Israel and Lebanon signed a historic US-brokered maritime border demarcation agreement in the Mediterranean Sea at the end of October. The Middle Eastern neighbours have technically been in a state of war for decades and even today have not established official diplomatic relations. Part of the decades-long problems between the two countries has been precisely the vast natural gas deposits located in the disputed waters of the Mediterranean. But will resolving this issue also lead to an overall improvement in relations between the two countries and greater stability for the conflict-ridden region?
Until an agreement was reached, Israel was unable to fully develop the Karish oil field from the undersea gas fields located in the waters between Lebanon and Israel, neither the Qana-Sidon field. The agreement grants Israel full rights to develop the Karish field, with estimated reserves of 68 billion cubic metres (bcm) of gas, and Lebanon full rights to develop the Qana-Sidon field, which has potential reserves of up to 100 bcm. But Beirut has agreed that 17% of any revenues will go to Israel.
Energean, a Greek mining company, has already started production in Israel’s Karish field. The pipeline linking the drilling system to the Israeli coast has an initial capacity to transport 6.5 bcm, with a total potential for 8 bcm of gas per year. This field is thus smaller for Israel than those located in its territory, such as Tamar and Leviathan. A potential winner in the long term is also the European Union, which, thanks to the agreement concluded between the EU, Israel and Egypt, may in the future be able to access this exported gas as a customer. Under this agreement, Israel will be able to supply potentially up to 40bcm of gas to Europe per year, a third of the gas that Russia used to supply to Europe.
However, the cautious statements of the outgoing Lebanese president suggest that the maritime border demarcation agreement will not mark a move towards a significant improvement in relations or reconciliation between Israel and Lebanon. The question also remains as to whether concluding an agreement with Israel is as economically beneficial for Lebanon as it is for Israel, since the reserves in the Qana-Sidon field have not yet been confirmed. However, indications as to whether current estimates of gas reserves in Qana-Sidon are correct may emerge as early as next year, when the French firm TotalEnergies is due to start exploring the field.
At the moment, the agreement thus signed is economically more advantageous for Israel, not least because Lebanon would need the revenues from production as soon as possible due to the ongoing liquidity crisis. In the words of some energy experts, Lebanon will have to wait a long time before it can profit from the gas deposits. Indeed, according to current estimates, production from the Qana-Sidon field can realistically start in five years at the earliest. Moreover, the conclusions of previous exploration activities carried out in the area by TotalEnergies, Novatek and Eni have concluded that the area does not have financially significant gas reserves.
At the same time, the conclusion of the agreement might have influenced the outcome of the Israeli parliamentary elections, helping the opposition and Benjamin Netanyahu win. Opponents of outgoing Prime Minister Lapid presented the conclusion of the agreement with Lebanon as “giving in”.
Greater demand for energy commodities from Europe and the need to improve Lebanon’s economic situation may also have contributed to the conclusion of this agreement two years after the start of the protracted negotiations. Ultimately, however, this agreement will contribute more economically to Israel in both the short and long term. The question remains to what extent it will contribute to Lebanon, as the natural gas reserves in the acquired territory may also turn out to be insignificant. What remains probable is that it will not be a major point in the calming of relations between the two countries.
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