WarSclerotic

Massive energy discoveries complicate relations between Israel and Lebanon. Analysis by Mary E. Stonaker.

Al Arabiya

Friday, 24 June 2011

A rapid descent into war is a very real possibility in the Levant unless Israel and Lebanon solve their disputed maritime border issue, and quickly. Weighed down by nearly $50 billion in national debt, Lebanon is eager to claim their share of the Leviathan basin gas and oil discoveries shared with Israel, Syria and Cyprus.

Disputed maritime borders and the fact that Israel and Lebanon are technically still at war after the 2006 ceasefire agreement, forecast a tricky road ahead for all parties involved.

Discoveries in this massive basin, Leviathan, may birth fields in Syrian and Cypriot waters. Leviathan is estimated to contain up to 122 trillion cubic feet (tcf) of gas and 1.7 billion barrels (bbl) of oil. For perspective, Saudi Arabia holds 238.1 tcf in proven gas reserves and 264.5 bbl in proven oil reserves.

The recent power vacuum in Lebanon ended last week when Prime Minister Najib Miqati announced a new government. Miqati inherited a national debt equal to nearly 150 percent of its GDP.

After the announcement, Israel released a statement hoping that Miqati and the new government would take steps to ensure the 2006 UN Resolution 1701 border agreement would be upheld.

The maritime border, however, was not discussed during UN Resolution 1701 (2006).

In January, the UN rejected Lebanon’s request for assistance in delineating the maritime border as well as preventing Israeli exploration and production (E&P) companies from drilling in would-be Lebanese waters.

The border issue here is two-fold.

First, the Israeli border with Lebanon was declared unilaterally by Israel.

Moreover, Israel is not a signee on the United Nations Convention on the Law of the Sea (UNCLOS), which dictates what constitutes maritime borders.

Even if Israel were a signee, the lack of a stable, mutually-agreed terrestrial border from which to base a maritime border would hinder the enforcement of the Law of the Sea.

Consequently, the contested nature of this maritime border is not under the jurisdiction of the UNIFIL which oversees the terrestrial border between Lebanon and Israel, known as the Blue Line. The lack of mechanisms under which to resolve this long-standing issue have merely prolonged the ceasefire rather than witnessed a progression into a mutual state of peace.

The nations currently do not enjoy diplomatic ties.

Both nations’ motivations in the border dispute are now based upon the ability of domestic oil and gas fields to change the fate of future generations. As both nations are pioneering shifts away from oil to natural gas, the following will focus the gas aspect.

In 2008, Lebanon possessed 9 Tcf of proven gas reserves, produced 208 Bcf of gas and consumed 213 Bcf. The differential was offset by its linkages to the Arab Gas Pipeline which originates in Egypt. Lebanon was operationally linked to the AGP (AGP) in 2006.

Despite consuming and producing very little natural gas, Lebanon is currently in the process of converting its power plants to run on natural gas from petroleum-based products. In 2006, Syria promised to supply Lebanon with 1.5 million cubic feet per day (mmcf/day) for 10 years through the Arab Gas Pipeline. However, Syrian shortages of domestic supplies may hamper the fulfillment of that promise.

Israel currently feeds about half of its domestic natural gas consumption, fueling the other half through the Arish-Ashkelon pipeline (a branch of the AGP). With a capacity of 335 mmcf/y, this pipeline stretches 100 kilometres under the Mediterranean to connect Israel to the AGP. The pipeline was constructed and is operated by the East Mediterranean Gas Company (EMG).

EMG is a multinational gas company and a joint effort of the Egyptian General Petroleum Corporation (EGPC) with 68.4 percent of shares, Merhav, an Israeli company with 25 percent and the Ampal-American Israel Corporation with the remaining 6.6 percent of shares.

The associated supply agreement between Egypt and Israel has come under intense scrutiny after former President Hosni Mubarak’s departure from Egypt’s government.

Artificially low prices were achieved by the Egyptian government selling the gas at low prices which then passed along the favor to Israel Electric Company (IEC).

The recent release by Al-Jazeera of the signed contracts will add further pressure to eliminate the corrupt legacy of Mr. Mubarak’s rule in Egypt.

As Israel prepares for potential supply gaps from Egypt, it is also looking into the near future by commencing oil and gas drilling. The recent oil and gas discoveries will not only supply domestic demand, they would allow Israel to become an exporter which would completely change the regional dynamic.

The magnitude of these discoveries and quick Israeli action led to the call for urgent action by Lebanese parliamentary speaker Nabih Berri, according to AFP. This is a follow-up to the exploration and production law passed last August by the parliament to oversee drilling.

These efforts aim not only to counter Israel’s full claims over the fields on the disputed border but also defy the recent Israeli-Cypriot maritime border agreement.

An added sticky issue in this border dispute is the potential for further conflict between Palestine and Israeli. A fully complicated issue itself, the peace process has moved at a snail’s pace, if at all, since Israel’s creation in 1948. However, these energy fields will no doubt add a further dimension to this already multi-faceted state of affairs.

Finally, the security of rigs set up in the Mediterranean waters off Israel and Lebanon must be addressed and will add high costs to this project if companies wish to have on-stream supplies in the coming years. Israel is aiming for 2013.

Sabotage of oil and gas rigs in the Mediterranean would have disastrous environmental and social effects on the region, leaking these destructive mineral resources into the ocean as well as cutting off energy supplies to millions.

It would be dangerous to give anything but the utmost significance to the quick resolution of maritime borders between Lebanon and Israel. Without that critical foundation, these disputes will lead to violent clashes as nations fight for their future generations’ access to stable and reliable energy supplies.

 

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