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Lebanon-Israel tensions grow over gas finding

Lack of formal borders raises tensions

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Israeli plans to drill for gas in the Mediterranean sea have alarmed Lebanon, which says it also has major gas reserves but may lose out because it lags behind in exploration and the hostile neighbors have no sea border.

Lebanon has said it would "use all means" to defend its rights if Israel was found to be drilling within its borders, after a U.S.-Israeli consortium announced in June a potential find that could turn the Jewish state into a gas exporter.

The discovery of the Leviathan prospect, which may have deposits of 16 trillion cubic feet (tcf), has sent Lebanese politicians scrambling to approve an energy law.

"In all cases Lebanon will not give up its rights, whether it is land, air or water rights and will use all means to defend these rights," said Lebanese lawmaker Ali Hassan Khalil, an aide to Shi'ite parliamentary speaker Nabih Berri.

Delineation of exclusive economic zone waters is a complicated process that often requires negotiation, an unlikely scenario in the case of Lebanon and Israel who fought a war four years ago.

"I see it becoming a source of considerable tension until the location and the scale of the reservoirs are better understood," said Catherine Hunter, the Levantine energy analyst at IHS in London.

Hunter was referring to the Tamar field announced last year and the Leviathan prospect which U.S.-based Noble Energy said would be twice the size of Tamar, the largest global gas find of 2009.

I see it becoming a source of considerable tension until the location and the scale of the reservoirs are better understood

Catherine Hunter, the Levantine energy analyst

Promising finds in Lebanon

Lebanon has demarcated its economic waters but the borders are not recognized internationally because they have not yet been presented to the United Nations. According to Hunter, Israel is working on a law to establish them.

Lebanon also says it has identified reserves that have promising quantities of natural gas, according to seismic surveys in 2006-2007.

"The quantities look very promising. We believe that we have all the indications from the seismic survey 2-D and 3-D ... We have commercial quantities that we are intending to benefit from very quickly," Lebanese Energy Minister Gebran Bassil said.

Lebanon has stopped short of accusing Israel of encroaching on its territory, but the mistrust between the two has exacerbated Lebanese fears.

Bassil has said Israel had showed a "degree of aggressiveness" when talking about the issue.

Khalil, who presented a draft energy proposal to parliament last month, said Lebanon was "worried about an Israeli violation on the borders of the economic waters".

"If we assume that Israel is drilling within the borders then they could be digging in a common field," Khalil told Reuters. "Drilling in border areas aims to take advantage of common fields, which may infringe on Lebanon's rights."

Bassil said the companies had no right to work in potential common fields unless there were guarantees from both states.

A map released by Israeli energy firm Delek showed the reservoirs firmly within Israeli territory based on government estimates. At the time of Tamar's discovery last year, Delek Drilling denied the possibility it was within Lebanon's waters.

Israel's National Infrastructure Ministry said on Thursday the oil was in its economic waters.

Drilling in border areas aims to take advantage of common fields, which may infringe on Lebanon's rights

Lebanese lawmaker Ali Hassan Khalil

Gas knows no boundaries

Even if Lebanon manages to pass the energy law this year, it will be hard to catch up with Israel.

It still has to identify blocs, supply data to interested investors, select bidders and have companies start exploration work. The Israelis already have firms drilling for gas.

"They're three to four years behind the Israelis. Even if they pass the law now, there's a lack of understanding of the potential of the reserves while the Israelis move forward with first gas due in 2012 but more likely in 2014-2015," Hunter said, referring to Tamar.

Drilling is set to begin in the fourth quarter of this year on Leviathan, but until then it is also impossible to identify whether a gas-bearing reservoir is present. In a June 2 statement Noble said the prospects of finding the resources at Leviathan had "a geological chance of success of 50 percent."

Hunter said unless the reservoirs are mapped out, it was hard to know their limits or where the gas came from. "The flow is important because it means it could potentially be coming from somewhere else."

"Gas doesn't sit within national boundaries."