MP Ibrahim Kanaan (l.), Chairman of the Parliamentary Finance and Budget Committee, at the meeting on Monday July 31. Image Ani
Final preparations are underway for Lebanon to become a hydrocarbon-producing country.
At a Wednesday press conference announcing the creation of the Lebanese Sovereign Wealth Fund — approved on Monday by Parliament's Finance and Budget Committee — MP Ibrahim Kanaan explained that the "fund would be a public establishment of a special nature, and would not be subject to the traditional interventions exercised by (...) the executive power."
Such a fund is important to Lebanon because, earlier this year, the country relaunched the exploration process in Block 9 of its Exclusive Economic Zone (EEZ) following the official demarcation of its maritime border with Israel in October 2022.
The fund will be financially and administratively independent and protected from political interference, assured Kanaan, who chairs the Finance and Budget Committee.
He said the Sovereign Wealth Fund was commissioned in line with global criteria for the creation of such funds.
According to Kanaan, the sums generated by the fund will be divided into two categories: The first for savings and investment (at least 75 percent of which must be invested abroad) and the second for development. Parliament and the cabinet still have to approve the fund's mandate to determine the investment strategy.
In a speech last week, Kanaan indicated that 80 percent of all revenues would go into the first category and the remaining 20 percent into the second, to be used to finance projects that develop the Lebanese economy. He ruled out the possibility that these revenues would be used to repay Lebanon's public debt.
"Through the Sovereign Wealth Fund, we want to ensure the good management of public money ... and its investment in a rational and sound manner, to preserve revenues for future generations," concluded Kanaan.
Before its implementation, the law must be adopted by Parliament in a plenary session.
At the end of March 2023, members of Parliament sought advice from former Norwegian Deputy Finance Minister Vidar Ovesen, as Norway has a sovereign wealth fund that includes $1,200 billion in oil-related assets, as of the end of 2022.
On July 21, TotalEnergies, one of the companies in the consortium responsible for exploration in Lebanese waters, announced that the TransOcean Barents drilling rig is due to arrive in Lebanon on Aug. 14.
"The process will take about two months before we know whether Lebanon can start extracting and producing natural gas from the block," a source at the Lebanese Petroleum Administration told L'Orient Today at the end of July.
"If this is the case, the consortium will move on to the next stage and Lebanon will officially become an oil-producing country."