There is increasing groundwork currently underway in the Eastern Mediterranean, in order to establish an oil industry, in light of recent gas discoveries in its maritime areas, amid sharp political disputes among the countries of the region. Here, we will try to briefly showcase the most important developments in this regard. Beginning with Egypt, this country has started prospecting its territorial waters lying north of Alexandria and in the Nile Delta since the mid-eighties, launching an exploration campaign in the eastern Mediterranean. The main motive behind this campaign was the early attention given to natural gas, and the economic incentives that were offered to international energy companies to discover gas, especially when equal economic incentives were given for discovering a gas field or an oil field. Before then, no adequate incentives were given for natural gas discoveries, prompting international oil companies operating in Egypt to overlook gas prospects. Egypt has succeeded then, in attracting major international companies to invest in its territorial waters, and indeed, natural gas fields were discovered there, in addition to other finds in Egypt's Western desert and the Gulf of Suez. Egypt has also developed the potential uses of natural gas, and today, the majority of its power plants are gas-fed, and natural gas in Egypt today finds its way into usage in public transport buses and households. Egyptian natural gas is also exported through pipelines to other Middle Eastern countries and Europe, while liquefied natural gas is also exported to the latter. In spite of the large quantities of gas that have been discovered, it became clear that the country needs additional quantities of gas in the future, as a result of rising annual consumption levels. From here stems the significance of prospecting for gas in the deep waters of the Mediterranean Sea. Egyptian gas discoveries encouraged gas exploration in the north in Palestine. British Gas (BG), which operates in Egyptian waters, obtained from the Palestinian National Authority in 1998 a 25 year concession agreement for exploration and production in Palestinian territorial waters. Although BG succeeded in discovering the Gaza Marine gas field in 2000, its efforts in developing the field that is located approximately 25 kilometers from the Gaza shore were impeded by the Israeli authorities, which insisted that the pipeline originating from the marine field pass through the city of Ashkelon first, and then to Gaza. The purpose of this proposal was clear, namely, that Israel wanted to control the gas quantities being pumped into Gaza, or in other words, to control supplies and to stop them whenever Israel sees fit. Subsequently, the people of Gaza would continue to be hostage to Israel. This is not to mention that as a result, Israel would be aware of the financial revenues of these gas supplies. Consequently, BP rejected these conditions, and the development of the field was put on hold. Israel, on the other hand, attempted to explore oil since the second half of the last century. However, its attempts failed for two main reasons: First, the caution exhibited by major international oil companies regarding working in Israel, because of the Arab boycott, and hence the reliance on local companies. The second reason is that the majority of prospecting operations took place on land instead of maritime areas. However, this situation changed at the end of the nineties, when British Gas, the Canadian group Bontan Oil and Gas Company, and the American group Noble Energy began exploration in marine areas. The first gas field discovery was made in southern waters stretching the length of the territorial waters of Palestine. In November, 1999, the BG group discovered gas in the ‘Or' field in Israel's southern waters. Despite the limited scope of its production, this discovery has encouraged companies to invest in neighboring regions, to increase the chance of discovering other fields in areas of similar geology. Also, the Noble Energy group discovered the Mari-B field in southern waters. Mari-B is the first commercially viable oil field. Its location is adjacent to Palestinian waters. Production from Mari–B began in 2004, and its production capacity is approximately 138 million cubic feet per day. Exploration then moved to the northern waters, where the Noble group discovered the Tamar field in January 2009. The Tamar field is estimated to hold 8.4 trillion cubic feet of gas. According to the information available, the main bloc of the field lies around 35 kilometers south of Lebanese territorial waters, while two small blocks lie in both Lebanese and Israeli waters. The information released by the Noble group indicates that the field also extends into Cypriot waters. In addition, Noble and its Israeli partners were awarded the concession for exploration and drilling in the Cypriot waters adjacent to Israeli waters. The Israeli government agreed to develop the field in August 2010, while production is set to begin in late 2012 or early 2013. The Nobel group signed a letter of intent in December 2009 to supply the Israeli state electric company with around 2.7 billion cubic feet of gas annually from the Tamar field, over a period of 15 years. The estimated value of this deal is about 9 billion dollars. The costs of developing the Tamar field amount to nearly 2.8 billion dollars. The gas will be extracted and transported southward into the pipeline network there, from whence it will be carried into Ashkelon. In June 2010, after conducting a seismic survey, the Noble Energy group announced the discovery of a field larger than Tamar. The discovered field is Leviathan, which lies 130 kilometers off the northern coast, and contains 16 trillion cubic feet of gas, half of which can be extracted. According to the Delek Group, Noble Energy's Israeli partner, there is also a chance of discovering oil reserves in the lower layers of the field. Leviathan is located in deep lower layers beneath layers of