Energean plc (LSE: ENOG; TASE: ENOG) has no plans to delay next month's start of gas production from Israel's Karish offshore gas field. Contrary to reports, the gas should begin flowing towards the end of September. At the same time, various sources in Lebanon and the US believe that an agreement between Israel and Lebanon on the border of their economic waters cpould be signed during September.
Media reports in Russia have quoted a senior Lebanese official as saying, "During the visit of US mediator Amos Hochstein to Israel, he received positive responses to the proposals on the table, and it seems that the matter is about to be closed."
US officials were less bullish, but one of them told "Globes," "There are elements in the outline plan that received good responses from both sides, but all disputes must be resolved more precisely, leaving no room for conflicting interpretations."
Another development that indicates progress is Hochstein's expected visit to France in the coming days, where he is supposed to meet with senior officials of French energy major Total, which is the owner of the drilling concession in the Lebanese Block 9 area, which is supposed to do test drilling in the Qana/Sidon field. This field is at the heart of the dispute over the maritime border, as it passes through Lebanon's economic waters, those in the disputed triangle, and Israel's economic waters. "Globes" has already reported that according to one of the proposals, Total will receive full rights to produce gas from the entire field, and Israel will receive its share of the profits if any.
According to various reports and sources, there is probably a solution to the division of the area of the field within the disputed triangle. The principle is, as mentioned, one company that will engage in discovery and production and an agreed distribution of profits. Regarding the rest of the area of the disputed triangle, there is one plan that is probably about to be agreed. It is not a straight line, but a kind of "zigzag", as Lebanese Foreign Minister Abdallah Bou Habib called it in an interview last week.
Lebanon hoping for strong interest from energy companies in the Eastern Mediterranean
Additional clauses in the expected agreement relate to guarantees on maintaining security of the gas rigs and setting distances for the location of rigs from the economic waters border line that will be established. As part of the agreement, Israel and Lebanon are supposed to submit to the UN their consent to this line and it will be officially sanctioned. After his visit to France, Hochstein is supposed to return to the region for a shuttle between Beirut and Jerusalem, to conclude the full details. If an agreement is reached, a joint signing ceremony with representatives of the two countries is not expected, but rather separate signatures by officials in the presence of the UN and the Americans, thus avoiding any diplomatic significance to the agreement.
The hope in Lebanon is that exploration of the Sidon/Qana field can begin as soon as Total signs a deal as well as additional fields and other energy companies will join the exploration efforts due to the large gas discoveries already made in the Eastern Mediterranean and the critical need in Europe for alternative sources to replace Russian gas.
Meanwhile Energean reported in the spring that it would begin production from the Karish gas field in the third quarter of 2022 and technical preparations were underway for this. Sources have told "Globes" that gas production will begin in the last week of September. Starting gas production on time may involve ignoring an ultimatum from Hezbollah that it would not allow gas production from Karish while "Lebanese rights to its gas and oil resources were not assured."
Hezbollah secretary-general Hassan Nasrallah and other senior officials in the militant Shia organization and its associated media outlets have repeated these threats, but they have already missed the ultimatum expiration dates twice, without anything happening.
The assessment in Israel is that the Shiite terrorist organization will not attempt any significant attack, even if it does not sign an agreement in the coming weeks, but it may carry out a minimalist operation or allow other organizations to launch rockets at Israel, as it has done in the past. If the talks fail and no agreement is reached, the possibility of escalation will increase. In less than two weeks, IDF head of Northern Command General Amir Baram is due to end his term. There are no plans to postpone the handover to his successor, another sign of Israel's assessment that there will be no real escalation.
Published by Globes, Israel business news - en.globes.co.il - on August 31, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.