Resolving Maritime Border Dispute Opens Door for Increased Energy Security​

By Nicholas Weising

On October 27, 2022 the State of Israel and the Republic of Lebanon, two countries who legally remain in a state of war, signed a historic agreement under the mediation of U.S. envoy Amos Hochstein to resolve a roughly eighty year old border dispute surrounding each country’s exclusive economic zone. The point of contention was a roughly 300 square mile strip of the Mediterranean to which both states laid claim, but tensions escalated in 2010 when maritime exploration suggested the area was rich in liquefied natural gas (LNG). The Qana gas field is estimated 100 billion cubic meters of gas, while the Karish gas field – already being exploited by Israel – has roughly 50 billion cubic meters. To prevent loss of life or escalation between the countries, the United States restarted negotiations in October 2021, after the United Nations failed to facilitate successful negotiations. The border dispute led to violence. Notably, in the summer of 2022, Hezbollah flew drones multiple times toward the Karish gas platforms, which were then shot down by the Israeli Navy.  

The Deal 

The agreement maintains Israeli rights to develop the Karish gas field, maintaining that status quo, and gives Lebanon full rights to develop the Qana gas field, with Israel set to receive 17% in royalties from the French petroleum company TotalEnergies, who will begin conducting exploration in the Qana field. TotalEnergies will be passing off this cost to Lebanon, so in essence, Lebanon is buying the right to extract gas from the Qana field, but this only occurs after Qana has been given a hard valuation. European oil companies have a long history of conducting Mediterranean drilling. Italian oil conglomerate Eni, of which the Italian government is the controlling shareholder, has drilled in Libya since the mid-twentieth century and recently signed an $8 billion deal with Libya’s National Oil Corporation to develop two new offshore rigs. So, there is strong precedent for a European firm to harvest gas in this area.  

Israel walked away from the deal more comfortable regarding stability on its northern border and for regional security more broadly. The deal is pragmatic for both sides and should not be overhyped as a springboard for future peace talks. Lebanon does not recognize Israel as a legitimate state, and Israel likewise considers Lebanon an ‘enemy country,’ meaning the United States had to be the go-between for each country’s negotiators. Furthermore, recent domestic political developments within each nation will most likely stymie cooperation. This includes the interim Lebanese government and Hezbollah’s strong presence within its parliament and the Sixth Netanyahu Cabinet being considered the most right-wing and religious in Israeli history. Undoubtedly, a significant contributor to the speediness of talks was the recent rise in gas prices due to the invasion of Ukraine, which each side wanted to take advantage of. This is all to say that it is overly optimistic to envision negotiations over the Israeli-Lebanon blue line in the future.  

For their part, Lebanon can pursue very lucrative natural gas drilling in the Qana field. The Lebanese economy has outright collapsed; it is in dire need of rejuvenation and stands to generate much needed income from potential gas explorations. This can hypothetically lead to a general boost to their economy, which could lower their credit risk, which might lead to increased foreign direct investment. This is all easier said than done, however. There is a lot of concern regarding whether the gains from gas extraction will actually be enjoyed by the Lebanese public, due to the high levels of corruption present in Lebanon. The agreement offers no oversight or stipulation on where revenues go, leaving many to worry that it would not have nearly as big an economic impact as it could were the money invested back into the country. It will also take considerable time for the government to unlock any revenue. The fields need to be evaluated, the Israeli government needs its due royalties, and TotalEnergies needs to begin constructing rigs and other infrastructure before Lebanon gets one red cent. Some experts have also exaggerated the potential impact the Qana field will have on Lebanon. Even in assuming the most optimistic projections about the amount of gas in the fields, experts state that gas reserves won’t exceed $8 billion in total, which will hardly dent the $131 billion outstanding debt the country has.

So if this deal doesn’t significantly promote Middle Eastern security or help the Lebanese economy in the present, what is its primary result?

Energy Security

Rather than Middle Eastern stability or Lebanese economic resurgence, the real win in this exchange is for the United States and Europe, in securing LNG for the latter. In 2021, before the war broke out, Russia supplied nearly half of the EU’s gas imports. Despite the fact that the Russian invasion of Ukraine is one year old at this point,  Russia remains extremely important in sustaining Europe’s energy needs. Russia provided around 10% of Europe’s petroleum and 19% of its LNG supply in the fourth quarter of 2022, which while being a much smaller share than before, is still large enough such that Russia holds leverage over Europe. Russian LNG imports primarily go to Spain, Belgium, and France. Turkey, a strategically-important NATO member, likewise heavily relies on Russian gas, which supplies half of its energy needs. There is concern that if the war in Ukraine escalates to a certain point or if Europe begins getting too involved on the Ukrainian side, Russia can stop supplying LNG altogether. This would leave the continent vulnerable, particularly during the colder winter season. The bombings of the Nord Stream pipelines in September of 2022 still leave much of Europe vulnerable to energy market manipulations. Even outside the issue of Russia exerting leverage over Europe, there is concern that Iran, boasting robust LNG exports in 2022, may step in and begin expanding in the Middle East or begin selling in Europe.

Increasing LNG production in the Eastern Mediterranean is a part of the solution for energy security in Europe and Turkey. Building a pipeline from Israel to Turkey is in the works, and it would be in Lebanon’s interest to join such a pipeline for similar pragmatic reasons as they had to negotiate the maritime boundary. It does not alleviate pressure for the EU immediately. However, it is table setting for a time where Europe does not rely on Russian gas. The agreement is an example of how U.S. policymakers can achieve multiple strategic goals by aligning the interests of involved stakeholders. The future of European energy security will rely upon building a strong energy infrastructure which meets countries’ needs and gives Europe more power in providing that power to its people.

The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.