The manner in which the government rushed, under American pressure, to reach the maritime border agreement with Lebanon, raises the suspicion that there are other interests behind the agreement. What particularly caught my attention was the American and also the French eagerness to promote the agreement. An urgency that does not only concern the aspirations of the powers for calm in the region.
“In every casino the bank makes a profit”
After an article was published this week in which I defined the agreement as an Israeli gamble, I received a call from a very senior official in the gas industry, especially in the Eastern Mediterranean. “At the end of every casino there is the bank that makes a profit,” he said. “In the United States and France, their energy companies have enormous political power, a power that greatly increased with the energy crisis that began about a year ago and greatly intensified due to the war in Ukraine and the closing of the gas pipelines from Russia. Who do you think will get the next concessions for drilling in Lebanon’s economic waters?”, he asked .
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Indeed, in a conversation with American and Lebanese sources, a clear picture emerges: the maritime border agreement has far-reaching economic implications for Lebanon – from which both American energy companies and the giant from France, “Total”, of which the French government owns 50%, should benefit. These are concessions for several additional reservoirs that are probably located in the area of Lebanon’s economic waters (which, following the agreement, was expanded by another 860 square kilometers to the disputed area with Israel).
Lebanon has divided its economic waters into ten blocks, in block 9 is the Cana-Sidon reservoir. The franchise for it is held by the Total company and also the Italian ENI (I) is a partner. Israel is negotiating with Total about the royalties it should receive for its share, which is estimated at 17%. Total and ENI own the concession in another block in the area. According to the plans, if and when the agreement is approved, the tenders will start with what one of the sources defined as: “Priority to companies already operating in the Eastern Mediterranean”, means Total, and also other international energy companies such as Chevron and Noble Energy.
Lebanese President Michel Aoun / Photo: Associated Press, Hassan Ammar
This discovery joins the generous aid packages that we published in Globes that the USA promised to Lebanon. These packages, according to a senior American source, will be both from Washington and Paris, and from international bodies such as the IMF and the World Bank. The conditions will be strict in an attempt to prevent the flow of money to Hezbollah, and they will likely be focused on issues (such as energy, health and other economic sectors). According to the source, this is aid in the amount of tens of billions of dollars in the coming years, and on the assumption that peace will be maintained and the political situation will allow it. And here lies the problem: Lebanese President Michel Aoun, who represents the Christian community and is considered a trusted partner by the Americans, is supposed to leave his post at the end of the month and has no replacement. The government in Lebanon has not yet been approved, and it is also on its knees. The parliament consists of many and divided factions. And in the background also stands Hezbollah, the most powerful military and political entity in the country, which although welcomes the agreement, but will demand to participate in the expected royalties and aid.
This means that the Americans, the Arabs officially to the agreement, and the French partners will have to deeply stir what is happening in Lebanon in order to prevent Hezbollah’s influence on the selection of energy companies and the routing of future aid funds. Experts on Lebanon believe that this mission is doomed to failure in advance, and that Hezbollah, through the parties, ministers, members of parliament and senior officials who oppose it, will know how to use the money route for its needs. A senior American official said this week that his country has monitoring and control capabilities, and that the Central Bank of Lebanon and other financial entities will undergo required changes and will be subject to close international supervision. But he also admitted that in practice there is no real possibility to prevent the flow of funds into the hands of Hezbollah.
How much money is involved?
In the agreement there is no precise definition of Israel’s share in the field that extends both in the territory of Lebanon, both in the disputed territory, and in the territory of Israel. The agreement states that Israel and Total will conduct negotiations on receiving Israel’s economic rights in the field, and the start of production from it, if it happens, will begin only after the completion of the negotiations. The estimated area of the field on the Israeli side is about 17%, but the agreement with Total is not based on the area but on the quantities of gas that will be found in the field and the Israeli share in them. That is, it can only be determined after the results of the exploration drilling are known. In the meantime, he will sign within two weeks, an agreement of principles determining the compensation mechanism for Israel, based on international practice and previous agreements.
Upon completion of the agreement and the start of production – Israel should receive the first payment. The payment mechanism will not be related to Israel’s tax laws and wealth fund royalties, but to the compensation for the value of the gas found in Israel’s territory. This value will be determined in the final negotiations, also according to the price of gas that will be on the world market at that time. This will probably require an adjustment of legislation to determine its distribution to the treasury and the wealth fund.
The marketing and the spins
In an attempt to market the agreement, Prime Minister Lapid said this week at a press conference that the citizens of Israel will gain billions from the agreement. This is despite the estimates at the cabinet meeting amounting to half a billion shekels, if gas is produced at all. The promise of Lapid will only be realized if it is discovered in a gas field on a huge scale. Lapid also said that Israel refused to accept Lebanon’s demands, but this is also not accurate. Lebanon demanded and received the reduction of restrictions on the companies that can participate in gas exploration; and the start of the drilling (although not the production, immediately after the signing, regardless of the reaching of agreements between Israel and the Total company on the level of royalties.
Prime Minister Yair Lapid / Photo: Ohad Zuigenberg
The government spokesmen also did not give an answer to some essential questions, including the great urgency of completing the agreement now. The reasoning for the expected retirement of the Lebanese president does not hold water, because if after his departure the situation in Lebanon deteriorates, won’t the entire agreement be in jeopardy?