While offshore natural gas discoveries have spurred Lebanese and Israeli saber-rattling in a region widely viewed as rich in energy resources, a London analyst said it is too early to make categorical claims about the size and ownership of the potential reservoirs.

In the last several months, Noble Energy Inc., based in Houston, Tex., and Israeli companies have announced two offshore gas discoveries known as Tamar and Leviathan that they say may hold about 24 trillion cubic feet of gas.

Yet, it is really too early to say which country has the valid claim over the underwater resources in dispute, as they may well extend into Lebanese waters, Catherine Hunter, a senior analyst on the energy team at IHS Global Insight in London, told OilPrice.com. Without further surveys and drilling, the situation is still unclear, she said.

There is a chance of a really large-scale discovery, Hunter said, but the blocks are located within recognized Israeli waters and exploration would not have occurred outside of this area. It will take a few years to figure out where exactly it is, and until then it's all quite speculative, she argued.

Leviathan is located 130 km from the city of Haifa in the north of Israel, while Tamar is based around 90 km from the city, Hunter later wrote in a research note. She said Leviathan is also located toward Cypriot territorial waters. Israel is reportedly in touch with the Cypriot authorities, who have not made claims to the find, although maritime borders still have to be officially delineated between Israel and Cyprus,

as well as Israel and Lebanon, she wrote.

Details on the size of the finds have also been uncertain, she argued. Leviathan, the larger discovery at 16 trillion cubic feet, has undergone seismic surveys but has not been proven via the drilling of actual wells and testing in the sea bed, Hunter said during an interview, adding this will take place later this year. The Tamar reserve base, estimated at about 8.4 trillion cubic feet, is more understood because of the

different wells that have been drilled, but it will take ages to fully assess as reserves have been upgraded at least twice so far, Hunter added.

The apparent natural gas windfall has ignited a war of words involving Hezbollah, Tel Aviv and Beirut.

Hezbollah warned that it will not allow Israel to steal Lebanese gas resources. The Lebanese parliament, now struggling with a hefty debt of about $52 billion, is racing to ratify a law allowing oil and gas exploration before Israel begins to move into its territory.

In turn, Israel's Minister of Infrastructure Uzi Landau cautioned that Israel will not think twice about using force to safeguard investments in the gas fields.

For Israel, the Tamar field alone can cover most of its needs for the foreseeable future, probably as distant as 2025, noted Hunter. The Leviathan prospect, however, will extend the country's energy independence beyond this and potentially pave the way for gas exports to Cyprus through a new pipeline or liquefied natural gas shipments to more distant markets, she added.

The U.S. Geological Survey took note of the contentious area in an April assessment. It estimates that the Levant Basin Province, based in the Eastern Mediterranean region, is rich with about 122 trillion cubic feet of undiscovered, technically recoverable natural gas.

Fred Zeidman, a principal at financial advisory firm XRoads Solutions Group who has spearheaded the global energy practice, sees no legitimacy in the Lebanese claim to natural gas deposits recently uncovered off Israel.

I have been in Israel, Zeidman, based in Houston, told OilPrice.com. I have seen the maps. About a month ago, Zeidman said he asked government officials there about whether they anticipated competing claims from regional neighbors over territorial waters. And they said, 'Absolutely not,' he noted.

Israel has been licensing for some time, but its Middle East neighbors have been slow to carve out their own gas domains.

Lebanon completed offshore surveys from 2006 to 2007 with the help of Norwegian firm Petroleum Geo-Services and had planned to launch a licensing round, which has been delayed, said Hunter, of IHS Global Insight. You would have thought that the Tamar find that was made in early 2009 . . . would have prompted some kind of action, she noted. But it's not been a legislative priority so far.

The political divisions in post-2005 Lebanon have put any real movement on qualifying and quantifying potential resources -- along with most other socio-economic development and reform initiatives -- on the backburner, explained Aram Nerguizian, a resident scholar at the Center for Strategic and International Studies in Washington who is focused on security politics in the Levant and the Persian Gulf. As a result, calls from within both the Lebanese public and private sectors for a comprehensive geological survey of the Mediterranean coastal shelf off Lebanon have been slow to materialize into action, he noted.

Cyprus, meanwhile, has moved ahead with one round in its nearby territorial waters, while Syria has failed to carry out offshore exploration, according to Hunter's research note. Syria called its first licensing round for four offshore areas in 2008, but received only one bid, which was then rejected, she wrote. A second attempt by Syria is planned for this year, although it has not yet been launched, she added.

Most experts doubt the conflict between Israel and Lebanon will spiral out of control into a full-fledged war, as the media have speculated.

The defense of potential national resources in a poorly demarcated border region is a rallying cry and source of domestic legitimacy at the rhetorical level both in Israel and Lebanon, CSIS' Neguizian said. While the gas issue is a source of political mobilization, for now it will not escalate into a military matter because the reserves are little more than an unknown until detailed geological surveys are conducted by concerned parties, he added.

Battles have been waged over natural resources in the past, but no fighting has ever taken place near the Dead Sea where both Jordan and Israel own bromide deposits, said XRoads' Zeidman.

And regardless of the depth and breadth of animosity between Israel and Lebanon, they have tended to have a mutual respect over natural resources, added Zeidman.

Even now, Israel has not experienced a cessation in either its coal supply from Turkey or fuel from Egypt, but the Tamar and Leviathan finds would be a saving grace should these political relationships grow sour, he maintained.

Cyprus and Lebanon should encourage exploration in their own waters and come to an agreement with Israel if there is any crossover in the reservoir, Hunter told OilPrice.com.

Maritime boundaries, however, also need to be clarified with some urgency, she said later in her research note. Failure to agree on onshore boundaries -- notably the Shebaa Farms and Israel's occupation of the Golan Heights -- does not instill a strong degree of confidence that any international ruling will be taken up, she warned.

Source: http://oilprice.com/Energy/Energy-General/Ownership-of-Offshore-Israel-Gas-Deposits-Speculative-Without-Further-Drilling.html

By. Fawzia Sheikh for OilPrice.com who focus on http://www.oilprice.com target=new>Fossil Fuels, Metals, Oil Prices and Geopolitics To find out more visit their website at: http://www.oilprice.com

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