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Troubled waters ahead in Israel-Lebanon border dispute

A maritime border dispute between Israel and Lebanon, and a plan by IOCs to start drilling close to the contested area, are contributing to regional tensions

When a Total-led consortium signed two exploration and production agreements in Beirut in February, the Lebanese government made no attempt to hide its delight.

"Today, we announce that we have started our petroleum path," energy minister Cesar Abi Khalil said. After years of delay caused by internal political crises and sectarian squabbling, Lebanon had finally nailed down contracts that would lead to the start of drilling for oil and gas.

The winning consortium consists of Total (with a 40% stake), Eni (40%) and Novatek (20%). The awarded blocks are 4 and 9. The group has committed itself to drill at least one well in each block in the first three years, starting probably in 2019.

So far, so good. The problem is that Block 9 is in the southern part of the Lebanese offshore, bordering Israel's economic exclusion zone. An even bigger problem is that because the two neighbours have no diplomatic relations, their joint maritime boundary has never been settled. Worse still, the two sides differ sharply over where the line should be.

Source: Petroleum Economist

Total, for one, doesn't believe this is a major issue. It said in February that the consortium was "fully aware" of the Israeli-Lebanese border dispute in the south part of the block. It added that this covers only a "very limited area", at less than 8% of the block's surface.

"Given that the main prospects are located more than 25km from the disputed area, the consortium confirms that the exploration well on Block 9 will have no interference at all with any fields or prospects located south of the border area," Total said.

But Israel isn't happy at the idea of any drilling taking place in Block 9 until the dispute over the maritime boundary is resolved. Energy minister Yuval Steinitz said "we made two things clear, in a very forthright manner, over the last year. One, don't provoke us, and don't explore in or even close to the disputed line of contact."

The US is continuing its attempts to mediate in the dispute. But with growing signs that Israel might be planning military strikes against Iran's allies in the region-or even a full-scale assault on the powerful Shia Hezbollah movement in Lebanon-the atmosphere in the region is anything but conducive to compromise.

So Lebanon may have started down the energy path, but it is by no means clear how far-or how fast-it will proceed.

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