By: Talya Pinto
November 7, 2022
On October 11, 2022, the Governments of Israel and Lebanon announced their decision on a historic agreement to establish a permanent maritime boundary between the two countries. The United States has been mediating this deal for several years, and this breakthrough brings with it the hope of some stability in the Middle East and several benefits to various countries around the world. The agreement will enter into force once Israel and Lebanon send finalized correspondence to the United States indicating their agreement, after which Washington will issue a notice to both countries officially announcing the deal is in place. On the day the notice is sent, Israel and Lebanon will simultaneously send identical coordinates to the United Nations detailing the exact location of the maritime boundary. This deal creates the possibility of exploration and drilling when gas prices have been skyrocketing amid the global supply crunch stemming from Russia’s invasion of Ukraine.
The area in dispute is located in the Mediterranean sea and is expected to fall into both Israeli and Lebanese waters under the deal. The countries have debated who can exploit the undersea natural gas reserves that both claim ownership over for years. The area covers 860 square kilometers (332 square miles) and includes the Karish oil and gas field and a region referred to as the Qana prospect. Under the agreement, the waters would be divided along a line straddling the Qana natural gas field. Lebanon hopes this deal will help the country recover from its escalating economic crisis. At the same time, Israel also hopes to exploit the gas reserves to benefit itself and other countries. Israel’s prime minister, Yair Lapid, believes this achievement will “strengthen Israel’s security, inject billions into Israel’s economy, and ensure stability of our northern border.”
The deal entails that Lebanon will be permitted to produce gas from the field but will have to pay royalties to Israel for any gas it may extract from the Israeli side. Israel expressed that it would begin extracting oil and gas from Karish immediately and exporting it to Europe. Lebanon’s President Michel Aoun said in a statement that “the final version of the offer is satisfactory to Lebanon and meets its demands and preserved Lebanon’s rights of this natural wealth.” The draft of the agreement also meets the security and economic standards laid out by Israel, according to Lapid. The deal represents the first significant diplomatic breakthrough between the two countries in many years. However, Lebanese officials have said the deal does not mean a treaty will be signed with Israel and that the agreement is not a step toward a stable relationship between the two countries, which are technically at war. Any further maritime differences that may be resolved in the future will be made through the United States, taking on an ongoing guarantor role.
For now, it appears a security crisis has been averted. The two countries have technically been at war for years. Tensions worsened earlier this year when Hezbollah, an Iran-backed Lebanese militant group, vowed to escalate its aggressive action if its rights were not met in the deal and sent drones toward the gas rig as a “message” to Israel. Days before the agreement was reached, Israel’s defense minister told his troops to “prepare for any scenario in which tensions increase in the northern arena- including defense and offense readiness.” He also warned that Israel would defend its infrastructure regardless of the outcome of negotiations.
As a result of the deal, Israel will now be able to assist Europe with its gas crisis. Due to a combination of factors, Europe is experiencing difficulties on both the supply and demand side in its natural gas market. On the demand side, colder winters, in addition to the phasing out of coal, have created an increase in the need for natural gas. Issues on the supply side include less investment and maintenance of oil and gas fields during the COVID-19 crisis. There have also been concerns about Russia using Europe’s crisis as leverage for the newly completed Nord Steam 2 pipeline to come online by not sending more natural gas for Europe’s storage. Russia was the largest exporter of natural gas to the European Union in 2019 and 2020. The International Energy Agency said, “Russia could do more to increase gas availability to Europe to ensure storage is filled to adequate levels in preparation for the coming winter heating season.”
As to how this affects us here in the United States, high prices in Europe will likely push electric and heating bills higher. With less Russian gas available, Europe is now competing in the global supply market, pushing prices upward worldwide. Although U.S gas producers are doing very well, consumers who rely on natural gas for their heat, which includes about half of the homes in America, could feel their utility or heating bills rising sooner or later. So hopefully this deal provides some relief for Europe and in turn, American households.