Israel’s northern neighbor is scrambling to set up a legal basis to challenge the Jewish state’s discovery of a gigantic natural-gas reservoir in the Eastern Mediterranean. Lebanese leaders are scrambling to pass legislation to govern offshore gas and oil exploration, following the discoveries of two gigantic natural gas reserves off the coasts of Israel and Lebanon, two countries in a state of war for decades.
The Lebanese parliament is set to discuss two draft laws that could manage offshore gas and oil exploration on Monday. The two versions of the bill differ over who will control potential revenues from offshore gas and oil discoveries: the President, through the Ministry of Energy and Water, or an independent body. In January 2009, an Israeli oil company discovered the first large natural gas reservoir, Tamar, some 55 miles off the coast of the northern city of Haifa.
Earlier this year, another offshore gas field, Leviathan, was discovered to contain 16 trillion cubic feet of gas, double that of the Tamar prospect. Once exploited, the fields could more than provide for Israel’s domestic demand and turn the country into one of the world’s top 10 exporters of natural gas. The Lebanese were quick to notice that their enemy’s new discoveries extend into Lebanon’s maritime territory, and that Israel had licensed the oil companies to explore (and eventually drill) in Lebanese territory.
Indeed, a US Geological Survey study earlier this year claimed that there are 122 trillion cubic feet of recoverable gas off the coasts of Syria, Lebanon, Israel and the Gaza Strip. Headlines like “Israel preparing to steal gas fields in Lebanon’s waters” and “Zionist Entity Robs Arab Resources” appeared across the Arab world within days.
Lebanese politicians jumped in to make a plethora of provocative statements, fanned by Hezbollah, the armed Shi’ite political movement, which pledged to defend Lebanon’s natural resources. Israel responded in kind, with the country’s Infrastructure Minister Uzi Landau stating that the army “will not hesitate to use force” to defend the gas fields. The Israeli navy meanwhile extended a line of buoys two miles into the sea off the Israeli-Lebanese border.
“This is a very large discovery which extends into Lebanese waters,” said Dr. Manouchehr Takin, a senior petroleum upstream analyst at the Centre for Global Energy Studies. “They could do it jointly through what is called unitization, and have outside oil companies evaluate the total resource and estimate how many cubic feet are on the Israeli side and how many cubic feet are on the Lebanese side. Then the reservoir could be developed jointly with the profits shared according to each side’s relative portion, but they’d have to agree and be in a good, cooperative mood.”
Asked what would happen if Israel and Lebanon do not enter a good, cooperative mood in the near future, Dr. Takin said that “one side can drill for itself, the other side can drill for itself and have a race… In the end this will be damaging because if you produce too rapidly you end up not producing as much as you would otherwise.”
Beyond the militaristic oratory and bravado on both sides, there are significant domestic political challenges to Lebanon moving forward with offshore oil and gas exploration, as the country has no law to regulate offshore resources, effectively killing any chance that international oil companies would risk drilling.
“They don’t have a legal system for oil and gas,” Dr. Takin said. “Who does it belongs to? Should it be exploited by government or the private sector? If private, how should it be taxed or regulated?”
Saad Oueini, general manager of the Association of Lebanese Industrialists, said Lebanon’s business community would be unable to access the potential impact of Lebanese gas exploration until the political debate settles down: “It’s only a project now and we don’t know the feasibility of it,” he told The Media Line. “We can’t analyze its business impact yet because we don’t know if it will work or where it will go.”
Dr. Louis Hobeika, an economics professor at Lebanon’s Notre Dame University, said Lebanese politicians are getting way ahead of themselves: “In my view, the problem is we are not sure if we even have oil or gas, so what are we fighting about?” he told The Media Line. “Why do you need a law to organize something you don’t even know you have. Logically you send an exploration team to see what we have, where and how much.”
“They are spending their time fighting over nothing,” Dr. Hobeika said. “It’s only an issue because it hides the other more serious problems facing the country – government inefficiency, incompetence and corruption and the lack of adequate services in transportation, water, education, health.”
“In my view it has nothing to do with Israel,” he continued. “If Israel discovered something, what’s the problem? This is an economic issue that can be settled easily, as, if there is oil or gas between us and Israel, then the United Nations will have to intervene to divide the proceeds because we are in a state of war.”
Tala Al-Khatib, an education and outreach officer for the Society for the Protection of Nature in Lebanon, argued that given the recent BP oil spill in the Gulf of Mexico, Lebanese should be more focused on the environmental implications of offshore drilling.
“The Lebanese coast is very important for fish spawning and sea turtle nesting, including the green sea turtle, which is an endangered species,” she told The Media Line. “The Mediterranean sea is already contaminated and is subject to threats including climate change, dynamite fishing, etc.”
“I personally believe that any potential pursuit of that kind could lead to a catastrophe similar to that caused by British Petroleum’s Deepwater Gulf of Mexico oil spill,” Al-Khatib continued: “Thousands of tons of oil leaked into the sea as a result of the 2006 Israeli air raid on the Jieh power plant in the South of Lebanon. This spill had a huge negative impact on the Mediterranean marine environment.”
“Drilling oil and gas off the Lebanese coasts could be dangerous,” she continued. “Having suffered huge environmental and economic losses, Lebanon cannot afford one more catastrophe… So why venture in risky endeavors?”
Read more on the natural gas saga:
Tamar’s Natural Gas Could Fuel Better Place Cars
Israel Strikes Massive Natural Gas Pocket