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Drilling Rig Arrives in Lebanon’s Block 9 to Begin Exploration

A drilling rig has arrived in Lebanon’s Block 9 to begin oil and gas exploration after foes Lebanon and Israel delineated the contentious maritime border between them in a United States-brokered agreement last year.

Minister of Public Works and Transport Ali Hamie made the announcement on Wednesday on social media platform X, formerly known as Twitter.

“For your information, today, Wednesday 8/16/2023, the oil and gas exploration vessel in Block No. 9 has now reached its drilling point,” he wrote.

The consortium led by France’s TotalEnergies includes Italian oil giant ENI and state-owned QatarEnergy. Qatar Energy replaced Russian company Novatek which withdrew from the Lebanese market in September.

The drilling became possible after the deal that delineated the Lebanon-Israel maritime border for the first time, despite Beirut still considering itself at war with its neighbour and laws barring contact with Israeli officials.

Block 9 lies mostly in Lebanese waters but a segment lies south of the newly delineated border.

INTERACTIVE: Israel Lebanon maritime border

A mechanism for the consortium to exploit possible discoveries that extend south from Block 9 was also established, setting up a royalties system for Israel while the exploitation would be on behalf of Lebanon.

Experts have argued that the absence of specific criteria for profit distribution is one of the biggest loopholes in the deal in the event of cross-border deposits being identified.

Lebanon hopes gas and oil discoveries will help it reverse a crippling economic crisis that has cost the local currency more than 98 percent of its value, eroded the country’s foreign reserves and caused rolling blackouts across towns and cities.

Lebanon’s Energy Minister Walid Fayad said in May that he expected to know whether there would be a discovery there by the end of the year. ENI CEO Claudio Descalzi said in January that he was “positive” about a discovery there.

However, the potential for gas exploitation to reduce a government debt of about $100bn is limited.

Assuming gas is plentiful, it will still take years before revenues reach state coffers and some fear the rampant corruption that has characterised Lebanon’s governing system may prevent the money from ever benefitting about three million people living below the poverty line.

While the delimitation of the maritime border removed a significant point of friction that could have led to a new conflict, Lebanon and Israel do not have direct diplomatic contact.