Shortly after the assassination of Prime Minister Rafik Hariri in February 2005, and the subsequent withdrawal of Syrian military forces from the country, Lebanon held elections for a new national parliament in June 2005. The process of forming a new governing coalition is not yet completed, but parties opposed to continued Syrian influence in Lebanon appear to have gained a majority of seats in the Lebanese parliament. Lebanons economy is experiencing reasonably strong growth, with real GDP growth projected at only 3.9 percent for 2005, after posting growth of 4.5 percent in 2004. The main economic problems faced by the new government are the countrys large external debt and budget deficit. External debt is now approximately 170 percent of GDP.
Lebanon currently imports all of the oil it consumes, approximately 108,000 bbl/d, in the form of refined products. As a result of its geographic location, Lebanon was once a refining center for crude oil that was exported from Iraq and Saudi Arabia by pipelines to two Lebanese coastal refineries, Zahrani in the south, and Tripoli in the north. However, due to years of internal and regional political unrest and war damage, these refineries have not been operational. The Tripoli refinery has been closed since 1982.
Lebanon is in the process of converting its power generating plants from oil to natural gas. To help meet this demand, a 26-mile natural gas pipeline, called GASYLE 1, that links the Baniyas plant in Syria to the Deir al-Ammar-Beddawi power plant in northern Lebanon was completed in March 2005. GASYLE 1 will allow Syrian natural gas from the Syrian Petroleum Company to flow into Lebanon for the first time providing some 53 million cubic feet per day. Syrian officials have said that this amount could eventually double to 105 million cubic feet per day.
The Trans Arabian Pipeline (Tapline) was originally constructed in the 1940s with a capacity of 500,000 bbl/d, and intended as the main means of exporting Saudi oil to the West (via Jordan to the port of Haifa, then part of Palestine, now a major Israeli port city). The establishment of the state of Israel resulted in diversion of the Taplines terminus from Haifa to Sidon, Lebanon (through Syria and Lebanon). Partly as a result of turmoil in Lebanon, and partly for economic reasons, oil exports via the Tapline were halted in 1975. In 1983, the Taplines Lebanese section was closed altogether. Since then, the Tapline has been used exclusively to supply oil to Jordan, although Saudi Arabia terminated this arrangement to display displeasure with perceived Jordanian support for Iraq in the 1990/1 Gulf War. Despite these problems, the Tapline remains a potential export route for Persian Gulf oil exports to Europe and the United States. At least one analysis indicates that the transportation cost of exporting oil via the Tapline through Haifa to Europe would cost as much as 40 percent less than shipping by tanker through the Suez Canal. In early 2005, rehabilitation of the Tapline at an estimated cost of $100 to $300 million was one of the strategic options being considered by the Jordanian government to meet oil needs.
The pipeline between the Syrian port of Banias and the "Strategic Pipeline" in Iraq, which connects its northern and southern oil infrastructure, has been inoperative since the war began in March 2003.
Another international pipeline option under consideration for the future involves a pipeline which would run from Haditha in Iraq to an export terminal at Aqaba in Jordan. The proposed $2 billion project would have a capacity of 1.2 million bbl/d, and would facilitate an increase in exports from Iraq once additional production capacity is developed.