Israel-Lebanon Gas Dispute Is About More Than Just Energy

Beirut and Hezbollah threaten, Israel is set to deploy Iron Dome: What’s really behind the fight over offshore drilling rights?

David Rosenberg
David Rosenberg
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Demonstrators carrying a banner and flags during a protest Saturday against Israeli gas extraction in the Karish gas field. The banner reads "The Line 29 is a red line."
Demonstrators carrying a banner and flags during a protest Saturday against Israeli gas extraction in the Karish gas field. The banner reads "The Line 29 is a red line."Credit: AZIZ TAHER/REUTERS
David Rosenberg
David Rosenberg

As menacing as they may sound, the threats Lebanon and Hezbollah issued last week in response to the arrival of a gas-drilling rig in Israeli waters, in the latest chapter of the long-running dispute between the two countries over offshore natural gas rights, have more the feel of a comic opera.

And despite the Lebanese bravado, an analysis by Haaretz based on satellite images shows that the rig and drilling vessel are located 10 kilometers southwest of the official southern border of Lebanon and are not in disputed waters.

Responding to news that a floating platform was on its way to begin pumping natural gas from Israel’s offshore Karish field, Lebanese President Michel Aoun said that as long as negotiations to delineate the maritime border continued, “any action or activity in the disputed area represents a provocation and an aggressive action.” Prime Minister Najib Mikati instructed the Army Command to keep him apprised of developments.

Hezbollah went a step further when its leader, Hassan Nasrallah, said his group has the “capacity to prevent” Israel from extracting gas from a field that Lebanon describes as disputed waters between the two countries. “All options are on the table” and Hezbollah is “not afraid of war,” he warned.

The threat from Hezbollah, which has far more firepower at its disposal than the hapless Lebanese army, seemed real – except for the proviso, mentioned by Hezbollah’s deputy leader, Naim Qassem, about the Lebanese government adopting a “clearer policy” about what it regards as its exclusive economic zone.

And that relates to one of the more comical elements of the dispute: After a decade of on- and mostly off negotiations with Israel under the U.S.’ aegis, Lebanon does not have a clear policy on what Mediterranean waters it is claiming.

“The United States can understand that there’s a difference of opinion on where the border is, but they believe it has to be sorted out by the two parties, and they will mediate that,” says Simon Henderson, director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute. “But the U.S. is frustrated by what they regard as Lebanese capriciousness. They don’t feel that it’s worth the effort.”

Amos Hochstein, the U.S. senior adviser for energy security who has been presiding at indirect talks between Israel and Lebanon, will arrive in Beirut to discuss the matter on Monday and Tuesday. But Hochstein is reportedly fed up with the Lebanese approach.

A tugboat pulling an Energean Floating production storage and offloading (FPSO) ship along Egypt's Suez Canal.Credit: - - AFP

A matter of degrees

The minutiae of the calculations that go into fixing a maritime boundary between countries are set out in the UN Convention on the Law of the Sea. But in the case of Israel and Lebanon, the two countries are in a state of war and have never even agreed on their land border. Compounding the problem is that, on paper at least, they aren’t even negotiating with each other but through a U.S. mediator.

As a result, resolution to what is supposed to be a technical dispute about where that boundary’s starting point should begin and what angle it should have has proven elusive. The challenge has been compounded by subsidiary issues, like whether islands should be taken into account in the calculations.

Initially, Henderson says, the two sides were disputing whether the angle should be 290 or 295 degrees, which comes out to a much greater area than a mere 5 degrees might seem. The United States thought it had reached a compromise that mostly favored Lebanon, when in October 2020 Beirut suddenly asserted that the angle should be 270 degrees.

Moreover, Lebanese negotiators also said Israeli islands on the border shouldn’t be recognized in establishing exclusive economic zone (EEZ) rights, even though Beirut has made the exact opposite claim regarding its own islands on its border with Syria.

The disputed area – a triangle whose starting point is the land border between the two countries and then fans out some 80 nautical miles into the Mediterranean Sea – now ballooned to some 2,300 square kilometers (889 square miles), including part of the Karish field, from a previous 855 square kilometers.

But Beirut never formalized its new claim by filing it with the United Nations, as it did with its original more modest one in 2011, or submitting them to parliament for approval.

Last week, as the issue of the newer, expanded area surfaced again, Lebanese lawmakers vowed to approve Lebanon’s amended claim, but the country is now ruled by a caretaker government and its authority to act on it is unclear. Officials didn’t signal they were ready to act

David Daoud, a research analyst on Hezbollah and Lebanon, and a nonresident fellow at the Atlantic Council, says that even though President Aoun has refrained from officially signing off on the expanded claim, it doesn’t mean Beirut isn’t serious about it.

