Lebanon and Israel announced that they have reached a “historic” agreement settling their maritime border dispute, through a lengthy U.S. mediation, which should remove obstacles to the extraction of hydrocarbons in the eastern Mediterranean. Here’s what we know about the agreement:
– What are the terms? –
Negotiations between the two neighboring countries, still technically in a state of war, have been tortuous since their launch in 2020. But indirect talks have accelerated in recent weeks, with both sides eyeing revenues from offshore gas fields.
The final text of the agreement was submitted to Lebanon and Israel by the American mediator, Amos Hochstein, at the beginning of the week, and both countries announced that they had accepted it.
It states that it “establishes a permanent and equitable resolution of their maritime dispute,” according to a copy obtained by AFP.
After the agreement enters into force, Lebanon and Israel will deposit the geographical coordinates of the maritime boundary with the United Nations, which will cancel the routes adopted by the two countries in 2011.
Under the agreement, Israel, which is expected to begin producing gas in a few weeks, has full and undisputed rights to the Karish gas field.
Lebanon for its part will have full rights to explore and exploit the Qana field, part of which is located in Israeli territorial waters.
But “Israel will be paid” by the firm operating Cana “for its rights to any deposits”, according to the text of the agreement.
– What concerns? –
Israel’s remuneration will be determined in separate talks between the Hebrew state and the company operating in Qana, located in Block 9 in Lebanon. Both parties will have to sign a financial agreement.
Lebanon has divided the exclusive economic zone at sea into ten blocks. Block 9 was part of the disputed area with Israel.
Israeli Prime Minister Yair Lapid said Wednesday that Israel “will receive about 17% of the revenues from the Lebanese gas field, the Qana-Sidon field.
French energy giant TotalEnergies has won a license to explore the Cana field.
The agreement states that Israel will work in good faith with the Block 9 Operator to ensure that this agreement is reached “in a timely manner”.
The Jewish state will also not oppose or take any action that “unduly delays” the operation of the field, according to the text of the agreement.
But Lebanese energy expert Suhail Chatila calls the financial agreement with Israel a “dangerous” precondition. “Israel has the right to stop any development in Qana by demanding that the financial agreement with Total be finalized first. This means that if they don’t want Lebanon to proceed with gas extraction, they have a window of opportunity in this border agreement,” he tells AFP.
Financial expert Mike Azar believes that the agreement does not solve the main economic problems related to the sharing of hydrocarbon profits, but postpones them to a later date.
“Lebanon’s ability to explore and subsequently exploit Qana depends on Israeli approvals and a future financial arrangement between Total and Israel,” he explains. “In the short term, this deal is more profitable for Israel because gas production from its Karish field can begin imminently,” independent of Lebanon.
– What is at stake? –
A 2012 seismic survey of a limited offshore area by the British company Spectrum estimated recoverable gas reserves in Lebanon at about 720 billion cubic meters.
Lebanese officials have announced higher estimates.
There are still no proven gas reserves in the Qana field. The maritime boundary agreement will allow TotalEnergies and Eni to start exploration.
According to the financial modeling of the Lebanese Oil & Gas Initiative (LOGI), an independent NGO, “the most positive scenario” would be the discovery of gas reserves in Qana of up to 453 billion cubic meters.
In this case, “the benefits to Lebanon will be about $6 billion over 15 years,” said Diana Kaissy, a member of LOGI’s advisory board. A small amount compared to Lebanon’s multi-billion dollar debt.
