Breakthrough for Israel-Lebanon Maritime Dispute?

Hezbollah leader Hassan Nasrallah has repeatedly threatened Israeli development of Karish — and other Israeli platforms — since London-listed Energean’s floating production, storage and offloading vessel arrived at the field in early June. Parts of Karish sit north of Lebanon’s Line 29 claim, put forward in late 2020.

The field, where output is targeted at 630 million cubic feet per day, was not in disputed territory under Lebanon’s previous Line 23 claim (see map).

Lebanon’s proposal has reportedly shifted in recent months to somewhere in between, with Beirut wanting all of Blocks 8 and 9 — which abut the Line 23 claim — plus additional territory that covers the portion of the Block 9 Qana prospect that extends beyond Line 23, according to a source close to Hezbollah.

• A deal will facilitate production in Israel, but it won’t necessarily mean a rapid boon for Lebanon, currently suffering an energy and economic crisis.

For Israel, the Karish development comes at an opportune time — if it can be done without triggering conflict. Europe’s desire to wean itself off Russian gas after Moscow’s decision to invade Ukraine has reopened a possible market  for Mediterranean gas.

The prospects for Lebanon are less clear. The TotalEnergies-led consortium that holds Block 9 won’t drill in disputed territory, Energy Intelligence understands, leaving Qana’s prospectivity unknown. Private Russian firm Novatek is also planning to leave the consortium, which also includes Italy’s Eni. And major oil and gas firms are having trouble commercializing even massive proven reserves — witness Total’s troubled Mozambique LNG development. Still, “there’s enough of an argument that if things go well and the natural gas reserves are there, they can be used for the Lebanese people in the medium and long term,” the International Crisis Group’s David Wood said.

Egyptian gas supplied via the Arab Gas Pipeline could yet offer nearer-term relief. Lebanon, Syria and Egypt have agreed for state Egyptian Natural Gas Holding Co. (Egas) to transport 650 million cubic meters of gas per year to Lebanon via Syria to alleviate chronic blackouts — a deal that only works if Washington comes up with a workaround to its existing sanctions on Syria to facilitate World Bank funding. The US’ Hochstein has said the two issues aren’t linked, but Lebanese officials believe they are — and that reaching an agreement on the maritime border could help pave the way for the piped gas in the near term.

• Domestic political issues on both sides may yet serve as obstacles to finalizing a deal.

The two sides have been close to agreement before, only for a deal to fall apart as domestic politics took over. In 2012, the government of then and current Lebanese Prime Minister Najab Mikati collapsed, putting an end to the prospects of a different compromise than what is on the table today, according to an account   by then-negotiator Frederic Hof. This time around, Lebanese President Michele Aoun’s term expires Oct. 31, and a deal could mark a much-needed win for his term.

Israel meanwhile faces a political transition of its own. Ahead of Nov. 1 parliamentary elections, there is some speculation that Israeli Prime Minister Yair Lapid may prefer to push a possibly controversial deal back until after the poll. “I think the incentives do exist for Israel to do a deal and bring it across the line, but there obviously are some domestic obstacles,” Wood said. There is also US pressure to get the deal done. In an Aug. 31 phone call with Lapid, US President Joe Biden “emphasized the importance of concluding the maritime boundary negotiations between Israel and Lebanon in the coming weeks,” a White House readout said.

Waiting until after the election to finalize a deal also presents other problems for Israel. First there’s the risk that Nasrallah carries through on the threat to attack Karish if production begins there before an agreement. But any Israeli decision to delay Karish risks looking like acquiescence to those threats. The US official is optimistic a deal can be done before the Karish start-up, and does not need to wait until Israeli elections.