This interview, conducted in October 2024, is part of a series looking at the impact of the war in Lebanon. Lebanon was already suffering from an economic collapse unprecedented in global financial history and a failing energy sector before the Israel’s incursions began. The war and its destruction have only added to the country’s socioeconomic, political, and environmental poly-crisis.
The recent war waged by Israel saw over 4,000 people killed, 16,000 injured, and 900,00 people [displaced according to the caretaker Minister](https://reliefweb.int/report/lebanon/lebanon-war-crisis-update-november-2024) of Public Health Firass Abiad. The World Bank has estimated that the Israeli military invasion caused over $3.4 billion in damage to infrastructure and more than $5 billion in economic losses. It is also estimated that the energy sector has incurred over [$300 million in losses](https://reliefweb.int/report/lebanon/lebanon-war-crisis-update-november-2024) due to the increased demand from internally displaced people, infrastructure damage, and revenue losses.
Laury Haytayan is the MENA Director of the Natural Resource Governance Institute and an expert in energy policy and geopolitics. She has authored several papers on the energy sector in Lebanon and hosts the Energy Espresso podcast, which covers the future of energy and energy transition in Lebanon.
**Q: Is Lebanon moving toward becoming an energy-insecure country due to the war? Is there an index, whether formal or informal, that categorizes energy insecurity?**
The issue is that we were never an energy-secure country. We have had problems for years, which were aggravated when the situation became catastrophic; so going forward, we will have bigger problems. First, some regions have been completely destroyed, and we do not know the extent of the damage to the electricity or energy systems, from the high voltage to transmissions. We do not know how much time will be required to rebuild. Second, destruction means reconstruction is required, between building back and connecting the infrastructure to the electricity grids.
But we are not heading toward becoming an energy-insecure country. We are already there; we have always been.
**Q: Israel has a lot of deals with oil and gas companies. Do you think these deals are going to change given the war? Will it affect or damage the production of gas and the economy of Israel?**
The prolonged war has started to affect the oil and gas sector. During the early stages of the war, Israel had to stop production in the Tamar field for about a month because its platform was very close to Gaza. This created problems for the companies and the country since most of its electricity generation is produced there. Almost 70% of the electricity generated in Israel comes from natural gas, so any destruction to that field will impact the electricity generated. And in turn, it will affect the revenues of the government. Before the war, the Lebanese Ministry of Energy had multiple licensing rounds, and all the results were announced. Companies like BP, SOCAR, and Eni won the bids. However, they had not signed contracts yet and this was all before October 7. Another example is Chevron, which has shares in the Tamar and Leviathan fields and has plans to expand the latter, increasing production to be able to export. But a few weeks ago, Chevron announced that they were stopping the expansion. So, a year in, it is starting to show that Israel cannot continue business as usual, and there are negative impacts on the oil and gas sector in Israel.
**Q: Do you think that they will stop the expansion of the project?**
It depends on how this war will continue and until when. Energian has a big portfolio, which includes the Israeli field, and it is a success story for them. They ventured into new exploration phases in Morocco and other places, which are new expansion plans and development. The success in Israel proves that there is a growth in electricity demands, and it will keep increasing; they want to be part of that market share and eventually export electricity. Energian worked mostly in the Karish and Tanin fields on the condition that all the gas would be for internal consumption. All new exploration will be for exportation, which means more money for them than just sending to the Israeli market. But they have not announced any postponement yet.
**Q: What do you think: the slowing down, the backing out…how is it going to affect the economy in Israel?**
During the 2024 summer, the Central Bank of Israel stated that the war was costing them around $70-$76 billion. At the beginning, there was the perception that the war was not affecting them economically, and the stock exchange was doing well. However, over a year of war led Israel and its armed forces to use its army reserves. These people were active in the economy; now they are at the front. So, this has definitely impacted the growth of the country, the economy, and productivity. For example, the tourism sector has been affected due to the closure of airports or airlines that said they were not going to travel to and from Israel. They can no longer act as if nothing has happened, but it is not like Lebanon, where we have been in crisis for the last five years. Lebanon heavily depends on its cash economy, a shrinking economy, and dying businesses. However, some businesses are booming, and new brand openings are taking place in Beirut. It does not make sense, but it is happening. We call it resilience, which works.
Both countries are affected, but it is not to the same extent. We entered the war in a state of collapse.
However, some people are looking at this as an opportunity for Lebanon, that the reconstruction will stimulate the economy. Unfortunately, it will be an economy of war built on the tragedy of people. My family, for example, sells clothes and for a while, they have been closing at 2:00 pm because the work has been slow. Since the war, they have extended their hours because people are coming every day. People have lost everything, and they need to start from scratch.
**Q: Do you think that is what happened after the war?**
Every time there is destruction, there is reconstruction that comes after, which means work, and this translates into the stimulation and rise of the economy. This is the economy of war.
EDL (Electricité du Liban) is a failed public utility. It cannot do its job; it is not self-sufficient or independent in its finances. We also do not know about the damage done during the war. There need to be surveys, and infrastructure damage that needs to be evaluated, to assess how much it will cost to rebuild.
Financially, how does the Lebanese government plan to secure funds while still relying on imports to provide energy? The government was betting on the oil and gas exploration, but Block 9 yielded no results. The second licensing round closed in October 2023 with no agreements because the government wanted to rush the process, and the companies disagreed. The third licensing round has been postponed to March 2025, which might provide more clarity.
There is an opportunity for a green reconstruction. When houses are being rebuilt, they need to be green. Dahyeh might become the greenest area if planned correctly. But there must be specifications to follow, from the installation of the rooftops to the heaters, etc. The green building policies need to be applied. When electricity networks are reconstructed, they need to be connected properly by smart metering. There could be a green renaissance reconstruction happening in these destroyed areas. This is the mindset we need to adopt. The reconstruction plan must be based on this.
The government needs to prioritize green reconstruction and should build forward, instead of going back to the way it was, starting with gas and renewables, and making them the main energy sources.
The views represented in this paper are those of the author(s) and do not necessarily reflect the views of the Arab Reform Initiative, its staff, or its board.