TotalEnergies, Eni to Explore Gas on Lebanese Offshore

TotalEnergies, Eni to Explore Gas on Lebanese Offshore

/ Oil & Gas / Wednesday, 16 November 2022 06:51

France’s TotalEnergies and Italy’s ENI have signed a framework agreement with Israel over a gas field shared with Lebanon, according to the French energy giant.

"By bringing our expertise in offshore exploration, we will respond to the request of both countries to assess the materiality of hydrocarbon resources and production potential in this area," said Patrick Pouyanne, CEO of TotalEnergies.

The agreement follows Lebanon’s and Israel’s historic deal to resolve a maritime border dispute involving offshore gas fields after years of negotiations headed by the US. In the same month, Lebanon had asked TotalEnergies to start gas exploration off its shores.

TotalEnergies said that after signing the agreement it "will initiate the exploration of an already identified prospect, which might extend both in block nine and into Israeli waters south of the recently established maritime borderline."

Lebanon divided its exclusive economic zone at sea into 10 "blocks," and block nine was part of the area disputed with Israel. TotalEnergies holds a 60% stake in block nine, while ENI holds 40%.

Under the agreement with Israel, Lebanon gained full rights to operate and explore the Qana or Sidon reservoir, parts of which fall in Israel's territorial waters. Analysts believe it will take several years for Beirut to enter the exploitation phase. Israel will receive compensation from the firm operating Qana.

With demand for gas rising worldwide because of the energy crisis sparked by Russia's invasion of Ukraine, Lebanon hopes exploiting the offshore field will help ease its economic crisis. However, analysts are wary about the possibility of quick production and return of investments for a country that is dire need of an economic upturn.

The maritime border deal could not have been signed by Lebanon without the consent of Hezbollah, a powerful Shiite faction backed by Israel's archrival, Iran. Israel and Hezbollah fought a 34-day war in 2006, and the two neighbors remain technically at war.

Meanwhile, Lior Schillat, director general of Israel's energy ministry, said that Israel had taken measures to "ensure Israel's economic rights to the potential reservoir between the countries."

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