Israel and Lebanon have been at war since 1948, but the two countries are nearing a deal to boost natural gas production, helping energy-starved Europe.
Officials from both countries say they are nearing a resolution to their long-running maritime border dispute, which will allow energy companies to extract more fossil fuels from offshore oilfields in the Mediterranean.
Increased production will not make up for the gas Europe is no longer getting from Russia. But energy experts say the Israeli-Lebanese deal should be a vital boost to efforts to produce more gas in that part of the world. , Jordan and Cyprus have all worked together to harness the oil and gas buried under the seafloor, increasing energy production in the eastern Mediterranean.
“This is a very important step for the region to come into its own,” said Charif Sorki, Lebanese-American chairman of Tellurian, a Houston-based liquefied natural gas company. “Players are finally starting to realize that it’s better to work together than to keep fighting.”
The Israeli-Lebanese negotiations will have the most direct impact on the Kalish field, which will produce gas for domestic use in Israel. The fuel is expected to replace gas produced in other fields and be exported. Also, the new oil field is expected to produce a small amount of oil.
Chevron, the second-largest US oil and gas company, and several smaller companies produce gas from two large gas fields off the coast of Israel. That fuel has increasingly replaced coal in the country’s power plants and factories. Israel now has so much gas that it has become a net exporter of energy, sending fuel to neighboring countries such as Jordan and Egypt. Some of that gas also flows from her LNG export terminal in Egypt to Europe and other parts of the world.
Across several administrations, the U.S. government has fostered the growth of gas trade in the region by supporting trade negotiations between long tense countries. The Ukraine crisis has accelerated efforts to explore and produce natural gas due to rising fuel costs in Europe, where countries are desperate to end Russia’s dependence on gas.
Chevron and its Israeli partners are discussing the possibility of building a floating liquefied natural gas platform on Israel’s largest Leviathan gas field. Both companies expect to make a decision on the project in the coming months.
However, getting gas out of this area is not easy. Floating export terminals are vulnerable to terrorist attacks. And even if a terminal were properly protected, it would not be able to handle as much gas as the large coastal facilities used by major gas producing countries such as the United States, Qatar and Australia. Building a terminal on land could take years, if not more, due to opposition from environmental and other groups.
“Offshore energy infrastructure is highly volatile and vulnerable,” said former Israeli military officer Gal Luft, co-director of the Institute for Global Security Analysis in Washington. “We need to manage risk.”
In theory, transporting gas by pipeline is easier than liquefying and exporting natural gas before turning it back into gas at its destination. However, building long-distance pipelines is expensive and difficult. For example, long-running conflicts between Turkey, Cyprus and Greece have made the construction of a pipeline from Israel to Southern Europe very difficult, if not impossible.
Even the border agreement between Israel and Lebanon faces risks. Hezbollah has threatened to attack the Kalish Field and in July sent unarmed drones over it. Israeli officials said they shot down the plane.
Still, Israeli and Lebanese officials have said in recent days that negotiations involving Biden administration officials are close to a deal. Talks gathered momentum at the United Nations General Assembly last week.
Lebanese Prime Minister Najib Mikati said Thursday at the United Nations that he was confident of reaching an agreement with Israel. “Lebanon is fully aware that promising energy markets in the eastern Mediterranean are critical to the prosperity of all countries in the region,” he said. “To meet the needs of importing countries”
The US and other Western oil companies have long shunned Israel, partly because they don’t want to alienate Arab countries. However, as Israel’s relations with countries such as Egypt, Jordan and, more recently, the United Arab Emirates improve, more companies are showing interest in the Eastern Mediterranean.
An agreement between Israel and Lebanon could accelerate that trend.
“It will soothe a lot of people,” said Leslie Parti-Guzman, chief executive of consulting firm Gus Vista. “Companies that were reluctant to invest will now have more incentives to develop additional projects.”
The Mediterranean gas field is one of several new suppliers Europe needs as it seeks long-term alternatives to Russian gas. Other suppliers include energy companies operating in the United States, Qatar, Africa, the Caspian Sea and the North Sea.
“There is no silver bullet,” said Paddy Brower, spokesman for London-based exploration firm Energian, which hopes to start producing gas at the Kalish field. “The Eastern Mediterranean is he one of a series of marginal interests that Europe must focus on.”
Energean plans to start production in the coming weeks and says it plans to produce up to 8 billion cubic meters of gas annually by 2025. If this succeeds, the company will be able to significantly increase its production in Israel. The country is expected to produce about 22 billion cubic meters this year. Israel, which once imported almost all of its energy, increased its gas production by 22% in the first half of the year compared to the same period in 2021. It exported about 40% of its gas and earned $250 million in government royalties.
An agreement between Israel and Lebanon would also pave the way for drilling in Lebanese waters by a consortium led by Italy’s Eni and France’s Total Energies. Lebanese officials see natural gas as a key financial tool to revive the country’s sluggish economy. The government has wanted to drill offshore since at least 2014, but border disputes with Israel have delayed exploration.
“It is not certain if Lebanon will find gas,” said Chakib Kheril, former president of the Organization of Petroleum Exporting Countries. “But then Lebanon will get a big boost.”