Lebanon Years Away From Gas Riches Despite Israel Deal, Analysts Say

Lebanon is nearing agreement with Israel over a maritime dispute involving offshore gas fields, but the cash-strapped country still faces an uphill struggle towards unlocking potential hydrocarbon riches, analysts said.

"A deal would mark one step forward but it does not mean that Lebanon has become a gas- or oil-producing country," said Marc Ayoub, an associate fellow at the American University of Beirut's Issam Fares Institute.

"We are talking of a timeline of five to six years... before the first gas" if commercially viable reservoirs are in fact found, the energy expert told AFP, describing the timeframe as "optimistic".

With the demand for gas rising worldwide because of an energy crisis sparked by Russia's invasion of Ukraine, Lebanon hopes that an offshore discovery would ease its current unprecedented financial downturn.

But more than a decade since it declared its maritime boundaries and an Exclusive Economic Zone, it still has no proven natural gas reserves.

One well drilled in 2020 by a consortium of energy giants TotalEnergies, Eni and Novatek showed only traces but no commercially viable gas deposits.

Further test drilling, in a block near the border, has been hampered by the maritime border dispute between Lebanon and Israel, which are technically still at war.

Following years of US-mediated negotiations, the rival states now appear to be nearing agreement after a draft proposal from Washington at the weekend was welcomed by both sides.

A deal would allow "offshore exploration activities to continue, but that doesn't mean that Lebanon has become rich... or that its crisis has been solved", Ayoub said.

- 'First gas'

A 2012 seismic study of a limited offshore area by the British firm Spectrum estimated recoverable gas reserves in Lebanon at 25.4 trillion cubic feet (tcf).

The authorities in Lebanon have announced higher estimates.

Block 9 near the border with Israel contains the so-called Qana field or Sidon reservoir, and will be a major zone for offshore exploration by TotalEnergies and Eni that were awarded a contract in 2018.

After being partly claimed by Israel, the Qana field is expected to fall entirely to Lebanon as part of the maritime border agreement, according to Lebanese officials.

"This time next year, we should know if there is a commercial discovery in Qana or not," Ayoub said.

"If we have a discovery, it will take... no less than three to five years after exploration" before production could start.

This time frame, according to Ayoub, assumes there are no delays by Lebanese authorities who are widely blamed for the corruption and mismanagement behind the country's financial crash.

It took months for the Lebanese Petroleum Administration (LPA) regulatory body to name its board after it was formed in 2012, because of political disputes over nominations.

Several bidding rounds for offshore gas and oil licenses have been hit by delays since they began in 2013.

Already, Lebanon lags far behind Israel which has been investing in the offshore Karish field for years and is expecting its first gas within weeks.

Roudi Baroudi, an energy consultant, said that gas or oil production could start within three years if commercially viable reservoirs are found.

But to attract energy firms and benefit from potential discoveries, Lebanon desperately needs to undergo reforms, he told AFP.

"Lebanon is not a good investment unless the government implements reforms," the energy expert said.

Reforms would provide "the basic assurances that international companies need to work with less risk".

State institutions in Lebanon have collapsed under the weight of the crisis, with strikes by civil servants adding to the paralysis.

An economic recovery plan has yet to take off more than three years since the financial downturn began, despite mounting pressures from foreign donors and the International Monetary Fund.

And political gridlock has caused a months-long delay in forming a new government amid fears of a presidential vacuum after Michel Aoun's mandate expires at the end of October.

With a bankrupt state unable to deliver more than an hour or two of mains electricity a day, energy firms may choose to work on their Lebanon projects out of Cyprus, according to Baroudi.

"With no rule of law, Lebanon is a jungle," he said.

"It's absolute chaos, whether judicially, financially or in terms of regulatory" bodies.

Moein Abu Odeh clambered up a pile of rubble in southern Gaza, searching for clothes, shoes, anything he could sell to raise cash more than a year since Israel started its relentless bombardments.

The father-of-four delved under blocks and brushed away piles of concrete dust at the site of one airstrike in the wrecked city of Khan Younis. His plan was to sell what he found to buy flour.

"If food and drink were available, believe me, I would give (these clothes) to charity," he said. "But the struggles we are going through (mean we) have to sell our clothes to eat and drink."

Widespread shortages and months of grinding war have generated a trade in old clothing, much of it salvaged from the homes of people who have died in the conflict.

At one makeshift market, shoes, shirts, sweaters and sneakers were laid out on dusty blankets, Reuters reported.

A girl tried on a single worn-out boot, which could come in handy this winter if she can afford it in Gaza's ruined economy.

A trader got an edge on his competitors by shouting out that his wares were European.

One man laughed as he got a young boy to try on a green jacket.

"We get clothing from a man whose house was destroyed. He was digging in the concrete to get some (clothing) and we buy them like this and sell them at a good price," displaced Palestinian Louay Abdel-Rahman said.

He and his family arrived in the city from another part of Gaza with only the clothes they were wearing. So he also keeps some back for them. "The seasons have changed from summer to winter and we need clothing," he said.

In April, the UN estimated it would take 14 years to dispose of the wreckage in Gaza. The UN official overseeing the problem said the clean-up would cost at least $1.2 billion.

More than 128,000 buildings have been destroyed or severely or moderately damaged in Gaza as a result of the conflict, the UN says. Underneath all of that are seams of mangled clothes.

"All our children only have short-sleeve clothing and nobody is helping them," Saeed Doula, a father-of-seven, said. "The war is all-encompassing."

Lebanon Years Away From Gas Riches Despite Israel Deal, Analysts Say