanese nationals should represent a minimum of 80 percent of an international company’s local labor force.
However, the 80 percent target could prove hard to achieve in the early phases of exploration and development due to the lack of specialized labor force in Lebanon, Gougeon added.
The failure to develop local content policies that enable technology transfer could impede future growth in indirect employment since Lebanon lacks a solid industrial base, Hamdan warned.
“Lebanon’s economy lacks a solid industrial component which could limit the possibility of developing links between the oil and gas industry and the local economy,” he said.
Lebanon expects to close its first licensing round for offshore gas exploration areas by August after the auction was delayed three times due to political gridlock.
Besides approving a model exploration and production agreement, the government should also issue a decree delineating the offshore blocks for auctioning.
Early estimates indicate that Lebanon may have as much as 96 trillion cubic feet of natural gas and 850 million barrels of oil under its waters.
“The oil and gas industry should represent a multilayer highway for the industrialization of Lebanon,” Hamdan said.
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