Lebanon-Israel deal unlocks lucrative energy fields, new political possibilities

BEIRUT -- Lebanon and Israel, still technically at war and with no diplomatic ties, struck a US-brokered maritime border agreement Thursday (October 27) that opens up lucrative offshore gas fields for the two neighbouring countries.

US President Joe Biden hailed the "historic" deal that comes as Western powers clamour to open up new energy production and reduce vulnerability to supply cuts from Russia after its invasion of Ukraine.

The agreement was signed separately by Lebanon's President Michel Aoun in Beirut and by Israel's Prime Minister Yair Lapid in Jerusalem, and went into effect after the papers were delivered to mediators.

"Both parties took the final steps to bring the agreement into force and submitted the final paperwork to the United Nations [UN] in the presence of the United States," Biden said in a statement.

After the agreement was signed, Iran-backed Hizbullah said it would end its "exceptional" mobilisation against Israel, after threatening to attack it for months should it reach for offshore gas reserves at the border before the deal was finalised.

"Our mission is complete," Hizbullah leader Hassan Nasrallah said in a televised speech.

The deal comes as Lebanon hopes to extract itself from what the World Bank calls one of the world's worst economic crises in modern history.

The exchange of letters was held in the southern Lebanese border town of Naqoura, in the presence of US mediator Amos Hochstein and UN Special Co-ordinator for Lebanon Joanna Wronecka, who will now deposit the new maritime co-ordinates at the UN headquarters in New York.

Energy: a tool for stability

Biden said that "energy -- particularly in the Eastern Mediterranean -- should not be a cause for conflict, but a tool for co-operation, stability, security and prosperity".

"This agreement takes us one step closer to realising a vision for a Middle East that is more secure, integrated and prosperous, delivering benefits for all the people of the region."

Hours before signing it, Lapid had claimed that Lebanon's intention to ink the deal amounted to de facto recognition of Israel.

But Aoun denied Lapid's assertion, countering that "demarcating the southern maritime border is technical work that has no political implications".

The Lebanese agreement follows a number of normalisation agreements, called the Abraham Accords, between Israel and a number of Arab countries.

The accords, originally signed in September 2020 by Israel, Bahrain and the United Arab Emirates (UAE), have helped synchronise security operations, boost investments and protect the free flow of commerce.

Israeli officials say the maritime border deal has the potential to reduce Iran's influence on Lebanon.

Nasrallah said the deal "is not an international treaty and it is not a recognition of Israel", while hailing it as a "great victory for Lebanon".

No quick fix

London-listed Energean on Wednesday said it began producing gas from Karish, an offshore field at the heart of the border agreement, a day after Israel gave the green light.

Lebanon meanwhile will have full rights to operate and explore the so-called Qana or Sidon reservoir, parts of which fall in Israel's territorial waters, with the latter receiving some revenues.

With demand for gas rising worldwide because of the energy crisis sparked by Russia's invasion of Ukraine, Lebanon hopes that exploiting the offshore field will help ease its financial and economic crisis.

But analysts caution that it will take time for production to start in Lebanese waters, meaning no quick return for a country that is desperately short of foreign exchange reserves.

Exploration has so far been only tentative -- a 2012 seismic study of a limited offshore area by the British firm Spectrum estimated recoverable gas reserves in Lebanon at 25.4 trillion cubic feet (719.5 billion cubic metres), although authorities in Lebanon have announced higher estimates.