Lebanon says Russia, Europe eye investment in oil and gas

Russian and European firms are mulling investments in Lebanon’s nascent oil and gas sector, as the country prepares to launch offshore drilling by the end of the year, said Energy Minister Nada Boustani. (AFP)
Updated 14 June 2019
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Lebanon says Russia, Europe eye investment in oil and gas

  • Gazprom, Lukoil, BP, Total and ENI are among the big companies interested in the sector says Energy Minister Nada Boustani
  • Last year, Lebanon signed its first contract to drill for oil and gas in its waters when a consortium comprising energy giants Total, ENI and Novatek took the first two of its 10 blocks

BEIRUT: Russian and European firms are considering investments in Lebanon’s nascent oil and gas sector as it prepares to launch offshore drilling by the end of 2019, Energy Minister Nada Boustani said.
“Several big companies have visited Lebanon,” she told AFP in an interview.
“We are talking about Gazprom (Russia), Lukoil (Russia), and soon, the BP firm (Britain) is expected to visit,” the 39-year-old minister said in her office in Beirut.
“There is also interest from Total (France), ENI (Italy) and Novatek (Russia).”
US firms have not yet participated in offshore bidding rounds.
But US State Department official David Satterfield told Boustani on Wednesday that Washington “has no problem with US firms participating” in the energy sector, she said, calling this a “positive step.”
Last year, Lebanon signed its first contract to drill for oil and gas in its waters.
A consortium comprising energy giants Total, ENI and Novatek took the first two of its 10 blocks, including one disputed by neighboring Israel with which Lebanon has fought several wars.
On April 5, Lebanon invited international consortia of at least three companies to bid for five more blocks by the end of January 2020.

 

 On Thursday, Boustani wrote on Twitter that she had met with the regional head of BP who said his company was “interested in the second licensing round.”
Two more of the blocks now up for tender are also adjacent to Israel’s waters.
Israel and Lebanon are technically at war, although the last Israeli troops withdrew from southern Lebanon in 2000 after two decades of occupation.
This has complicated attempts to demarcate land and maritime borders with Israel, which produces natural gas from reserves off its coast in the Mediterranean.
In recent weeks, Satterfield has been mediating in indirect negotiations between the two countries over their disputed maritime border, whose delimitation could affect offshore exploration.
“If we agree on entering talks with Israel, then in addition to negotiations over the maritime borders, we will also discuss ways to divide offshore oil and gas fields,” Boustani said.
Lebanon is set to start drilling in block 4 in December, and later in the disputed block 9.
Last year, Total said it was aware of the border dispute in less than eight percent of block 9 and said it would drill away from that area.
In the wider region, Lebanon is also considering agreements with other neighbors.
In January, representatives of seven Mediterranean countries — including Egypt, Cyprus and Israel — agreed on establishing the East Med Gas Forum, a Cairo-based body that aims to create a regional gas market to benefit member states.
Lebanon refused to take part in the forum because of the participation of Israel, but it has since started working on separate deals.
In April, Lebanon and Cyprus said they were working together toward a deal over adjacent oil and gas exploration zones in the Mediterranean.
“We have made way for negotiations with Cyprus and we are doing the same with Egypt,” said Boustani, the youngest sitting minister in Lebanon’s government.
“We can’t be involved where the Israelis are,” she said, referring to the East Med Gas Forum.
“But nothing prevents us from striking a tripartite agreement” with Cyprus and Egypt, she added.
Laury Haytayan, a Middle East oil and gas expert, says such a tripartite deal is one way for Lebanon to secure strategic regional alliances in the energy sector.
Lebanon may also have to strike a deal with Syria, with which it also has a maritime border dispute.
Two of the five blocks up for bidding until January 2020 border Syrian waters, which may complicate drilling.
“There is certainly room for (negotiations) with Syria, and we need to look into this very soon,” Boustani said. “When the government agreed to open blocks 1 and 2 for bidding ... this means that it knows a deal will be brokered” with Syria, she said.
But divisions among Lebanon’s political class may complicate such an agreement.
Prime Minister Saad Hariri and his Future Movement refuse a normalization with Damascus.
Syrian regime backer Shiite movement Hezbollah and its Lebanese ally the Free Patriotic Movement, however, are in favor.
Haytayan said that Russia may take the lead in negotiations because Moscow is interested in conducting exploration works on block 2. “The Russians could mediate between Lebanon and Syria and together they will put in place a plan to share resources and outputs,” she said.
While many hurdles still stand in the way, Boustani says she has “big hopes for this industry.”

FASTFACTS

In January, representatives of seven Mediterranean countries — including Egypt, Cyprus and Israel — agreed on establishing the East Med Gas Forum, a Cairo-based body that aims to create a regional gas market to benefit member states. Lebanon refused to take part in the forum because of the participation of Israel, but it has since started working on separate deals.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 20 July 2019
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BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.