Israel-Lebanon Sea Boundary Row Obstructs Energy Development

Water border marks in the Mediterranean sea next to Rosh Hanikra, near Haifa at the Israel-Lebanon border, 06 June 2022. (EPA)
Water border marks in the Mediterranean sea next to Rosh Hanikra, near Haifa at the Israel-Lebanon border, 06 June 2022. (EPA)
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Israel-Lebanon Sea Boundary Row Obstructs Energy Development

Water border marks in the Mediterranean sea next to Rosh Hanikra, near Haifa at the Israel-Lebanon border, 06 June 2022. (EPA)
Water border marks in the Mediterranean sea next to Rosh Hanikra, near Haifa at the Israel-Lebanon border, 06 June 2022. (EPA)

A dispute between Israel and Lebanon over their maritime boundary has obstructed energy exploration in the eastern Mediterranean and risks exacerbating tensions between two foes.

After months of deadlock in US-mediated talks, Beirut on Sunday warned against any activity in the disputed area, responding to the arrival of a vessel to develop a field for Israel.

Lebanon has said the field in question, Karish, is in disputed waters. Israel denies this.

Here's what you need to know about the standoff:

What’s at stake?
Gas - potentially a lot of it.

Lebanon and Israel are located in the Levant Basin, where a number of big sub-sea gas fields have been discovered since 2009. Israel already produces and exports gas.

But while Israel has moved ahead, Lebanese hopes of producing energy have been hamstrung by political paralysis.

Lebanon's one and only attempt at drilling - an exploratory well in 2020 - found gas traces but no reservoirs, according to France's Total, part of a consortium with Italy's ENI and Russia's Novatek that was awarded Lebanon's first oil and gas offshore license in 2018.

A gas find would be a major boon for Lebanon, which has been mired in financial crisis since 2019. Eventually, such a discovery could fix Lebanon's long-standing failure to produce adequate electricity for its population.

Israeli officials have previously said they hoped the negotiations would take a short time and that an agreement would strengthen both countries' economies.

But while an agreement could allow both sides to benefit, the issue could risk conflict if unresolved.

Lebanon is home to the heavily armed, Iran-backed Hezbollah, which has fought numerous wars with Israel and has previously warned Israel against drilling in the disputed zone.

What is the dispute over?
Lebanon and Israel are at odds over the boundary separating their exclusive economic zones - an offshore area that a country can claim for resource extraction.

Israel claims the boundary runs further north than Lebanon accepts, while Lebanon claims it runs further south than Israel accepts, leaving a triangle of disputed waters.

After indirect negotiations began in 2020, Lebanon expanded its claim. Israel then did the same.

Karish became part of the zone Lebanon was disputing after Beirut expanded its claim, according to Laury Haytayan, a Lebanese oil and gas expert.

Lebanon has stated that Karish was in the disputed area in a letter to the United Nations, the presidency said on Sunday.

Israel says Karish field, discovered more than a decade ago, is in its exclusive economic zone. Israeli Energy Minister Karin Elharrar said the Lebanese account was "very far from reality".

What does Hezbollah think?
Hezbollah has been a sworn enemy of Israel since it was established in 1982 by Iran's Revolutionary Guards. The group has said the talks are not a sign of peace-making and threatened action if Israel violates Lebanese rights.

But Hezbollah is more deeply involved than ever in Lebanese state affairs, and wants to see Lebanon's offshore energy resources developed. It has not stood in the way of the US-mediated indirect talks and has said it will agree to whatever the government agrees.

Is there a risk of conflict?
The last major war between Israel and Hezbollah in Lebanon was in 2006. The border area has remained largely calm since. Analysts believe both sides want to avoid another conflict.

But Hezbollah leader Hassan Nasrallah said last year Israel was wrong if it thought it could act as it pleased before a solution was reached, and the group would "act accordingly" when it finds that Lebanese oil and gas is in danger.

Following the latest spat, Lebanon said it would invite a US envoy to resume negotiations to prevent any escalation and Israel's defense minister said the matter was a civilian issue to be resolved diplomatically.



What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
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What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo

Austria's energy company OMV was informed by Gazprom that the Russian gas producer would halt deliveries of natural gas via Ukraine to OMV from 0500 GMT on Nov. 16 following OMV winning an arbitration case. Supplies of Russian gas to Europe via Ukraine may completely stop from Jan. 1 2025 after the current five-year deal expires as Kyiv has refused to negotiate the new terms of the transit with Moscow during the war.
Here is what happens if Russian gas transit via Ukraine is completely turned off and who will be affected most, according to Reuters.
HOW BIG ARE THE VOLUMES?
Russian gas supplies to Europe via Ukraine are relatively small. Russia shipped about 15 billion cubic meters (bcm) of gas via Ukraine in 2023 - only 8% of peak Russian gas flows to Europe via various routes in 2018-2019.
Russia spent half a century building its European gas market share, which at its peak stood at 35%.
Moscow lost its share to rivals such as Norway, the United States and Qatar since the invasion of Ukraine in 2022, prompting the EU to cut its dependence on Russian gas.
EU gas prices rallied in 2022 to record highs after the loss of Russian supplies. The rally won't be repeated given modest volumes and a small number of customers for the remaining volumes, according to EU officials and traders.
UKRAINIAN ROUTE
The Soviet-era Urengoy-Pomary-Uzhgorod pipeline brings gas from Siberia via the town of Sudzha - now under control of Ukrainian military forces - in Russia's Kursk region. It then flows through Ukraine to Slovakia.
In Slovakia, the gas pipeline splits into branches going to the Czech Republic and Austria.
Austria still receives most of its gas via Ukraine, while Russia accounts for around two-thirds of Hungary's gas imports.
Slovakia takes around 3 bcm from energy giant Gazprom per year, also about two-thirds of its needs.
Czech Republic almost completely cut gas imports from the east last year, but has started taking gas from Russia in 2024.
Most other Russian gas routes to Europe are shut including Yamal-Europe via Belarus and Nord Stream under the Baltic.
The only other operational Russian gas pipeline route to Europe is the Blue Stream and TurkStream to Türkiye under the Black Sea. Türkiye sends some Russian gas volumes onward to Europe including to Hungary.
WHY DOES THE UKRAINIAN ROUTE STILL WORK?
While remaining Russian gas transit volumes are small, the issue remains a dilemma for the EU. Many EU members such as France and Germany have said they would not buy Russian gas anymore but the stance of Slovakia, Hungary and Austria, which have closer ties to Moscow, challenges the EU common approach.
The countries, who still receive Russian gas, argue it is the most economic fuel and also blame neighboring EU countries for imposing high transit fees for alternative supplies.
Ukraine still earns $0.8-$1 billion in transit fees from Russian gas transit. Russia earns over $3 billion on sales via Ukraine based on an average gas price of $200 per 1,000 cubic meters, according to Reuters calculations.
Russia's gas pipeline export monopoly Gazprom plunged to a net loss of $7 billion in 2023, its first annual loss since 1999, because of the loss EU's gas markets.
Russia has said it would be ready to extend the transit deal but Kyiv has repeatedly said it won't do it.
Another option is for Gazprom to supply some of the gas via another route, for example via TurkStream, Bulgaria, Serbia or Hungary. However, capacity via these routes is limited.
The EU and Ukraine have also asked Azerbaijan to facilitate discussions with Russia regarding the gas transit deal, an Azeri presidential advisor told Reuters, who declined to give further details.