Oil majors the key to unlocking potential
International oil companies are vital to efforts to extract oil and gas from the Levant Basin, where hydrocarbons are trapped under the seabed at depths of more than 7,000 metres.
But big international operators will be unwilling to join production efforts until disputes over the maritime border between Israel and Lebanon is resolved, experts say.
While Israel and the Greek part of Cyprus have delineated their border, Lebanon and Israel are still at odds over where the right of each to explore and produce ends.
The areas claimed by both as exclusive economic zones overlap, and attempts to demarcate a maritime border are hampered by the fact the two countries have no diplomatic relations, so international courts and arbitration do not apply. In addition, Israel has not signed the 1994 Convention on the Law of the Sea.
Israel will be able to start production at its offshore gasfields with the help of smaller energy companies, and by purchasing and developing technology, says Justin Dargin, an energy expert at Harvard University.
Noble Energy, a US company, is already active off Israel's shores, and production from the Tamar field is expected in 2013.
"The Israelis are quite technologically advanced," says Mr Dagin. "I would not be surprised if they were to acquire technology abroad and integrate it with some domestic innovation to start production."
But bigger companies will be needed to maximise the production under very challenging circumstances.
"When we talk about maximising production, that's a different issue, and at some point, the Israelis will need the help of the majors in producing deep offshore," says Mr Dargin.
He predicts the UN will get involved, and that it will eventually be able to solve the border dispute in about five years. He also forecasts international oil companies will commit to the Levant fields once stability has been achieved.
While Israel would benefit from that, it would also open up Lebanon's reserves to production.
Published: November 20, 2011 04:00 AM