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Lebanon-Israel maritime border deal: What do we know?

Text of accord ‘establishes permanent and equitable resolution of their maritime dispute’



In this file handout picture released by Energean oil and gas company on September 20, 2022 shows an Energean Floating production storage and offloading (FPSO) ship in the Karish field, an offshore gas field in the Mediterranean sea.
Image Credit: AFP

BEIRUT: Lebanon and Israel said they have struck an “historic” deal over a maritime border dispute involving offshore gas fields after years of US-mediated talks, in a step that facilitates hydrocarbon production.

Here’s what we know of the agreement:

WHAT ARE THE TERMS?: Negotiations between the neighbouring countries, which are still technically at war, had suffered repeated setbacks since their launch in 2020.

But they gained momentum in recent weeks with both sides eyeing revenue from potentially rich Mediterranean gas fields.

Lebanon, which is in deep financial crisis but cannot count on gas alone to bail it out, and Israel said they agreed on the terms of the US-mediated deal this week.

The text of the agreement sent to both countries by US mediator Amos Hochstein said it “establishes a permanent and equitable resolution of their maritime dispute”, according to a copy seen by AFP.

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It will go into force as soon as the US sends a notice confirming it has received from Lebanon and Israel their separate approvals, the deal says.

Lebanon and Israel will then deposit maritime border coordinates with the United Nations - in a move that will override 2011 submissions by both countries.

Under the agreed coordinates, Israel has full and undisputed rights over the Karish gas field which is expected to start gas production within weeks.

Lebanon will have full rights to operate and explore the so-called Qana or Sidon reservoir, parts of which fall in Israel’s territorial waters.

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But “Israel will be remunerated” by the firm operating Qana “for its rights to any potential deposits”, according to the text of the agreement.

Israeli critics of the deal, including the conservative Kohelet Policy Forum, have challenged the Qana provision in court, demanding a national referendum before Israel relinquishes “sovereign territory.”

What are the concerns?

Israel’s remuneration will be determined by separate talks between the Jewish state and the energy company operating Qana which is located in Lebanon’s Block 9.

“Israel and the Block 9 Operator will sign a financial agreement prior to the Block 9 Operator’s Final Investment Decision,” the agreement says.

Israeli Prime Minister Yair Lapid on Wednesday said Israel “will receive approximately 17 per cent of the revenues from the Lebanese gas field, the Qana-Sidon field, if and when they will open it”.

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French energy giant TotalEnergies has been licenced to explore the field.

The US-brokered agreement stipulates that Israel shall work in good faith to ensure its deal with the Block 9 operator is concluded in a “timely fashion”.

It will also not object to or take action that “unduly delays” the development of the Qana reservoir.

But energy expert Suhail Shatila called the financial arrangement a “dangerous” pre-requisite.

“Israel has the right to stop any development in Qana by requesting the financial agreement with Total to be finalised first,” he said.

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“This means that if they do not want Lebanon to extract any gas, they got a window in this border deal.”

Energy finance professional Mike Azar said the deal did not resolve key economic issues related to hydrocarbon profit-sharing but deferred them to a future date.

“Lebanon’s ability to explore and eventually develop the Qana prospect depends on Israeli approvals and a future financial arrangement between Total and Israel,” Azar said.

“In the near term, this deal is more profitable for Israel as gas production from its Karish field can commence imminently without any issues from the Lebanese side.”

What’s at stake?

A 2012 seismic study of a limited offshore area by the British firm Spectrum estimated recoverable gas reserves in Lebanon at 25.4 trillion cubic feet.

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Lebanese officials have announced higher estimates.

There are still no proven gas reserves in the Qana reservoir.

A maritime border deal will allow TotalEnergies and Italian energy giant Eni to kickstart exploration.

“The most positive scenario,” is the discovery of gas reserves at 16 trillion cubic feet, according to financial modelling by the Lebanese Oil and Gas Initiative, an independent NGO.

“Lebanon’s profit will be around $6bn over the span of 15 years,” if this ideal quantity is found, said LOGI advisory board member Diana Kaissy.

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This is not even a fraction of Lebanon’s multi-billion dollar debt pile.

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