Lebanon’s energy sector has long been plagued by numerous challenges, leading to significant struggles in securing adequate funding and resources. Some of the key issues include:

  • Infrastructure Decay: Much of Lebanon’s energy infrastructure is outdated and poorly maintained, leading to frequent power outages and inefficiencies.
  • Financial Crisis: The ongoing economic crisis in Lebanon has greatly limited the government’s ability to invest in the necessary upgrades and expansions of the energy sector.
  • Corruption and Mismanagement: Corruption and lack of transparent management have hindered efforts to improve the energy sector, diverting funds meant for infrastructure improvements.
  • Reliance on Imported Fuel: Lebanon relies heavily on imported fuels, making it vulnerable to fluctuations in global energy prices and impacting its financial stability.
  • Inadequate Energy Production: The country’s energy production capacity is significantly below demand, resulting in widespread electricity shortages and reliance on private generators.
  • Political Instability: Political gridlock and instability have prevented the enactment of necessary reforms in the energy sector, further exacerbating the crisis.


Lebanon wants to raise money, including debt, to develop its energy sector, but funds are hard to come by as financial institutions choose to remain on the sidelines, and the domestic financial system suffers from a lack of reforms, the country’s energy minister said.

It is “almost impossible” to access significant investment from bodies such as the World Bank, the International Finance Corporation and the European Bank for Reconstruction and Development, which are typically involved in big infrastructure projects, Walid Fayad, Lebanon’s caretaker Minister of Energy and Water said on Q1 2024.

“It’s not only a lack of financing in the oil and gas space, but also a lack of funding in the renewable energy space with major international institutions not yet unlocking the financial instruments,” he told The National at the World Energy Congress in Rotterdam.

Lebanon, which generates about 25 per cent of its electricity from renewable energy, requires an additional few thousand megawatts of solar capacity to complete its energy transition, which could cost a “couple of billion dollars”, he said.

“I want to say the total bill for the next 10 years would be something less than $1 billion.”

The country is grappling with what the World Bank has called one of the worst global financial crises since the 19th century.

It has yet to enforce critical structural and financial reforms required to obtain $3 billion of assistance from the International Monetary Fund, as well as billions in aid from other international donors, due to a lack of consensus among the political ruling class.

The country has been without a president since the end of October 2022, when the six-year term of Michel Aoun ended. It is being run by a caretaker cabinet led by Prime Minister Najib Mikati, with limited powers.

“You almost feel like you need the geopolitical stability in addition to other considerations of a political nature to unlock this financing,” Mr Fayad said.

“At the same time, inside Lebanon, the financial system has not undergone the needed reforms in order to allow the rebirth of the banking system and the access to the funding from the local banks,” he said.

In the last couple of years, Lebanon’s government has pinned its hopes on possible oil and gas reserves as a source of much-needed revenue for the debt-ridden country.

Exploratory drilling for hydrocarbons in the country’s offshore Block 9 began last year after a US-mediated agreement that demarcated Lebanon’s maritime border with Israel.

French oil company TotalEnergies is leading the consortium that is doing the drilling, along with Italian company Eni and state-owned QatarEnergy.

“In Lebanon, over a 20-year period, we have only dug two exploration wells and so statistically speaking, we just need to do more,” the minister said.

“We need to see better engagement from our international partners … in the exploration activities to produce commercial results. With two exploration wells, it is not sufficient to be able to get those results.”


Note that on July 2024, Lebanon’s energy ministry has extended a deadline for companies to bid for exploration rights for offshore oil and gas fields in its third licensing round until March next year; The government originally set a deadline of July 3, 2024 for bidding in the licensing round for nine maritime blocks, which was launched in January.

The Lebanese Petroleum Administration – LPA said the deadline had been extended to March 17, 2025 to provide enough time to monitor “accelerating regional and international developments,” find ways of attracting more interest from companies and “work towards achieving economic stability.”

The statement did not mention the ongoing hostilities between the Israeli military and Lebanese armed group Hezbollah, which have been trading fire for more than ten months in parallel with the Gaza war.

An industry source told Reuters that the exchanges of fire had been a major factor in the decision to extend the deadline.

Lebanon has extended previous licensing rounds repeatedly, in some cases because there had been no applications.

Lebanon formally delineated its maritime border with Israel in October 2022 after years of U.S.-mediated talks. It had hoped this would pave the way for an influx of bids for oil and gas exploration in its waters.

Energy experts also call for continued global investment in oil and gas along with renewables

The ongoing conflict around the Southern Lebanese border that has been triggered by the war is expected to have significant impact on key economic sectors; The country’s economy is estimated to have suffered by a huge damage in different levels.

First Lebanon should wait the end of Gaza war and identifying the damages; the country needs a strong and immediate action plan to manage the energy sector in the coming months and a new strategic vision for the next 10 years knowing that all the efforts to reform and revitalize Lebanon’s energy sector require a coordinated approach involving investment, policy changes, and international support, as well as addressing the underlying issues of governance and corruption.

Article source: thenationalnews.com – oedigital.com – reuters.com