Lebanese civilians fear there could be another war between Israel and Hezbollah after the discovery of rich offshore oil and gas reserves on disputed territory.

International oil and gas exploration company, Energean, announced in November, 2019 that the waters near Lebanon’s southern border contains recoverable resources of 0.9 trillion cubic feet of gas, and 34mm barrels of light oil and condensate. The oil and gas reserves – worth tens of millions of dollars – is present in a triangular area of water known as Block 9.

Israel And Palestine Both Claim The Reserves

The offshore borderline is disputed between both countries, because of its incredible oil and gas wealth. Although Lebanon is a signatory of the United Nations Convention on the Law of the Sea (UNCLOS), Israel is not. Article 3 of the UNCLOS concludes that, “every State has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from base lines determined in accordance with this Convention.” Israel, however, operates under international maritime law.

“We will not hesitate to use our force and strength to protect not only the rule of law but the international maritime law,” Israel’s Minister of National Infrastructures, Uzi Landau, said years before.

“I Think That There Would Be A War”

Speaking about the conflict last year, former Lebanese army general, Eliad Farhat, said emphatically: “I think that there would be a war.” The Foreign Policy Research Institute argued last month that Israel’s border dispute is an issue of financial security. It wants to solidify its economic and political power on the national stage.

For Lebanon, however, the stakes are even higher. The nation was driven to mass protests at the end of 2019, as protesters, fed up with decades-long economic, social and environmental crises, demanded revolution. At an estimated 155 percent of gross domestic product, Lebanon is one of the world’s most indebted countries. Its government has been accused of decades of corruption, sectarianism and mismanagement of public funds.

“I am taking part because over the last 30 years warlords have been ruling us. I am about to be 30 and my parents still tell me tomorrow will be better. I am not seeing better days ahead,” said Sylvia Yaqoub, 29, a laboratory manager taking part in the protests. “We want back the money they stole because 30 families are ruling five million people. We won’t accept this any longer,” she added.

Lebanon’s Utilities Company: A Financial Black Hole

The country’s infrastructure is also severely lacking, under a government that refuses to diversify its rentier economy, with an equal dependence on remittances from its emigrant population. Its estimated 1.5 million Syrian refugees are an additional financial and infrastructural strain on Beirut’s already failing government. Arabian Industry has called the government’s utilities company a huge financial drain and “major source of the nation’s ballooning debt”.

“The electricity sector in Lebanon is undergoing a transition from heavy fuel oil to natural gas,” the Lebanese Petroleum Administration wrote in a statement.

“Most of the existing power plants and all the planned plants are equipped to run on natural gas. A prospective natural gas discovery is expected to first fulfill the needs of the local market, in particular the electricity sector, which is the main off-taker of natural gas.”

Additionally, access to this natural gas reserve would increase Lebanon’s export and revenue, reducing the country’s debt and unemployment problem.

Crisis Point: South Lebanon

South Lebanon, Hezbollah’s heartland – and bordering Israel – has been a war zone for forty years. In 2018, attacks from both sides of the border saw a one-day battle between Hezbollah and Israel, in a sign of the diminishing relationships between leaders of both countries. Hezbollah, Lebanon’s Iranian-backed Shi’ite Muslim movement, and Amal, both received support in last year’s protests.

“If we don’t work towards a solution we’re heading towards a collapse of the country, it will be bankrupt and our currency will not have any value,” Hezbollah leader, Sayeed Hassan Nasrallah, said in a speech targeting the nation “The second danger is a popular explosion as a result of wrong handling of the situation,” he added.

Lebanon’s problem is multi-generational. It is a shared problem between its government, its banks, its militia-leaders and its wealthy elite. Its disputed oil and gas reserves may improve the country’s financial standing, but there is no guarantee that an already broken government and political system would be able to economically manage such a big responsibility for the benefit of the people.

Partly a failure of international laws, where two different laws override the same jurisdiction, the problems facing both sides of the border are multi-faceted and driven by deeply nationalistic and tribalistic sentiments. Diplomatic talks have been tenuous and unsuccessful, yet threats of war, attacks and violence have been plenty. The only sure thing going forward is that civilians on both sides of the dispute will suffer the consequences of both nations’ actions.

L'articolo Fears Of Another Israel-Hezbollah War After Discovery Of Large Oil Reserves proviene da InsideOver.

