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Strangled development in Gaza and Lebanon

Lebanon and Gaza both hold commercial quantities of hydrocarbons. But regional politics are still stifling progress

Initial studies carried out in Lebanon in 2012 indicated positive hydrocarbon prospects, offshore as well as onshore. But the exploration and development of potential energy sources have become hostage to the political paralysis inside the country and mutual enmity between Lebanon and its southern neighbour, Israel.

Intense political and sectarian rivalry has resulted in the country's parliament failing since mid-2014 to choose a new president. Political groups seeking to influence the shape of a future energy sector are also preventing the cabinet's vote on the model production-sharing contract and legislation to approve the country's 10 exploration blocks. "This could be wrapped up in no time, it needs only 20 minutes of the cabinet's time and the whole issue could move forward," says Lebanese energy expert Abboud Zahr. "It's all because of political conflicts."

Once legal matters are agreed Lebanon will proceed quickly to a bid round. Zahr says that "four or five blocks will be offered initially, including 8, 9 and 10 which are in the far south of the EEZ." This is an area where the demarcation line between Lebanon's and Israel's exclusive economic zones is contested by both sides. Israel's award to a Greek company of the Karish and Tanin fields, close to the disputed area, "should push Lebanon to move faster. They are only 5km away-Israel could easily siphon off hydrocarbons from Lebanon".

Trouble afoot

Israel has not yet offered blocks in the far north of its EEZ for development. But if Lebanon proceeds along the lines above, then the US, which has sought to play a mediating role over the dispute, may be left trying to prevent a dispute over East Med energy resources escalating into something more dangerous.

Violence and economic blockades have put potential production from offshore Gaza on hold. BG discovered gas at the Gaza Marine field in 2000, around 32km offshore. Reserves are estimated at 1 trillion cubic feet. Aside from difficulties associated with the instability in the Gaza Strip and wars with Israel, the development of Gaza Marine has encountered a range of objections from Israel, not least because of suggestions that the Palestinian Authority, as a non-state entity, cannot claim legal ownership of the property. Another obstacle was a proposal that gas from Gaza's offshore should be piped first to Israel before proceeding southwards.

The issues blocking the development of gas offshore Gaza are ones that could easily be resolved with mutual goodwill. But the prospects of that state of affairs coming about and gas flowing from Gaza Marine remain unimaginable under current circumstances.

This article is part of a report series on the East Med. Next article: The Aphrodite plan

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