“It remains to be seen whether or not this is a negotiating tactic, but there seems to be a growing consensus on Line 29 among Lebanese politicians and thinkers – even among the so-called ‘change’ or ‘independent”’ politicians who are ostensibly aligned against Hezbollah, like MPs Mark Daou or Melhem Khalaf,” Daoud says. Line 29 is the term used for Lebanon’s most expansive claim.

The East Mediterranean’s natural gas reserves have grown in importance since the negotiations began a decade ago. Israel has already put into production the Tamar and Leviathan fields (both distant from any Lebanese claims), and the Karish field is about to join them. Natural gas now generates most of Israel’s electric power generation and is being exported to Egypt and Jordan, making it a political as well as economic asset.

Supporters of Lebanon's Hezbollah leader Sayyed Hassan Nasrallah riding in a convoy, marking the commemoration of Israel’s withdrawal from southern Lebanon in 2000, in Kfar Kila village, southern Lebanon, last month.Credit: AZIZ TAHER/REUTERS

Europe’s decision to wean itself off Russian energy in response to Moscow’s invasion of Ukraine in February has awakened interest in Israeli and other East Mediterranean gas as an alternative supply source. Last month, Israeli Energy Minister Karine Elharrar announced she was dropping a freeze on new exploration and would hold a new round of bidding for drilling licenses later this year.

Lebanese leaders have often boasted that the country’s fossil fuel reserves could one day rescue an economy deep in the doldrums. Estimates of the value of oil and gas reserves in Lebanese waters have been put as high as $250 billion.

But not enough exploration and appraisal work has been undertaken for anyone to have a reliable number, said Laury Haytayan and Aaron Sayne in a recent study for the Natural Resource Governance Institute in New York. It’s more likely that the true value is much smaller.

In any case, Lebanon has made almost no progress on exploration. It launched its first bidding round for drilling rights in 2013, but only awarded them five years later. The one exploratory well that resulted, in an area designated Block 4, was completed in 2020 by a consortium of the French company Total, Italy’s Eni and Russia’s Novatek. It found only traces of gas.

The consortium also won rights to drill in Block 9, which is more likely to contain hydrocarbons. But Henderson says Total was unlikely to act on them because it now lies in the disputed zone after Israel upped its claims in response to Lebanon’s, and now claims an angle of 310 degrees.

In any case, getting the gas out from deepwater reservoirs like Lebanon’s is expensive and technically tricky. Development will only happen if the reserves are large enough to justify the cost, said Haytayan and Sayne. With Block 4 coming up dry, it’s not clear they exist. A second round of bidding has been delayed indefinitely, apparently out of concern that no bidders will emerge.

The question is whether Lebanon – or, more worryingly, Hezbollah – may raise the stakes through some kind of military action against the Karish field.

Israeli navy vessels pictured off the coast of Rosh Hanikra, northern Israel, last week.Credit: JALAA MAREY - AFP

‘Major crisis’

Karish is small in comparison to Tamar and Leviathan, but is of outsize importance to the Israeli economy, says Amit Mor, CEO of the Israeli energy consulting firm Eco Energy. Leviathan’s gas is being exported, while Tamar has lost many local contracts to Karish’s operator, the Greek-British company Energean, he adds. Karish will thus be a major supplier of gas to the Israeli market after it goes online later this year.

The floating production storage and offloading vessel that has aroused Lebanese anger will play a key role in delivering that gas, making it an obvious target for a rocket attack. Analysts doubt that will happen, but as Henderson notes: “This is the Middle East, so who knows?”

“The additional problem here is that it’s not as if the parties involved are just Lebanon, Israel and the United States – there’s Hezbollah and Palestinian groups as well that can make their own impact on this,” he says. “You only have to have one or a few well-targeted rockets or missiles, and you’ve got a major crisis on your hands.”

Israel is taking that risk into account. After waiting two days to respond to Lebanese accusations, Israeli Defense Minister Benny Gantz sought to assure Beirut and the world last Wednesday that Israel was not testing Lebanese claims.

“The rig is located in Israeli territory, several kilometers south of the area over which negotiations are being conducted between the State of Israel and the Republic of Lebanon, mediated by the United States,” Gantz said in a tweet.

In any case, public broadcaster Kan said Israel has dispatched warships and a maritime version of Iron Dome to protect the Energean vessel.

Army soldiers standing guard during a protest against Israeli gas extraction from a maritime field in Israel's exclusive economic zone, in Naqoura, southern Lebanon, on Saturday.Credit: AZIZ TAHER/REUTERS

With or without Iron Dome, missile threats would seem to be a big deterrent to international oil companies coming to Israel to explore for more gas. Mor, however, is optimistic they won’t be put off, noting that the license areas being auctioned are far from the disputed zones and Israel is providing security.

“This is not going to affect the Israeli market, and it’s not going to have an effect on the coming tender and participation of the international oil companies for exploration,” he says.

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