Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions.

Trading and distribution


How are oil and gas resources traded in your jurisdiction and what (if any) regulations and procedures apply to oil and gas sales, distribution and marketing activities, both nationally and internationally?

Lebanon has not yet begun any exploration or production activity and so has not yet reached this level. However, general rules govern petroleum sales and natural gas marketing.

The sale or transfer of any interest in petroleum originating from a reservoir in an exploration and production agreement (EPA) area shall be based on the terms and conditions of independent parties in the international market. Any sale or transfer of interest in petroleum or volumes delivered shall be reported to the minister of energy and water and the Lebanese Petroleum Administration.

Regulations for the sale of petroleum shall be stipulated by a decree issued by the Council of Ministers, upon a joint proposal from the minister of energy and water and the minister of finance.

In the event of a natural gas discovery, the right holders must submit a gas infrastructure and marketing plan to the minister of energy and water for approval.

The state shall have priority rights over any royalties and profits from petroleum in the form of natural gas, as well as the right to purchase all or a portion of this natural gas for the Lebanese domestic market.

Is oil and gas pricing regulated in your jurisdiction?

The prices adopted for calculating royalty payments and the cost of petroleum are determined in accordance with the Petroleum Activities Regulations, which require that the prevailing market price be used, in addition to certain specific valuation provisions. The valuation provisions for crude oil specify:

  • a determination at the end of each calendar month;
  • that freight, insurance or costs paid by the seller beyond the delivery point be disregarded;
  • for sales to non-affiliates, a valuation equal to weighted average of actual sales prices at each delivery point during the month; and
  • that sales to affiliates are subject to a formula specified in the Petroleum Activities Regulations.

The valuation provisions for natural gas specify the following:

  • for sales to non-affiliates, a weighted average price per 1 million British thermal units in the relevant month from Lebanese reservoirs, and the weighted average of publicly available prices for alternative fuels for large-scale industrial consumers;
  • for sales to affiliates, the same price as above, or as otherwise agreed with the minister of energy and water; and
  • for sales to the state, a price no higher than the price sold to an affiliate.

Click here to view the full article.