salt. As a result of this discovery, there is talk in Israel that its gas reserves will last 25 years, that Israeli now enjoys "energy independence" and that it will possibly even become an exporter of gas. Indeed, preliminary talks have begun with Greece for the construction of a gas pipeline, amid talk about exporting liquefied natural gas. There was even talk that Israel might attempt to replace Russian gas supplies to Europe. The least that can be said about these allegations at this time is that they are “political” and that they are not related to petroleum policies. They are also exaggerated and have nothing to do with the reality of the petroleum industry. It is also clear that exporting gas to Europe through Greece is to compensate for the loss of the Turkish ally. Meanwhile, the claims about replacing Russian gas would seem delusional, if we compare the sheer capabilities of the gas industry in Russia, the world's number one gas producer, to those of Israel, which has just started to drill its first wells. Despite all the talk about the Leviathan field, the drilling of the exploratory well is only now underway, having started two weeks ago only. The results will not be known for another five months. (The depth of the well to be drilled is 1630 meters.) In a report released in April 2010, the U.S. Geological Survey announced details of the Levant Basin, which covers maritime and land areas across the Palestinian territories, Israel, Lebanon, Syria and the Cypriot marine regions. According to the U.S. agency's study, the field may hold about 122 trillion cubic feet of gas and 1.7 billion barrels of oil. The study relied on its own research findings, in addition to those of previous studies conducted by two Israeli experts and also studies by Soviet experts previously conducted in Syria. The Israeli oil industry faces several challenges, including the fact that major oil companies, despite the important discoveries that have been made so far, are still absent from the scene, possibly for fear of Arab boycott. Also, the state of war between Israel and Arab countries affects the development of this industry, especially when several fields lie in proximity to Arab waters. Interestingly, the majority of reports published in Israeli newspapers refer to this fact when covering the subject of maritime discoveries. Moreover, talk about “self-sufficiency" when it comes to natural gas, and even the possibility of exporting gas, led to higher expectations among the politicians, regarding the profits they may be able to incur from operating companies. In truth, there are serious attempts in both the government and the Knesset to amend the laws on oil taxes, with a view to raise these from 12 percent to higher levels that some estimated at 26 percent of profits. This prompted Nobel Energy, which is the most important company operating in Israeli waters at present, to threaten to resort to the International Court of Justice in the event the law is changed. In case there will be litigation, it will be only natural that development projects will be delayed. Also, tax increases will deter small companies from prospecting for oil and gas. With regard to Lebanon, this country is still in the early preliminary stages of developing its petroleum sector. This is in spite of the fact that Lebanon has enacted a petroleum law in August 2010, and despite the seismic survey of nearly 3300 square kilometers, the attempts to demarcate maritime boundaries - for example with Cyprus-, or even the demarcation of the southern borders of the exclusive Lebanese economic zone, pursuant to the memorandum submitted by the Lebanese Foreign Ministry to the Secretary-General of the United Nations, deposited with the Secretary-General on July 14, 2010. Despite these steps, a lot is left to be done. For example, there is a need to appoint an official at the Ministry of Energy who would be responsible for the petroleum sector, in addition to the appointment of a professional cadre, the enactment of marine ecological laws, and the drafting of model contracts with oil companies, including commitments, taxes, etc. The Ministry of Energy is scheduled to inaugurate an Information Bench for international oil companies at the end of November 2010, while the first tender for concessions is planned to begin in the second half of 2012. It is worth mentioning here that several major international oil companies, such as Exxon, Total, Shell and ENI, in addition to Qatar and Iran, have expressed their desire to work in Lebanese waters. Meanwhile, Syria has offered five exploration licenses for marine areas in the middle of the year 2007. Shell, Total, and the Croatian oil company INA have initially expressed their interest to operate in Syria. However, no agreement was reached in the end with any of these companies. The Syrian authorities are expected to call for a new tender next year for the same areas, after collecting additional seismic data on these regions. Finally, Cyprus has called for a tender for exploration rights in its territorial waters in 2007. Only Noble Energy was awarded a license to operate in Cypriot waters. Cyprus has enacted most of the legislation required for inviting international oil companies to operate in its territories and waters. Cyprus has also enacted a law on petroleum and another on marine ecology. In addition, Cyprus has drafted a model for agreements with international companies and signed agreements for the delimitation of its maritime boundaries with most of its neighbors. The island nation is expected to call for another tender soon. What demarcates Cyprus from other countries is possibility that the Nile Basin extends into Cyprus's southern deep waters. It is also possible that the Tamar field extends into its eastern waters. However, its main problem lies in the Turkish military occupation of the northern part of the island, where Turkey claim sovereignty over the waters in the vicinity of the territories it occupies. *. Mr. Khadduri is an energy expert