From November 17 to December 4, Saudi Arabia’s oil giant Saudi Aramco will list its shares on the Riyadh stock exchange, making it the world’s biggest initial public offering (IPO). The company set a valuation worth $1.7 trillion, below $2 trillion the kingdom’s prince sought.

Chinese’s e-commerce giant Ali Baba IPO is the globe’s biggest as it garnered $25 billion in the offering in New York in 2014, Reuters reported.

Saudi Aramco’s IPO will be held amid the ongoing tension in the Middle East following the drone attack on Saudi Aramco’s oil facility last September and the global call for the use of renewable energy.

The world’s most profitable firm said it would only release 1.5 per cent of its shares or around three billion shares, priced between 30 riyals and 32 riyals, as Reuters wrote. The oil firm has appointed Goldman Sachs, Citigroup, Morgan Stanley, and JP Morgan as underwriters.

Previously, Saudi postponed the IPO plan

Saudi Aramco has planned to sell its shares to the public since the firm announced the offering proposal in 2016. However, it had to postpone the idea due to some factors, such as the sharp decline in the global oil price. The location of the listing was then still unclear. Saudi Aramco once considered the Wall Street, bourses in Asia (the primary market of Aramco oil), or a local Saudi bourse for the listing location.

Initially, Saudi Aramco was estimated to release five per cent of its shares in two stock markets (two per cent in the Tadawul Saudi, and the remaining three per cent in overseas bourse). However, Saudi Aramco then revised the plan by ruling out an overseas listing.

In mid-September, ten drones attacked two Aramco’s refineries. Saudi Aramco suffered a 5.7 million barrel a day lost due to the incident (which is equal to five per cent of the global oil supply).

Yemen’s Houthi rebels claimed responsibilities for the attack. However, the US accused Iran of masterminding the attack despite providing no supporting evidence.

The drone attack almost forced Saudi Aramco to delay the public offering. The company’s officials were not optimistic that the oil giant would recover its production quickly after the aggression.

“The company continues to engage with the shareholders on IPO readiness activities. The company is ready, and timing will depend on market conditions and be at a time of the shareholders choosing,” Aramco said in a statement as quoted by CNN.

Saudi Aramco contributes to ten per cent of global oil demand, producing more than ten million barrels of crude oil per day, Marketwatch wrote. The company’s net profit in 2018 reached $111 billion, five times bigger than that of Exxon, Apple and Shell combined.

The Risks Saudi Aramco Is Facing

Saudi Aramco’s offering may be the largest in history. However, the offering is not risk-free and there are several factors to consider.

The drone attack last September disrupted 50 per cent of the kingdom’s oil production. The ongoing conflicts in the Middle East have made some investors think twice before buying the company’s shares.

“They are the best assets in the world, but I have no interest in owning Aramco given the security risks,” Ben Cleary, Asia chief executive officer at Tribeca Investment Partners, told SCMP, adding that the tensions in the Gulf show no signs of receding.

Analysts from 16 banks have provided a valuation of Saudi Aramco, ranging from $1.1 trillion to $2.5 trillion, as Saudi’s Prince Mohammed bin Salman expected. However, $1.5 trillion is considered the most realistic value given the previous incident and Saudi Aramco’s recovery following the intrusion.

Transparency and professionalism are also among the main issues before the IPO. There is no specific data about the size of Saudi oil reserves as Saudi Aramco has not handed over the audit of its reserves to an independent review since 1980.

Saudi Aramco’s management team has little experience in running a public company, dealing with investors, and complying with complex regulations and procedures, CNBC wrote.

The demand for cleaner energy to curb the impact of climate change will pose a risk to Saudi Aramco’s business. As many companies are going greener, Saudi Aramco must be able to adapt to the current situation and demand.

Saudi’s Prince Mohammed bin Salman expects the IPO will raise billions of dollars to help the kingdom to curb dependence on oil. Per December 31, 2016, and 2017, the hydrocarbon industry contributed 43 per cent to the country’s GDP.

Saudi is busy developing alternative energy sources. In 2018, the oil-rich nation built a renewable energy facility to generate electricity in the next ten years, including 40 GW of photovoltaic solar power, three GW of concentrated solar power and 16 GW of wind power, Reuters reported.

L'articolo Saudi Aramco’s IPO: Why The Record-Shattering Listing Has Its Risks Too proviene da InsideOver.