Lebanese President Michel Aoun has warned Israel against "aggressive" action in disputed waters, after an LNG storage and production vessel arrived off the coast of Haifa to produce gas.
"Negotiations to draw the southern maritime borders are still ongoing and any activity or action in the disputed area is considered a provocation and aggressive act," the Lebanese presidency said on Sunday, citing Mr Aoun.
Israel on Monday afternoon denied Lebanon's accusations of encroachment.
Speaking to Tel Aviv's Radio 103FM, Energy Minister Karine Elharrar said the vessel was not in the disputed waters and downplayed the likelihood of a confrontation with Lebanon.
"It is our area and the natural gas is ours," she said.
Later on Monday, the Lebanese Presidency said it would invite the US Special Energy Envoy for Energy Affairs, Amos Hochstein, for talks in Beirut to demarcate the country's southern maritime border "as soon as possible".
The vessel's arrival became known after the Suez Canal Authority reported that the Floating Production Storage Offloading ship was the first of its kind to travel through the waterway on Friday.
Lebanon-based open-source intelligence tracker IntelSky said the vessel was heading for the Karish natural gas reservoir, off the coast of Israel, which Israel says falls within its "economic waters" in the Mediterranean.
Extraction from the Karish field is expected to take place in the third quarter of this year, Energean — an international hydrocarbon exploration and production company — said earlier.
Lebanese caretaker Prime Minister Najib Mikati accused Israel of "attempting... to incite a new crisis by transgressing on Lebanon's water resources".
He also said Israel was imposing a fait accompli on the disputed zone. This could "create tensions that may have unpredictable implications", he said.\
Ms Elharrar had earlier welcomed the vessel's arrival and said she hoped it would be brought online quickly.
"We will continue to work to diversify the energy market and maintain stability and reliability," she said.
The US began mediating indirect talks between the sides to settle a long-running dispute that has obstructed energy exploration in the Eastern Mediterranean.
Hezbollah's warnings for Israel
Lebanon is home to the heavily armed, Iran-backed Hezbollah group, which has fought numerous wars with Israel.
Hezbollah has previously warned Israel against drilling in the disputed area until the border issue is resolved and said the group would take action if it did so.
Lebanon says its border cuts into the sea at an angle farther south and Israel's claim runs farther north, creating a triangle of disputed waters.
Last year, Beirut expanded its claim by around 1,400 square kilometres, enlarging the area disputed with Israel.
Lebanon has yet to respond to an undisclosed proposal a US envoy made early this year to revive the stalled talks.
Senior Lebanese security official Maj Gen Abbas Ibrahim said in an interview published last week following a trip to Washington that Beirut's response would open the door for a return to those talks and that the US was keen to "turn the page" on the issue.
With additional reporting from Reuters