The Leviathan Partners to Sell Tanin and Karish

The Leviathan partners will be selling their stake in Tanin and Karish, two smaller fields off Israel’s shores, as imposed by the Israeli Antitrust Auhtority.

The sale of Tanin, Karish and a part of the Leviathan will ensure that Noble Energy and Delek Group are not constituting a cartel in the Israeli market. The Energy Ministry Petroleum Commissioner declared Tanin and Karish proven discoveries, a declaration that will allow the sale of the fields to a third party, as reported by Globes.

Earlier this year, Italy’s Edison was said to be interested in the acquisition. Is it interesting to note that Edison was one of the 36 companies that pre-qualified as non-operators in Lebanon’s pre-qualification round. Edison’s involvement in Israel’s waters would no doubt jeopordize its participation in Lebanon’s offshore search for hydrocarbons, should the italian company still be seeking to invest in Lebanese waters.

Tanin and Karish are estimated to hold a gross amount of 3 Tcf of natural gas. The Leviathan and Tamar fields contain respectively 21 and 10 Tcf of natural gas. The discovery of the Karish field just four kilometers from Lebanon’s maritime zone had triggered Lebanese concerns that Israel might siphon its gas. Previous Minister of Water and Energy Gebran Bassil urged the politicians to facilitate the issuance of two essential pieces of legislation that would allow Lebanon to launch its first licensing round and allegedly protect its natural resources.

Lebanon and Israel are in a state of war, and disagree on the delimitation of the borders of their exclusive economic zones. Given that Israel is not a signatory of UNCLOS (the United Nations Convention on the Law of the Sea), Lebanon cannot force it in front of the International Court of Justice. Direct negotiation is not an option. Cyprus, the US and the UN have played a role as a third party mediator in an effort to put an end to the conflict, but all attempts have failed thus far.

The disputed area encompasses around 850 square kilometers and is believed to hold substantial amounts of the hydrocarbon. Without a solution to the conflict, international investors might be reluctant to venture in disputed waters. US solutions involve a unitization agreement, buffer zones or the management of the disputed area by a private third-party.

While Israel is already at the stage of drawing an export strategy involving both pipeline and LNG scenarios, Lebanon has not been able to launch its first licensing round, delayed by problems of a political nature and the failure of the government to meet and agree on the terms of the hydrocarbon search and the blocks that will be offered for bidding.