Despite Israel Spat, Lebanon Signs First Offshore Gas, Oil Deals

Lebanese President Michel Aoun speaks during a ceremony marking the signing of offshore oil and gas exploration deals. (Dalati & Nohra)
Lebanese President Michel Aoun speaks during a ceremony marking the signing of offshore oil and gas exploration deals. (Dalati & Nohra)
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Despite Israel Spat, Lebanon Signs First Offshore Gas, Oil Deals

Lebanese President Michel Aoun speaks during a ceremony marking the signing of offshore oil and gas exploration deals. (Dalati & Nohra)
Lebanese President Michel Aoun speaks during a ceremony marking the signing of offshore oil and gas exploration deals. (Dalati & Nohra)

Amid a simmering dispute with Israel over the demarcation of the shared marine border, Lebanon signed on Friday its first agreements for offshore oil and gas exploration.

The deal includes exploration in two blocks, including one that is contested with Israel.

The signing ceremony was held Friday afternoon in Beirut and was attended by President Michel Aoun.

"We have achieved a big dream and Lebanon has entered a new era today," Aoun said at the ceremony.

A consortium of France’s Total, Italy’s Eni and Russia’s Novatek signed the agreements for the two blocks, which are among five that Lebanon put up for tender in the country’s much-delayed first licensing round.

Lebanon’s energy minister said the dispute with Israel would not stop Lebanon benefiting from potential undersea reserves in the contentious Block 9, while consortium operator Total said it would not drill the block’s first well near the disputed zone.

Israel and Lebanon, which regard each other as enemy states, have exchanged threats and condemnation over the tender, amid rising tensions over territorial and marine boundaries between them.

“Today, we announce that we have started our petroleum path ... after signing the agreements and launching the exploration activities,” Lebanese Energy Minister Cesar Abi Khalil said at a ceremony in Beirut.

The contracts had already been signed on January 29.

Data suggests there are reserves in Lebanon’s waters, but no exploratory drilling has taken place to estimate their size.

Abi Khalil has said a second offshore licensing round will happen once the first commercially viable discovery is made.

The first exploratory well will be drilled in Block 4 in 2019, said Stephane Michel, Total’s head of exploration and production in the Middle East and North Africa.

The second well will be drilled in Block 9 more than 25 km (15 miles) from the maritime border claimed by Israel, he said at the ceremony. “There is no reason not to proceed in this way,” Michel added.

Lebanon has an unresolved maritime border dispute with Israel over a triangular area of sea of around 860 sq km (330 square miles) that extends along the edge of three of its total 10 blocks.

Total said in a statement the disputed waters comprise 8 percent of Block 9 and that its exploration well “will have no interference at all with any fields or prospects” in the disputed sliver of water.

Lebanese and Israeli officials said David Satterfield, acting assistant US secretary of state, was in Israel last week and in Lebanon this week on a mediation mission. US officials confirmed his travels without detailing his agenda.

Abi Khalil told Reuters the heightened tension between the two countries in recent weeks has “not had an effect” on the consortium’s plans to explore.

Lebanon's Foreign Minister Jebran Bassil warned Israel not to try to hinder the drilling on the Lebanese side saying that Beirut can also stop offshore development on the Israeli side.

Earlier this week, Israeli Defense Minister Avigdor Lieberman described Lebanon's exploration tender as "very provocative" and suggested that Lebanon had put out invitations for bids from international groups for a gas field "which is by all accounts ours."

His comments drew sharp condemnation from Prime Minister Saad Hariri, who described Lieberman's comments as a "blatant provocation that Lebanon rejects."

Lebanon is on the Levant Basin in the eastern Mediterranean where a number of big sub-sea gas fields have been discovered since 2009.

Eni reported the Mediterranean’s largest discovery in 2015: the Zohr field off Egypt which holds an estimated 30 trillion cubic feet of gas. On Thursday Eni said it and Total had discovered a promising natural gas field off Cyprus.

Fuad Krekshi, Eni’s executive vice president of the Middle East, said Eni’s entry into Lebanon’s market is a “natural consequence” of its existing role in the Mediterranean region.

Total, with 40 percent, heads the consortium drilling Lebanon’s first offshore well. Eni also holds 40 percent and Novatek 20 percent.

Vyacheslav Mishin, head of Novatek’s new Lebanon office, said the projected global growth in natural gas and LNG consumption was key to his company’s future growth.

“The Middle East market for LNG consumption is forecast to grow by more than 100 percent by 2030,” he said.

Potential reserves could be used domestically or exported.

Both are attractive for Lebanon which has been short of electricity since its 1975-90 civil war and has an anemic economy battered by war in neighboring Syria and political tensions. Lebanon has a debt of $80 billion or 145 percent of its gross domestic product making it one of the world's highest.

It is also hoped the developing oil and gas industry will create jobs and economic growth. To this end, the EPA contracts say 80 percent of people employed by the consortium should be Lebanese, with priority given to local suppliers and contractors.

But the commercial viability of potential reserves depends on energy market prices, the ability to secure customers and the cost and politics of building export infrastructure.

