Lebanon’s oil and gas: Four reasons why disputed zone with Israel doesn’t matter

First, let me be clear, I’m neither saying geopolitics is not important, nor suggesting that Lebanon to take the issue of disputed maritime border with Israel any less seriously. Geopolitics is a major consideration in any investment decision, let alone in a strategic sector such as oil and gas; and Lebanon must do all it can to exercise full sovereignty over its land and sea, according to international laws.

Ever since oil and gas development in Lebanon has become a known public issue, I often hear about how having a disputed maritime border with Israel is/could be a big hindrance. I really don’t see it that way, at least for now; and here’s why:

1. There are three blocks adjacent to the maritime border with Israel. The first one has almost no disputed area, the second has about 10%, and the third has about 40%. Lebanon can (and should) subdivide these three blocks into smaller ones, increasing the area that can be accessed by international companies.
2. If subdividing is not possible (if anyone knows why this can be the case, please tell me), Lebanon has seven other blocks to explore. Similar to the ongoing oil and gas sector development in Israel, having disputed zones shouldn’t prevent the expansion of the sector in Lebanon.
3. Bidding for the disputed zones is possible! In fact, companies might be able to negotiate better terms and conditions by accepting higher risks and levels of uncertainty. Additionally, oil companies often have states supporting them, which could help resolving the dispute. This could a stabilizing factor if all parties see the situation as a “win-win” scenario.
4. International oil and gas companies have a lot of experience in operating in unstable locations. Since exploration, and, potentially production, will be offshore, the main risk for international companies is the legality of their status and operations. Political risk will be of a lower importance, and the stability of the host state is not necessarily essential, even for big companies (Think of oil and gas development in Iraqi-Kurdistan).

I remain more worried about how the development of Lebanon’s oil and gas sector is handled domestically, with issues such as governance and transparency still hanging over our heads.