At a time when the world's gas supply is having to catch up with demand, two prospective gas majors in the eastern Mediterranean have locked horns over a disputed field that could delay the development of local resources. Israel and Lebanon have been at odds about their maritime border ever since gas was found. The issue seems to be of particular importance for troubled Lebanon: a big gas find could change the country's quite grim fortunes. It is also important for Israel, however, as it eyes the position of a regional gas major.
The focus of the rift is an offshore field called Karish. According to Israel, Karish lies in its territorial waters. According to Lebanon, it falls within a triangle of contested waters because the two cannot agree where exactly the border passes. As Reuters put it, "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."
This weekend, UK's Energean, which has been awarded the right to drill at Karish, arrived on the site with a rig, prompting an immediate reaction from Beirut. The Lebanese president and the caretaker prime minister of the country accused Israel of violating Lebanon's sovereignty.
The Lebanese side also says the Israeli armed forces accompanying the rig on its trip to Karish have sent battleships to the field even though the drilling rig has yet to be connected to the deposit, Israel's Haaretz reported this week.
One interesting twist, according to Israeli sources quoted by Haaretz, is that the rig in Karish actually sits south of the border proposed by the Lebanese side, that is, in Israeli waters. According to the Lebanese side, however, this doesn't seem to be the case.
"The Israeli enemy's attempts to create a new crisis, by encroaching on Lebanon's maritime wealth, and imposing a fait accompli in a disputed area in which Lebanon adheres to its rights, is extremely dangerous," the head of the Lebanese caretaker government, Najib Mikati said.
Israel, on the other hand, has warned early on that any damage to the drilling rig in Karish—like attacks on any gas drilling rigs in its waters—will be construed as an attack on the state, implying there will be an immediate reaction.
It looks like the flare-up could be put out with mediation after Lebanon said it would invite Amos Hochstein, the U.S. State Department's Special Envoy and Coordinator for International Energy Affairs and leads the Bureau of Energy Resources, to broker a resolution.
While Lebanon has yet to make a commercial find of gas in its waters, Israel is already producing from a couple of giant fields and has big plans for its gas wealth. The country recently held talks with the European Union to start exporting gas there after liquefying it in Egypt. Energy Minister Karine Elharrar said this would prompt a series of new drilling tenders, to take place in the third quarter of the year.
Over the next few years, Israel plans to double its natural gas production to 40 billion cubic meters, both through expanding existing projects such as the Leviathan field, and bringing new ones, such as Karish, online. And Europe is an obvious target market for all that gas.
"Israel must act as quickly as possible as the window to sign contracts and become a significant gas supplier to Europe will only be opened for a limited time," gas consultant Gina Cohen said recently in a report for the Israeli Foreign Ministry and the European Parliament.
In order to materialize its plans, Israel will need to secure its gas fields, which makes the resolution of the dispute advantageous for it, too, reducing the risk of potential attacks or further rifts with its neighbor to the north.
By Irina Slav for Oilprice.com
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