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U.S. proposes maritime buffer zones

BEIRUT: The United States proposed three different ways of resolving a dispute between Lebanon and Israel over offshore borders, according to a classified proposal obtained by The Daily Star.

The proposal, which was handed to a few Lebanese and Israeli officials in July 2013, was aimed at breaking the deadlock over the 860-kilometer area disputed between the two countries, where it is believed that large quantities of natural gas are located, and to facilitate the work of international oil companies eager to explore for gas in these waters.

The United States government proposed three options to solve the dispute and pointed out that indirect mediations had solved other disputes between many countries facing similar situations.

In April 2013, Amos Hochstein, U.S. deputy assistant secretary for energy diplomacy, visited Lebanon and Israel in a bid to mediate an agreement between both sides on the disputed area.

Hochstein told The Daily Star at the time that he had advised the Lebanese and Israeli governments not to drill in the area until the dispute was solved.

He added that most oil companies were not willing to risk drilling in disputed zones, and that firms preferred to work in areas that were within the recognized Lebanese territorial waters.

“I think the most advisable policy for choosing where to drill is to reach an agreement on the disputed zone so there isn’t a disputed zone. I think it would be good not to touch the disputed zone until there is a resolution for this dispute,” Amos said in 2013.

The U.S. official said that he had some ideas that he would discuss with the Lebanese officials to resolve this issue, but at the time he refused to disclose the nature of these ideas.

However, The Daily Star has now seen the document, and is able to outline the proposal contained within it.

The proposal gives three options for resolving the dispute.

The first option is to establish buffer zones – zones in which no petroleum exploration or exploitation would occur without the consent of both governments – north and south of the maritime security line (referred to in the document as the MSL).

The report does not specify the size of the buffer zones, except to say that the southern buffer zone would be smaller than Lebanon’s full maritime claim, and also that the northern buffer zone would be “significantly smaller” than the southern buffer zone.

The buffer zones would remain in effect until a permanent maritime boundary was established.

“Each government gives a commitment letter to the United States government regarding non-exploration/exploitation in its respective buffer zone,” the proposal said.

It added that the U.S. government would give a letter of assurance to the Lebanese and Israeli governments confirming the buffer zones, and also confirming U.S. commitment to supporting negotiations of a “unitization agreement” of any future trans-MSL discovery.

The second option is largely the same as the first option, except that it allows for exploration within the buffer zones to the extent necessary to establish the existence of specific reserves that crossed the MSL.

The second option would: “allow each government to license development of a confirmed trans-MSL reservoir through a well located in the buffer zone,” the proposal said.

Option two also talks about establishing a method for determining what percentage of recoverable reserves lies on each side of the MSL, and thus allocating production between the Lebanese government and the Israeli government.

The proposal also calls on the parties to “address other issues commonly addressed in international unitization agreements, including exchanges of petroleum-related data for areas close to the MSL and evacuation of hydrocarbons.”

The third option is very different from the other two.

Option three proposes the formation by Lebanon and Israel of a unit company “in which they are indirect 50-50 shareholders and which has jurisdiction over the Unitized Area.”

The Unitized Area would consist of two zones of equal size north and south of the MSL (and be similar in size to, or smaller than, the area of overlapping claims.)

The proposal suggests that the Lebanese government issue licenses to the Unit Company for the northern zone while the Israeli government issues licenses to the Unit Company for the southern zone.

“These licenses allow the Unit Company to issue petroleum exploration/development licenses to oil companies in the Unitized Area,” the proposal said.

It added that each government would still receive revenue from the portion of reserves in the Unitized Area located on its side of the MSL only (by means of a divided and other payments from the Unit Company to its shareholders)

“Lebanese laws (e.g., tax, health, safety and environment) would still apply to north of the MSL and Israeli law would still apply south of the MSL,” the proposal said.

The document said members of the Unit Company would not necessarily be Lebanese and Israeli but could be other nationalities.

It added that both Lebanon and Israel would have a veto power over the exploration and discoveries in the MSL.

The document has maps of the proposed MSL and the areas in which each party can operate according to the proposal.

Energy and Water Minister Arthur Nazarian told The Daily Star that Lebanon still considered the 860-kilometer zone to be part of Lebanese territorial waters, but welcomed any effort from any party to solve this issue.

He admitted that international oil companies were reluctant to make any bid on until the issue between Lebanon and Israel was fully resolved.

 
A version of this article appeared in the print edition of The Daily Star on August 11, 2014, on page 5.

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Summary

The United States proposed three different ways of resolving a dispute between Lebanon and Israel over offshore borders, according to a classified proposal obtained by The Daily Star.

The proposal gives three options for resolving the dispute.

The first option is to establish buffer zones – zones in which no petroleum exploration or exploitation would occur without the consent of both governments – north and south of the maritime security line (referred to in the document as the MSL).

The report does not specify the size of the buffer zones, except to say that the southern buffer zone would be smaller than Lebanon's full maritime claim, and also that the northern buffer zone would be "significantly smaller" than the southern buffer zone.

It added that the U.S. government would give a letter of assurance to the Lebanese and Israeli governments confirming the buffer zones, and also confirming U.S. commitment to supporting negotiations of a "unitization agreement" of any future trans-MSL discovery.

The proposal suggests that the Lebanese government issue licenses to the Unit Company for the northern zone while the Israeli government issues licenses to the Unit Company for the southern zone.


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