Lebanon

Investment & Operational Criteria

Key Indicators

Risk Premia

6.250

%

Outlook

Uncertain

Rating

C|3U|§

Ranking

109

Reserves (1P)

Total

mm boe

Oil

0

%

Summary

While offshore remains an attractive location, continued political unrest provide a significant headwind.

Updated

June 14, 2021

Country Basics

Region

Middle East

Reserves (1P)

Oil

mm bbl

Gas

bcf

Location

LebanonLebanon

Middle East, bordering the Mediterranean Sea, between Israel and Syria.

Outline

Tax Regime
Type

Concession

Tax Regime
Notes

The fiscal regime applied to the oil and gas industry in Lebanon consists of a combination of corporate profit tax and royalties. Petroleum companies are subject to Lebanese Petroleum Activities’ Tax Law, which sets special accounting principles that a petroleum company should comply with while calculating its taxable result subject to 20% corporate income tax rate. In addition to CIT, royalties are imposed annually and can vary between 5% and 12% based on the production level per day for crude oil and 4% for natural gas.

Investment & 
Operational
Climate

Most analysts assess that Lebanon’s near- and medium-term economic future is bleak, with likely fiscal austerity, continuing capital controls, further devaluation, and a potential loss of value applied to wealthy accountholders to recapitalize the banking sector. The Minister of Finance in May said Lebanon needs USD 28 billion in financial assistance over the next four years. The World Bank projected that the poverty rate will reach 40-50 percent by the end of this year. These developments hold consequences for Lebanon’s potential as a destination for foreign investment. Much depends on how Lebanon implements overdue economic and governance reforms, including in connection with its negotiation and implementation of a potential IMF program. If the country is able to implement necessary reforms, attract foreign capital, stabilize the exchange rate, and recapitalize its financial sector, opportunities remain for U.S. companies. To date, Lebanon has the legal underpinnings of a free-market economy, a highly-educated labour force, and limited restrictions on investors. The most alluring sector is the energy sector, particularly for power production, renewable energies, and oil and gas exploration, though challenges remain with corruption and a lack of transparency. Information and communication technology, healthcare, safety and security, waste management, and franchising have historically attracted investment.

Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.

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