Lebanese Parliament Approves New Energy Law to 'Protect' Offshore Fields

Lebanon passes long-awaited energy law, paving the way for exploration of major natural gas reserves the country says it has off its Mediterranean coast with Israel.

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Lebanon's parliament unanimously ratified a long-awaited energy law yesterday, paving the way for exploration of major natural gas reserves the country says it has off its Mediterranean coast with Israel.

The law had been discussed for many years, but Israeli plans to drill for gas in the Mediterranean alarmed Lebanon - which fears Israel may be encroaching on its own reserves - sending Lebanese politicians scrambling to finally approve the law.

Lebanese politicians closed ranks and approved the new energy law, which was strongly backed by Parliament Speaker Nabih Berri and his allies in the militant Hezbollah group.

For the past decade, Lebanese politicians have been unable to agree on how to exploit the country's natural resources, bickering over which companies would do the surveying - and pocket the profits.

"The law organizes the process of surveying, exploration and production of energy," said the Lebanese lawmaker who presented the draft law, Ali Hassan Khalil, an aide to Shi'ite parliamentary speaker Nabih Berri.

Lebanon has said it would "use all means" to defend its rights if Israel was found to be drilling within its borders, after a U.S.-Israeli consortium announced in June a potential find in the Leviathan offshore natural gas field that could turn the Israel into a gas exporter.

The U.S.-Israeli consortium involved in the discoveries said the Leviathan prospect may have deposits of 16 trillion cubic feet and is said to be twice the size of Israel's Tamar field, which was the largest global gas find of 2009.

Khalil said the law calls for setting up an entity under the auspices of the energy minister in which a sovereign wealth fund would be created to manage and invest potential energy revenues.

Lebanon has said it has identified reserves that have promising quantities of natural gas, according to seismic surveys in 2006-2007.

Lebanon has stopped short of accusing Israel of violating its territory, but the mistrust between the two - which were embroiled in a deadly border clash last week - has exacerbated Lebanese fears.

Even though Lebanon has passed the law, it still has a long way to catch up with the Israelis. It has to identify blocs, supply data to interested investors, select bidders and have companies start exploration work, while the Israelis already have firms drilling for gas.

Ali Hamdan, an aide to Berri, said that by the end of 2011 Lebanon should have demarcated its maritime borders and divided the area into blocs in order to be able to sign production sharing agreements with companies.

"The amount of debt and Israeli greed are major concerns," Hamdan said of why consensus emerged around the new law. "Passing the law is a message that shows Lebanon is serious and persistent."

Hezbollah has threatened to use force to protect Lebanon's natural resources.

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