Israel and Lebanon have been at war since 1948, but the two countries are close to reaching an agreement that could increase natural gas production, helping energy-starved Europe.
Officials from the two countries say they are close to settling their long-running maritime border disputes, which would allow energy companies to extract more fossil fuels from offshore fields offshore in the Mediterranean Sea.
Increased production will not offset the amount of gas that Europe no longer receives from Russia. However, energy experts say an Israel-Lebanon deal would give an important impetus to efforts to produce more gas in that part of the world. Over the past four years, energy production in the eastern Mediterranean has been on the rise as Israel, Egypt, Jordan and Cyprus have worked together to take advantage of oil and gas buried under the sea.
“This is a very important step toward making the region its own,” said Charif Souki, Lebanese-American executive president of Tellurian, a liquefied natural gas company based in Houston. “Players eventually realize that it’s better to cooperate than to constantly fight.”
The Israeli-Lebanon negotiations will most directly affect the Karish field, which is designed to produce gas for Israel’s domestic use. That fuel is expected to replace gas produced from other fields, which can then be exported. The new field is also expected to produce small amounts of oil.
Chevron, the second-largest U.S. oil and gas company, and several smaller businesses have been producing gas from two larger fields off the coast of Israel. That fuel has increasingly replaced coal in the country’s factories and power plants. 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 has also been found reaching Europe and other parts of the world from LNG export terminals in Egypt.
The U.S. government, through several administrations, has encouraged the growth of gas trade in the region by helping to negotiate deals between nations that have long had strained relations. The Ukraine crisis has boosted efforts to extract and produce natural gas due to soaring fuel costs in Europe, where countries are desperate to end their dependence on Russian gas.
Chevron and its Israeli partners are discussing the possibility of building a floating liquefied natural gas platform at the Leviathan gas field, Israel’s largest. The companies are expected to make a decision on the project in the next few months.
But getting gas out of the region won’t be easy. Floating export terminals are very vulnerable to terrorist attacks. And, even if they could be fully secured, the terminals would not be able to handle as much gas as the larger coastal facilities used in major gas producers like the United States, Qatar and Australia. Construction of land-based berths could take several years, if not longer, because of opposition from environmental and other groups.
“Offshore energy infrastructure is volatile and vulnerable,” said Gal Luft, a former Israeli military officer and co-director of the Institute for the Analysis of Global Security in Washington. “You have to manage risk.”
In theory, it would be easier to ship gas by pipeline than to liquefy natural gas for export before converting it back to gas at destination. But building long-distance pipelines is expensive and difficult. A protracted conflict between Turkey, Cyprus, and Greece, for example, has made building a pipeline from Israel to Southern Europe extremely challenging, if not impossible.
Even an Israel-Lebanon border deal faces risks. Hezbollah has threatened to attack the Karish field, and it sent unarmed drones there in July; Israeli officials said they shot down the plane.
However, Israeli and Lebanese officials have in recent days said they are pushing for negotiations, with officials from the Biden administration acting as a middleman and close to reaching an agreement. The talks gained momentum during the United Nations General Assembly last week.
Prime Minister Najib Mikati of Lebanon said Thursday at the United Nations that he is confident about reaching an agreement with Israel. “Lebanon is well aware of the importance of the promising energy market in the eastern Mediterranean for the well-being of all countries in the region, but also for meeting the needs of the nations of the Mediterranean,” he said. import.”
Oil companies in the United States and other Western countries have long shunned Israel, in part because they do not want to alienate Arab countries. However, as relations between Israel and countries such as Egypt, Jordan and more recently the United Arab Emirates have improved, many companies have expressed interest in the eastern Mediterranean.
An agreement between Israel and Lebanon could accelerate that trend.
“I think it will ease the minds of many people,” said Leslie Palti-Guzman, chief executive officer of Gas Vista, a consulting firm. “Companies that don’t want to invest may be more incentivized to develop additional projects.”
Gas fields in the Mediterranean are among the new suppliers Europe will need as it looks for a long-term alternative 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 Blewer, a spokesman for Energean, a London-based exploration company that hopes to start gas production at the Karish field. “The Eastern Mediterranean is one of a series of marginal interests that Europe must consider.”
Energean plans to start production in the next few weeks and says it expects to produce up to 8 billion cubic meters of gas per year by 2025. If successful, the company could add a significant addition to production amount of Israel. The country will produce about 22 billion cubic meters this year. Once an importer of almost all of its energy, Israel increased gas production by 22% in the first half of the year compared to the same period in 2021. It exports about 40% of gas, earning the government 250 million. USD royalties.
The Israeli-Lebanon deal would also pave the way for drilling in Lebanese waters led by a consortium led by Italy’s Eni and France’s TotalEnergies. Lebanese officials see natural gas as an important financial tool in their efforts to revive the country’s faltering economy. The government has wanted to drill offshore since at least 2014, but disputes with Israel over the border have delayed exploration.
“It is unlikely that Lebanon will find gas,” said Chakib Khelil, former president of the Organization of the Petroleum Exporting Countries. “But, if they do, Lebanon will get a big boost.”