“For all the fields in the region, there are commercial, political, and technical challenges that hinder exploitation for the purposes of export,” Tareq Baconi, a European Council on Foreign Relations visiting fellow on MENA energy told Reuters.

“Many of the challenges for export will be faced by Lebanon as well when, and if, it discovers offshore reserves,” he said.



Israel Attempts to Penetrate Second Line of Villages in Southern Lebanon

Trails of Israeli missiles launched towards targets in southern Lebanon, as seen from an undisclosed location in northern Israel, 18 November 2024, amid cross-border hostilities between Hezbollah and Israel. (EPA)
Trails of Israeli missiles launched towards targets in southern Lebanon, as seen from an undisclosed location in northern Israel, 18 November 2024, amid cross-border hostilities between Hezbollah and Israel. (EPA)
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Israel Attempts to Penetrate Second Line of Villages in Southern Lebanon

Trails of Israeli missiles launched towards targets in southern Lebanon, as seen from an undisclosed location in northern Israel, 18 November 2024, amid cross-border hostilities between Hezbollah and Israel. (EPA)
Trails of Israeli missiles launched towards targets in southern Lebanon, as seen from an undisclosed location in northern Israel, 18 November 2024, amid cross-border hostilities between Hezbollah and Israel. (EPA)

Relative calm prevailed in Beirut’s southern suburbs on Monday after a day of intense Israeli strikes. In the South, Israel also scaled back its air raids as its forces clashed with Hezbollah on the second line of villages that it is trying to penetrate.

Israel is trying to ramp up its pressure on the field hours before US envoy Amos Hochstein is expected to arrive in Beirut where Lebanon and Hezbollah have agreed to a US ceasefire proposal.

On the ground, Israel now controls a first line of villages and is trying to capture the second line, specifically in the western sector through the village of Chamaa and the eastern sector towards al-Khiam.

Khiam witnessed relentless Israeli artillery fire throughout the night. Israel also targeted the towns of Jdeide, Marjeyoun and Bourj al-Mamlouk, reported Lebanon’s National News Agency (NNA).

Hezbollah announced in a series of statements that it had fired rockets at Israeli forces in Khiam on four occasions. The Iran-backed party’s al-Manar television reported that Israeli armored vehicles were moving in the fields of al-Wazzani towards Khiam.

Hours earlier, the Israeli army announced that it had deployed artillery batteries inside Lebanese territory, a first since it intensified its attacks against Hezbollah in October.

Israeli army spokesman Avichay Adraee said the artillery was deployed to provide support for the ground operations as the forces advance towards new goals.

Former deputy chief of staff of operations in the Lebanese Armed Forces retired General Hassan Jouni and founder and CEO of the Institute for Near East and Gulf Military Analysis (INEGMA) Riad Kahwaji agreed that the deployment of the artillery was normal in the field battle.

Jouni told Asharq Al-Awsat that the first line of villages was now under Israeli control through fire, while Kahwaji said they are effectively occupied and now Israel can advance on the second line.

Jouni disagreed on calling it an occupation, saying Israel was controlling it by force. Its military can roam the area, but it still comes under attack. It has also not built any defensive posts that allow it to establish a permanent position in the area.

The deployment of the artillery will not have a major impact on the fighting. Rather, it is aimed at firing deeper in Lebanon, he explained.

In offensive operations, artillery batteries are moved forward as forces advance. This is what Israel is doing. It has moved up to the second line of villages, but does not consolidate its occupation of villages, he said.

The first line will become occupied once Israel seizes control of the second, Jouni went on to say.

As it stands, the army is being met with fierce resistance by Hezbollah on the second line, especially in the Tayr Harfa region and leading to Chamaa.

Chamaa is significant because it lies between two valleys and is the only route to al-Bayyada, whose capture would be a major achievement given its geographic location, Jouni said.

Kahwaji, meanwhile, asserted that the first line of villages has been occupied by Israel, which has allowed it to move on to the second line.

The deployment of the artillery confirms this advance. Moreover, the forces will be stationed around the artillery to defend it, so they would have effectively established a foothold in the area.

On the ground, an Israeli airstrike targeted the main water facility in the southern port city of Tyre, killing two local officials and injuring two others, further compounding southern Lebanon’s worsening water crisis, Lebanon’s state media said.

The attack severely damaged the facility, prompting the Tyre Municipality to urge residents to ration water use until repairs can be made, NNA said on Monday.

Those killed in the attack included Samer Shaghri, a local elected official called a mukhtar who handles residents’ administrative affairs, and Qassem Wehbi, the deputy mayor of Burj al-Shamali, a town east of Tyre.

This strike is part of a broader pattern of bombardments in the 13-month conflict between Hezbollah and Israel that, according to an October 22 UNICEF report, have damaged at least 28 water facilities, cutting off access to safe water for over 360,000 people, primarily in southern Lebanon.

UNICEF’s report quoted Lebanon’s caretaker Minister of Energy, Walid Fayyad, who said, “The ongoing hostilities have inflicted severe damage on Lebanon’s essential services, leaving hundreds of thousands without access to safe water and electricity.”