Isranomics

Karish gas field is gearing for opening despite the new Hezbollah threat

by | Sep 18, 2022 | Economy | 0 comments

Usually, under normal circumstances, a country that has natural resources would grant a license to a company to extract them and to sell them to the public at some point when commercially viable. However, there is nothing usual about the Karish gas field in Israel. First of all, neighbouring Lebanon claims that the reservoir is partly in their territory. If this was not enough, Lebanon is one of the few countries that does not have diplomatic relations with Israel, and the maritime border has been disputed by both sides.

The good news is that with the mediation of the US, the border dispute is nearing its end and there is a good chance that Lebanon’s claims to the Karish gas field will be settled.

While politicians are working on the final agreement and all technicalities, Energian, the London and Tel Aviv listed company, has been developing the Karish gas field. And if there are no unforeseen issues, the company will start transferring gas through the transmission systems from the Karish rig to the shore and back on Tuesday, September 20. This is a technical procedure to examine the system’s integrity before Energian’s customers’ gas is allowed to flow to the coast, while the full operation of the rig is scheduled for the first week of October. The Greek-British corporation has already signed agreements with ICL, Bazan Group (oil refineries), the private electricity company OPC and others.

Credit: Energean

The quantities of gas that can be produced from Karish and similar gas fields are considerable for Israel but not internationally. For instance, while Europe’s yearly gas demand was approximately 400 billion cubic meters (BCM) even before the Ukraine conflict, with Russia supplying more than 40% of that amount, Leviathan produces roughly 12 BCM annually and Tamar less than 10 BCM. Therefore, increased Israeli exports would have little effect on this current situation.

Nonetheless, the overall volume of the new gas contracts, along with the contracts signed with the Dalia Energy Group, the Dorad Group, and the Edeltech Group, raise the total annual sales volume from the Karish and a smaller Tanin reservoirs to more than 4 BCM per year. But here is a caveat – in spite of Energian’s readiness, it is not clear if gas production will begin as scheduled or perhaps at all.

The reason being is that while negotiations on the maritime border between the two countries are delineating their commercial waters, there is an ongoing confrontation between Israel and Hezbollah. In fact, the terror organisation has repeatedly threatened further attacks if the gas extraction goes ahead, after launching four drones toward Karish back in July.

According to Globes, messages were sent indirectly between Israel and Hezbollah in recent days, intended to prevent a flare-up. This has been overtly mentioned by Hezbollah Secretary General Hassan Nasrallah, who repeated the previous ultimatums that set a deadline for the end of all negotiations.

The start of the actual gas production from the Karish reservoir was marked by Nasrallah as a new red line. He made reference to a statement made by the Ministry of Energy on Friday afternoon which stated that the Ministry of Energy is making preparations for the Karish reservoir to be connected to the Israeli system, with the inspection of the rig and the natural gas transmission from the rig to the national system scheduled to start in the coming days.

These negotiations are ongoing, and both parties are reviewing drafts of an agreement that, in addition to establishing the maritime border, is intended to regulate the development of the Cana/Sidon field. A field that extends from Lebanon through the disputed territory deep into the territory of Israel.

This makes the situation with the Karish gas field exceedingly delicate and, if handled incorrectly, might lead to the escalation of with Hezbollah.

While determined to resolve the dispute with Lebanon on time before the full operation of the rig begins, the Israeli government has come under fire since some believe that responding to Hezbollah’s demands amounts to caving in to their threats and bolstering its influence in Lebanon.

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