As if they had found a new natural gas field of their own, the Israeli media was quick to report on an agreement purportedly signed between Israel and Lebanon for the sale of Israeli natural gas to its northern neighbor. The report on Israel’s N12 news website even managed to spur the U.S. administration to adamantly deny the existence of such a deal, but the news has still had a ripple effect.
In October, an agreement was indeed signed to ship Egyptian natural gas and Jordanian electricity to Syria, and from there to Lebanon. It provides for the gas to be shipped through the Arab Gas Pipeline, which runs from Sinai via Aqaba in Jordan to the Syrian city of Homs and from there to Lebanon. At the same time, with the reconstruction of power lines from Jordan to Syria and to Lebanon, Jordan will sell electricity to the Lebanese.
The draft of the plan was negotiated by Egypt, Jordan, Syria, Lebanon and the United States in July, and it was clear to all involved that the United States would request that the other parties be granted an exemption from sanctions against Syria. In addition, it was agreed that Syria would collect a 10 percent cut on the Egyptian gas and 8 percent on the electricity transiting its territory.
The United States did indeed give Egypt and Jordan a letter confirming that they should not be concerned about violating anti-Syrian sanctions in providing the gas and electricity. They would only have to wait for renovation work on the Syrian stretch of the gas pipeline and the portion running from Homs to Lebanon, which is not connected to the Arab Gas Pipeline.
Israel was copied to the correspondence, but was never a party to the agreement. Even back when the deal with being negotiated, there were sensational stories in the Arab media about how Israeli natural gas would be illuminating the streets of Lebanon. Energy expert Matthew Zeiss even wrote an article for the Atlantic Council’s website in October stating that Israeli gas would provide lighting for the headquarters of Hezbollah leader Hassan Nasrallah.
In its natural state, natural gas is odorless and colorless. The gas that Israel sells to Jordan is used to generate electricity – some of which will also be provided to Lebanon – but Israel and Jordan, as well as Lebanon, are not parties to an agreement that would segregate the gas to ensure that Israeli gas isn’t used to generate the Jordanian electricity going to Lebanon. That’s simply because there’s no practical way to do so.
The payment for the gas will be made through the International Monetary Fund, which has yet to resolve a problem regarding the repayment of a loan that would be granted to Lebanon. The Lebanese government is an amorphous concept. It isn’t functioning and there is no confidence when it comes to its debt repayment. The suggested solution is paying Jordan and Egypt directly based on the amount of electricity and gas provided rather than having the payment go through Lebanon. The Lebanese would be charged when a miracle happens and it begins carrying out economic reforms that give it access to foreign assistance.
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Hezbollah keeps mum
The reports of a gas deal between Israel and Lebanon even explained that it was aimed at curbing Iran’s influence in Lebanon and Syria, bringing Syria back into the Arab fold and reducing Hezbollah’s influence in Lebanon. All that was missing was an assessment that the agreement would usher in world peace, or at least reduce global warming.
Iranian influence in Lebanon does not rely on those few oil tankers that the Iranians dispatched in September to the Syrian port of Banias at Hezbollah’s request. Even the United States refrained from blocking the oil shipments. “I don’t think anyone is going to fall on their sword if someone’s able to get fuel into hospitals that need it,” the U.S. ambassador to Lebanon, Dorothy Shea, told the Al-Arabiya news network.
At the same time, she reported on the draft of the agreement to export the gas from Jordan and Egypt. Hezbollah took notice and didn’t oppose it, maintaining its silence even when Arab media outlets reported that the Jordanian electricity destined for Lebanon would be generated from Israeli natural gas. In precisely the same way, Hezbollah gave its consent for negotiations between Lebanon and Israel to demarcate the maritime boundaries between the two countries, as a stable and orderly Lebanon is in the joint interest of Israel, Hezbollah, Iran and Syria.
The suggestion that Israel should demand diplomatic or military concessions in return for its consent to have natural gas provided to Lebanon is therefore also baseless. Not only is Israel not selling gas to Lebanon, it also can’t veto Jordan and Egypt’s involvement, particularly when the United States is the one who devised the agreement.
Iran eyes the European market
While the dreamers have visions of a Middle East in which Israeli gas creates regime change, forges coalitions, shakes up Hezbollah and expels Iran from Syria, it’s actually worth planning for Iran’s reentry into the world gas market – particularly the European one.
The discovery of a gigantic gas reserve in Iranian waters in the Caspian Sea, the Chalous field, puts Iran at the top of the rankings as a regional gas producer. The Western experts assess that the field contains more gas than any reserve at the Pars gas reserve site that Iran shares in the Gulf with Qatar, which itself is considered the largest offshore gas reserve in the world.
Officials at the Iranian Energy Ministry are already talking about Iran being able to supply about 20 percent of Europe’s natural gas needs. On the assumption that a new international nuclear agreement is signed with Iran and that sanctions against the regime are lifted, Iran could become an alternative to Russia in supplying Europe with natural gas, or at least reduce European dependence on Russian gas.
But the process of transforming Iran into an option for Europe's gas needs would face quite a few roadblocks. Iran is a signatory to a 25-year strategic agreement with China, which grants the Chinese preferential access to Iranian oil and gas at reduced prices in return for hundreds of billions of dollars in Chinese investment. And a strategic agreement that Iran and Russia just agreed to extend will also limit Tehran’s ability to compete in the European market. Russia views its gas pipeline to Europe not only as an economic asset but also as a source of essential diplomatic and strategic leverage. Moscow will not let any country push it out of this lucrative arena.
In addition, the Islamic Republic lacks facilities and other means to liquefy gas, which impedes its ability to compete in the liquefied gas market. Iran will require thorough reforms in how its natural gas is used. Currently it’s mainly for domestic consumption, with only about 7 percent being exported to its neighbors.
Even if Iranian sales of natural gas to Europe are currently theoretical – mainly due to American sanctions – Iran intends to substantially boost its output of gas this year and to be a significant player in the Central Asian gas market. The tripartite agreement to supply gas that it signed in November with Turkmenistan and Azerbaijan, as well as its supply agreement with Turkey, ensure that the huge reserves in its territory and in the Caspian Sea will find new markets.
With the lifting of sanctions, Iran would also be able to sell or give away quantities of gas to Lebanon, and in the process ensure its economic and political influence in the country. This would even spare Lebanon the need to buy gas and electricity from Egypt and Jordan. It would be imprudent, then, to expect that using Israeli natural gas will chase Iran out of Syria and Lebanon.