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The Race for Natural Gas

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Israel and Lebanon on Gas Tender Collision Course

March 21st 2017

Med Natural Gas

Israel has asked the US and the UN to pressure Lebanon to change the oil and gas exploration tenders being planned by the latter in five maritime blocks. Three of these blocks are within Israel's marine border and overlap the 800 sq.km. of marine territory disputed by the two countries. At the same time, the Ministry of Justice is promoting a marine areas bill that has been proposed for years, which among other things determines Israel's marine territory, including the disputed area.

After many years of preparations and postponements, the Lebanese government published six weeks ago a call to oil and gas exploration companies to submit their candidacy for the preliminary stage of the new tender. The filing deadline for the preliminary stage is the end of March. If it goes ahead, it will be the first such tender for Lebanon.

2,700 BCM natural gas potential

Lebanon believes that its economic waters contain 850 million barrels of oil and no less than 2,700 BCM of natural gas, similar to Israel's potential, including the fields that have already been discovered. Commenting at last week's Eastern Mediterranean Gas Conference (EMGC) in Nicosia, Cyprus on the chances of finding oil and gas, Lebanese Petroleum Administration (LPA) chairman Wissam Edmond Chbat said that Block 1 had medium-to-high potential for discovering fossil fuels, Block 4 had medium potential for discovering oil, gas, and perhaps condensate, Block 8 had high potential for gas and a little condensate, and Blocks 9 and 10 had especially high chances for discovering oil, gas, and condensate. He added that most of the gas found would be exported.

The Lebanese government hopes to receive final offers from companies competing for exploration of the blocks in September, and to announce the winners in November.

During the conference, Lebanese representatives were asked whether the blocks overlapped the disputed territory, and answered that there was almost no overlap. At a conference of oil and gas companies in late February, Lebanese Minister of Energy and Water Cesar Abi Khalil said, "The Lebanese government is determined to continue the tender process until the winner is declared," despite the dispute with Israel over the marine territory. "Lebanon has adopted transparent criteria for outsourcing exploration in its marine blocks," he added.

Lebanon gas exploration, photo: Reuters

Lebanon to issue offshore gas exploration permits

Discussion of the marine areas bill began at the end of the preceding decade. Deputy Attorney General Avi Licht shelved the idea in early 2014, accepting the objection by former Minister of Energy Moshe Shahal. Shahal asserted that passing the bill would require Israel to accept the International Maritime Law Convention, thereby subjecting Israel to the International Court of Justice in the Hague in any dispute arising between Israel and its neighbors, such as the dispute with Lebanon.

"The International Maritime Convention," says Adam Teva V'Din maritime management manager Adv. Tammy Ganot, "sets rules that are subject to agreements between countries. There is such a dispute that has continued for a very long time between Turkey and Greek Cyprus. If the convention rules are taken into account, and if Cyprus is regarded as a country, it follows that its maritime borders in effect close all of Turkey's marine passageways. Turkey has made it clear that ownership is Turkish, and to the best of my knowledge, there is no diplomatic way of dealing with this."

The bill has environmental aspects, and the environmental organizations were therefore very involved in preparing it and in the responses to it. They demanded that the Israeli Planning and Building Law apply to Israel's marine territory in order to enforce rules for environmental preservation. The revised bill was improved in this aspect. It was reported today that in the framework of concern about the environment, Minister of Environmental Protection Zeev Elkin had agreed with Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz that Steinitz would be responsible for supervision in Israel's marine territory.

The Ministry of Environmental Protection said, "In the marine areas bill, there are environmentally positive aspects, because it ensures certainty that environment laws apply to economic waters in which oil and gas drilling is taking place. At the same time, the ministry is not satisfied with the proposed planning arrangement, which does not provide sufficient protection for the environment, and does not guarantee that the Ministry of Environmental Protection will be responsible for verifying that the environment is not damaged, not the Ministry of National Infrastructure, Energy, and Water Resources, whose main concern is energy and drilling needs. The ministry's response to the proposal has been communicated to the Ministry of Justice.

"Although progress can be cited in solving the dispute between the Ministry of National Infrastructure, Energy, and Water Resources and the Ministry of Environmental Protection, , there is still no full agreement between the ministers on the proposed marine areas bill. Nevertheless, it should be noted that almost any version of the bill will improve the current state of this legal and environmental no man's land."

Commenting on this issue at the Cerweek Conference in Houson, Steinitz said, "In early February, we sent an official letter to the UN expressing our protest about the actions by Lebanon, which published a tender for its marine economic waters that extended into the edge of Israel's economic waters. Israel will maintain its rights, but is open to a dialogue in this context."


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