Lebanon’s gas and its export

Gas fields in the Lebanese Sea will be the focus of future eastern Mediterranean conflict scenarios. This indicates the possibility of a war, as predicted by the repercussions of Israel’s „Karesh“ field exploration.

Lebanon has been very late in dealing with its gas wealth, and there was only one attempt by the French “Total” to explore gas. The exploration’s result was declared that the quantities in it are not big enough for a commercial success.

Today, Lebanon is also engaged in the battle of demarcating its maritime borders with Israel in indirect negotiations.

Several studies have been published about the reality of gas in the Lebanese sea. There was an extensive study considered the most credible, published by the “Lebanese Army Journal”.

The study results

“Lebanon’s oil wealth, especially natural gas, has occupied a large part of the Lebanese attention over the last decade. Speculations differed about the volume of this wealth, and dreams continued that Lebanon would enter the wealth era through its wide door, while some went to attack the method of exploiting this wealth“, the study points out.

It includes two main parts, internal and external:

– In the first part, it asks whether possible wealth (if it exists and has been extracted) would be able to reform the country? Taking into consideration Lebanon’s fragile economic, political and social situation.

– The second part, the Middle East as a whole, and the Eastern Mediterranean in particular, has a geopolitical and geostrategic weight that cannot be overlooked even in internal projects. In fact, the gas supply routes to Europe constitute one of the most important aspects of the intense geopolitical conflict. So we may have to find a place for ourselves in the already crowded gas map. According to Army magazine.

The proper exploitation of this wealth must be accompanied by studying the average oil and gas reserves, determining its annual revenues, and therefore calculating the quantities that can be exported, in order to determine the feasibility of this real wealth.

What about exporting after gas extraction?

Let us assume that Lebanon would have already started drilling and extraction operations, and that the quantities of gas ready for export are available, what mechanisms can Lebanon use to export its gas?

The truth is that the basic options for exporting gas in total are not numerous, and they are limited to three options: export by land, by sea via pipelines, or via dedicated gas tankers. Aside from the cost that each of these options may impose, what is available for Lebanon?

Overland export options

Israel’s presence on the southern borders of Lebanon limits the option to exporting its gas by land to the Syrian Arab Republic, which shares its northern and eastern borders. Therefore, this leads to the Syrian gas pipelines or those that pass through its territory, or the pipeline projects that may pass from there in the future. Syria has a range of gas lines and projects that may meet this purpose, the most important of which are the Iranian-Syrian line, the Qatari-Turkish gas line, and the Arab gas line.

The Iranian-Syrian line:

Iran with the world’s second largest gas reserve after Russia began negotiations with the Iraqi and Syrian sides in early 2010, to extend a gas line from Iran to Syria and Lebanon through Iraqi territory. But Iran’s ultimate goal of the project is to deliver its gas to Turkey and from there to Europe, and an agreement was reached between the three parties in 2011 to construct the pipeline at a cost of $10 billion, the final agreement was signed in 2013. However, the Syrian crisis prevents the completion of this project.

Qatar-Turkey line:

Qatar is the third largest gas reserve country and is constantly seeking to deliver this gas to Turkey, its main regional ally, in order to enter European markets and maintain its energy security. The Qatari-Turkish gas line project would pass through Syrian territory, and there was talk of Qatari-Syrian-Turkish negotiations to establish this line in 2009, but Syria rejected the issue for considerations related to its allies Russia and Iran, which are at the same time Qatar’s main competitors in terms of gas. Thus, this project was not achieved on the ground, but did not lose sight of the geopolitical planning of Qatar and Turkey. It could be an option for Lebanon by connecting its gas to this line in the event that the balance of power changes in the Syrian crisis and allowing the Qatari-Turkish line to be realized.

Arab line:

Unlike the Iranian-Syrian and Qatari-Turkish lines, which are still incomplete plans, the Arab gas pipeline already exists despite current problems. The line was agreed to be established in 2000, extending from Egypt to Turkey, crossing Jordan, Syria and Lebanon. This gas line was supposed to export Arab gas to the European market by connecting it to the Nabucco pipeline. Its stages have already been completed and it is on the ground, but events affecting the strategies of the participating countries made this pipeline unable to supply gas, as it has been subjected to a number of attacks since the outbreak of the so-called Arab Spring, most notably in Egypt starting in 2011, and Syria, which recorded the last attack on this line on the night of August 24, 2020. In addition, the Nabucco project became unpopular for European decision-makers due to the authoritarian rulers in Central Asia.

