What's at stake in the Lebanon-Israel maritime dispute?

On 5 June, an exploratory vessel arrived in the Karish gas field. The vessel, sent by the English energy conglomerate Energean, was there to explore and eventually extract gas for Israel.

The arrival of the vessel set off alarm bells in Lebanon. On Monday, Lebanon’s President Michel Aoun said that he was discussing steps “to confront the attempts of the Israeli enemy to raise tensions on the southern maritime borders”.

His critics released statements lambasting him and the Lebanese caretaker PM as conceding Lebanon’s natural mineral wealth to its southern neighbour.

Hezbollah, the Iranian-backed militia based in Lebanon’s south, took a harsher tone. In an interview with Reuters, a Hezbollah official said that it was ready to take action “including force” against Israeli gas explorations in disputed waters.

"The sudden escalation in tensions was years in the making. Israel and Lebanon have fought over how exactly to demarcate their maritime border for well over a decade now"

Just a day earlier on Sunday, Israel announced that maritime vessels, in addition to a naval version of the Iron Dome missile defence system, would be deployed to protect the gas excavation site in Karish.

The sudden escalation in tensions was years in the making. Israel and Lebanon have fought over how exactly to demarcate their maritime border for well over a decade now, with little progress to show for it.

At stake are potentially hundreds of billions of dollars. Lebanon’s offshore oil and gas reserves alone are estimated to be valued at around $250 billion, or about eight times Lebanon’s GDP in 2020.

Lebanon and Israel disagree over where their shared border lies, as a difference of a few hundred square kilometres could mean billions in lost fuel. The two sides, despite countless rounds of negotiations, have very little common ground. They do not even agree on how much of the area is actually disputed.

On Tuesday, Lebanon’s government invited the American energy envoy, Amos Hochstein, who acts as the mediator between Israel and Lebanon, to Beirut to discuss “completing the negotiations.”

What is the status of the negotiations?

Amos Hochstein was last in Beirut in February, where he concluded a series of shuttle-diplomacy style meetings with Lebanon and Israel. Before leaving, he told a local Lebanese media outlet that the two sides were “at a moment of narrowing those gaps towards a deal”.

All involved parties have been mum on the border demarcation file since then. Hochstein has not divulged what the potential deal between the two countries involved and given recent tensions, it seems gaps still persist.

A Lebanese source with knowledge of the negotiations told The New Arab in February that the proposed deal involved a resource swap. Such a deal, the source said, would see Lebanon and Israel divide the resources in the disputed zone equally between themselves.

Though the specifics of such a plan have yet to be decided, the source said that one such swap could be the Lebanese dropping their claim to the Karish gas field, in exchange for getting the entirety of the Qana gas field.

The source further specified that the negotiations had reached a “trust-building” phase with both parties wary, but eager to proceed.

To the Lebanese, it’s likely Israel’s recent moves to exploit the Karish field could very well interrupt such trust-building.

However, frustration has also been building on the Israeli side due to Lebanese inaction and its shifting negotiating positions, Lebanese energy expert Laury Haytayan, said.

“There is nothing unexpected in Israel’s actions in Karish. Energean was always clear about the steps in building an FSPO [Floating Production Storage and Offloading unit] – this is a normal procedure,” Haytayan, told The New Arab.

She said that Israel was surprised when Lebanon suddenly shifted its claims in 2020 from the so-called “Line 23” to “Line 29,” which expanded their claim significantly. This was a large jump from its previous territorial claim, which observers interpreted as Lebanon trying to improve its leverage with a more maximalist position.

“Israel was very surprised by Lebanon’s [new] position. From 2011 to 2020, Lebanon was claiming that its maritime borders with Israel was at Line 23, so, therefore, Karish field was outside of that disputed area,” Haytayan said.

Hochstein has similarly reacted to Lebanon’s pivot, expressing that it was late in the game for a new negotiating position.

The Lebanese side, for its part, views the previous negotiating team as lacking in technical and legal expertise. Its perception is that recent international maritime rulings, including the UN’s ruling on a dispute between Somalia and Kenya, has provided it with ample ground for its claim to Line 29.

The result has been continued deadlock between Israel and Lebanon on the maritime file.

"Lebanon is a country in a deep financial crisis, hungry for a bailout. In this context, many expectations are hanging on the offshore gas"

Pressure from all sides

The reality of the continued dispute over Lebanon and Israel’s border and the resources which may lie beneath has so far proven much gloomier than past hopes and expectations.

Energean, in a past presentation to investors, said that operations in Karish should have begun in mid-2022 and the first gas flowing in the second half of 2023. With no resolution between Israel and Lebanon, that timeline could potentially end up delayed as it has been once before.

With the first instalment of a $2.5 billion loan needing to be repaid by the first quarter of 2024, the stakes are high for the energy conglomerate.

Lebanon also faces a variety of domestic pressures, stemming from its deep economic malaise and patchwork political system.

“Lebanon is a country in a deep financial crisis, hungry for a bailout. In this context, many expectations are hanging on the offshore gas,” Mohaned Hage Ali, a fellow at the Malcolm H. Kerr Carnegie Middle East Center, told The New Arab.

Besides Lebanon’s economic crisis – dubbed one of the world’s worst since 1850 – the country faces an acute energy crisis. The failing power grid provides citizens with at most two hours of electricity a day. An influx of cheap gas would go a long way in providing the country with power.

Still, in a best-case scenario, it would take Lebanon at least six-to-seven years to monetise any gas once exploration began.

Popular opinion is sensitive around the offshore gas issue, as demonstrated by shared popular outrage in Lebanon over Israel’s naval mission in Karish.

Besides the need for cash, Lebanon’s longstanding enmity with its southern neighbour makes the idea of Israel “stealing” its resources a particularly bitter pill to swallow.

The result is a number of actors applying pressure on the government to adopt an uncompromising position on the maritime negotiations.

It is in this context that Hage Ali views Hezbollah’s comments on Monday, as it is “an opportunity” for the Iran-backed group to “show its usefulness”.

William Christou is The New Arab's Levantine correspondent, covering the politics of the Levant and the Mediterranean.

Follow him on Twitter: @will_christou