US and Lebanon deny report of secret Israeli gas deal

Regional negotiations for extra power for Lebanon involve a gas swap deal between Egypt and Syria

Lebanese Energy Minister Walid Fayad would not comment on reports that the US has helped to negotiate a secret deal to transfer natural gas from Israel to Lebanon. AP

The US and Lebanon have denied an Israeli TV report that caused controversy in Lebanon by claiming that a US envoy had brokered a secret deal to transfer natural gas from Israel to Lebanon – two enemy countries with no diplomatic relations.

Aired by Channel 12 news, the report seemed to contradict previous information circulated by Lebanon’s Energy Ministry regarding continuing negotiations over a regional gas deal that is expected to provide around six more hours of electricity daily to power-deprived Lebanon.

The US State Department tweeted that “media reports that the United States has brokered an energy deal between Israel and Lebanon are false”. It did not provide further clarification.

Lebanon’s Energy Ministry previously said it “categorically denied” the Israeli report, which claimed US diplomat Amos Hochstein had brokered the deal that was secretly signed at the weekend.

“This is highly controversial given the nature of relations between the two countries,” said Mona Sukkarieh, political risk consultant and co-founder of Middle East Strategic Perspectives.

Lebanon and Israel have been technically at war since the 1948 Arab-Israeli conflict which displaced hundreds of thousands of Palestinians to neighbouring countries including Lebanon.

The border between the two countries is closed and patrolled by the UN. Hundreds died in the last full-blown war in 2006 between Hezbollah and Israel.

The Energy Ministry’s statement said that negotiations involve Egypt exporting “a small portion of its production” in subterranean natural gas to Syria via Jordan.

Syria would distribute it internally before sending a “parallel amount of gas” from its fields in Homs to Deir Ammar power station in Lebanon “according to the transit and swap agreement”, read the statement.

Energy Minister Walid Fayad was not available for comment on Monday. Last October, he told The National that Syria would send a smaller amount of gas to Lebanon than received from Egypt as in-kind payment to work around US sanctions.

Under the 2020 Caesar Act, sanctions could be imposed on people and businesses that work with Damascus in an attempt to avoid normalisation of relations with President Bashar Al Assad’s government after a decade-long civil war that has involved numerous cases of alleged war crimes.

At the time, Mr Fayad said rumours of Israeli gas exports to Lebanon were “a stretch of the imagination” and that Lebanon would receive “100 per cent Syrian gas”.

Mr Fayad said he expected that the gas deal with Egypt, valued at around $300 million, would bring four more hours of daily electricity to Lebanon. Egypt has committed to selling a minimum quantity of gas to Lebanon equivalent to 650 million cubic metres per year.

In parallel, Lebanon is negotiating with Jordan for an electricity transfer between the two countries’ power grids which would give Lebanon an extra two hours of electricity a day.

The World Bank is expected to finance the deal via a loan to be disbursed over two years to Lebanon.

Ms Sukkarieh said that regardless of the accuracy of Channel 12’s report, “the information has already taken over Lebanese media and social media”. The controversy will likely corner Lebanon, she told The National. “It is going to become increasingly challenging for Lebanese authorities to defend the gas import deal with Egypt,” she said.

The negotiations are widely viewed as a US attempt to counter Lebanese group Hezbollah’s recent imports of US sanctioned fuel to Lebanon. The Tehran-backed political party-cum-militia has distributed the fuel internally at prices below the market rate.

Mr Hochstein told CNBC in November he was hopeful the deal would “mature and work”. He reacted on Monday on Twitter to the State Department’s denial of the Israeli media report with two exclamation marks and did not provide further comment.

Analysts in Lebanon view the Channel 12 claims as a possible attempt to pander to US Congressmen opposed to the idea of circumventing sanctions on Syria.

“If there were any doubt in Lebanon that Israel could be involved, then neither the Lebanese Parliament nor government would agree to the deal,” said Marc Ayoub, an energy policy researcher at the American University of Beirut’s Issam Fares Institute for Public Policy and International Affairs.

“It looks like the Israelis are trying to send a message to Republicans indicating that Israel is normalising its relations with its neighbours,” Mr Ayoub said.

Lebanese media report that the country’s crumbling state-run electricity company produces no more than four hours of power per day.

Power cuts have plagued Lebanon since the end of its 1975-1990 civil war but have been exacerbated by the country’s two-year long financial collapse and residents are now reliant on expensive private neighbourhood generators.