It seems that only Lebanon has the Arab Gas Pipeline as a natural gas transmission line, to which Lebanese gas could be delivered, as it extends in Lebanese territory, and the Syrian city of Homs as a major hub. However, Lebanon cannot rely entirely on this line due to the great risks resulting from the instability in the areas it passes through, as it was subjected to a series of attacks that disrupted its work many times, while Lebanon is betting on its gas to get out of its chronic economic crisis. Consequently, any interruption to the future export of its gas, even if it is temporary, would have disastrous repercussions on the economic recovery process. The rest of the lines are still projects that need regional and international political consensus and convergence of strategies of multiple countries to turn into existing pipelines on the ground.

From here, we believe that the option of exporting gas by land is one of the available options, specifically through the Arab Gas Pipeline, but it needs a careful economic study, based on a political analysis.

Sea Export Options

Lebanon has a seafront along its western border, central to the eastern coast of the Mediterranean Sea, a site that, across the ports of Beirut and Tripoli, has given this small country great geopolitical importance.

The coast line of any country plays an active role in the discharge of its natural gas production, and of course Lebanon can take advantage of its maritime borders for exporting its gas production. The export by sea can be done through two methods: pipelines and offshore gas lines or marine gas tankers.

With regard to the gas pipeline option, Lebanon cannot build its own pipelines alone, firstly because it is a very expensive project and the country would not be able to invest in such a construction, and secondly because of Lebanon’s distance from the closest major energy market to it, which is Europe. Any such project has to pass through the waters of other countries, and Lebanon must therefore search for a site in the pipelines nearby, if it takes the decision to export its production by sea.

All this comes in the context of Lebanon’s attempt to find solutions to export its gas by sea, if it is actually extracted, as the map of onshore gas pipelines in the region is very complex and subject to the mercy of the parties controlling regional crises.

If Lebanon settles on the option of transporting its gas by sea and does not have the opportunity to deliver it to existing sea gas pipelines, it is always possible to resort to the tanker option. The fact is that this option is easier, since it does not require such complex infrastructures as those required by pipes. However, Lebanon will have to find a liquefaction plant in order to transport it by this means.

But the option of transporting gas through tankers will put Lebanon in the face of a fundamental question: Can a country that suffers like Lebanon on the economic level buy complex and expensive tankers?

For other solutions, Lebanon can charter tankers or place the burden of gas transportation on the importing country, while deducting the transportation cost from the total price of the cargo. The growing global trend towards renewable energy, reducing countries’ dependence on various oil and gas materials, makes tankers the most realistic option, because it gives its user the option to stop its supplies if it turns out that it is no longer economically viable, without the need to lose what it has invested in pipe infrastructure.

Port preparation

In this context, it is necessary to talk about the port’s explosion of Beirut, its consequences on the Lebanese economy and the possibility of exporting gas. It is one of the most important ports on the eastern basin of the Mediterranean, due to its location and strong relations with dozens of international ports. But the 2020 explosion disrupted the port’s work, which will have major implications for its Arab standing, especially with the recent political wave of normalization. Due to its proximity and similar characteristics, Israel’s land transport network intends to establish it to connect its coast to the Arab depth.

The impact of the explosion on the export of Lebanese gas by sea will be significant, because of the reconstruction it needs to restore the port to its previous capacity. The Initial assessment completed by the World Bank shows Lebanon’s urgent need for financing, with an average of $2 billion dollars to cover direct damage and reconstruction for operation, material asset losses averaged $4.2 billion and economic losses of about $3.2 billion, while the total direct losses are likely to exceed The $10 billion threshold is after surveying buildings and property damage. These great losses will undoubtedly have an impact on Lebanon’s ability to export its gas in the first place, and to benefit from the proceeds due to the losses that the Lebanese economy has incurred as a result.

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