For most countries, the existence of a massive fossil-fuel deposit within its sovereign territory would be gratefully welcomed as an economic windfall. But the delight in Israel at the recent giant gas discovery off its northern coastline is tempered by the knowledge that it could provide the spark to ignite the next war between the Jewish state and its mortal foe to the north, Lebanon's militant Shi'ite Hizballah.

The stakes are enormous. Both Lebanon and Israel currently have little or no oil or gas deposits, and are dependent on neighboring countries for importing fuel and power. Israel presently relies on Egypt for most of its gas, but the durability of that arrangement has been cast into doubt following the ouster of Hosni Mubarak's regime. The Egyptian pipeline supplying gas to Israel and Jordan was blown up in January and only began operating again last week. (See TIME's video "Israel's Lonesome Doves.")
Key to the tensions over the potential gas bonanza is that the maritime border between Israel and Lebanon has never been delineated because the two states are still technically at war.

The two gas fields off the northern Israel coast - Tamar and Leviathan - contain an estimated 8.4 trillion cu. ft. (238 billion cu m) and 16 trillion cu. ft. (453 billion cu m) respectively, sufficient to satisfy Israel's energy needs for the next half century. What remains unknown is if the fields stretch into Lebanon's territorial waters. Even if neither of them do, Tamar and Leviathan are part of much bigger potential oil-and- gas reserves in the eastern Mediterranean. Last year, the U.S. Geological Survey estimated that the Levant Basin Province, encompassing parts of Israel, Lebanon, Syria and Cyprus, could contain as much as 122 trillion cu. ft. (3.4 trillion cu m) of gas and 1.7 billion barrels of recoverable oil. (For comparison, Libya has gas reserves of 53 trillion cu. ft. (1.5 trillion cu m) and oil reserves of 60 billion barrels.)

The Israelis have a head start in the race to extract gas, having awarded the concessions to a joint U.S.-Israeli firm. Tamar is expected to go online in 2012 and Leviathan three years later. (See "Does Libya's Oil Industry Reflect Its Fate?")

The upheaval in Egypt has "awakened old fears among Israelis that their power supply rests in the hands of potentially hostile neighbors," says Gal Luft, the executive director of the Institute for the Analysis of Global Security in Potomac, Md. "This jolt will force Israel to move much more expeditiously toward developing its own newly discovered fields in order to achieve energy independence."

Meanwhile, Lebanon is moving on its interests as well. Last August, the country's Parliament approved a long-awaited draft bill on gas-and-oil exploration. Lebanon also is pursuing arrangements with neighbors Syria and Cyprus to delineate their respective maritime exclusive economic zones. Representatives of energy companies are already in Beirut lobbying for potentially lucrative oil-and-gas concessions. The prospect of oil and gas beneath Lebanon's coastal waters could have immense benefits for a country with one of the highest debt rates in the world, around $52 billion or 147% of gross domestic product. But progress has slowed down because of the collapse of the government in January and the delay in the formation of a new cabinet due to political bickering.
"Oil exploration is the victim of the current political vacuum," Nabih Berri, the parliamentary Speaker, said last week, noting that Lebanon's three neighbors - Israel, Syria and Cyprus - were forging ahead with agreements on oil-and-gas surveys.

Beirut has asked the U.N. to help mark a temporary sea boundary between Lebanon and Israel, a maritime equivalent of the "Blue Line" established by the U.N. in 2000, which corresponds to Lebanon's southern land border. The U.N. has agreed to assist and the Israelis are studying the proposal. But the U.N. faces a potentially thankless task. The demarcation of the Blue Line 11 years ago was mired in mutual distrust and wrangling with neither the Lebanese nor Israelis willing to concede an inch of territory to the other. Without goodwill from both sides, the maritime boundary could be even more difficult to define given the complicated geography of the coastline.

Some have described the dispute over the gas fields along the Lebanon-Israel border as another "Shebaa Farms," a reference to a small unpopulated mountainside along Lebanon's southern border which is occupied by Israel but claimed by Lebanon. The Shebaa Farms has been a periodic flashpoint between Hizballah and Israel. But a foreign diplomat in Beirut said that parallels between the Shebaa Farms and the offshore gas fields are misplaced. "Forget the Shebaa Farms," the diplomat says, "That was created as a point of tension between Lebanon and Israel." The practicalities of energy needs, however, mean that the Lebanese will approach the gas fields practically - not politically. "The Lebanese are not being difficult [over the maritime boundary] because they have real economic interests here," he says. But that doesn't mean there isn't a potential for friction. He adds, "Unless there is a pragmatic arrangement, you could have a confrontation."

It is perhaps no surprise then that the sudden interest in the potential fossil-fuel wealth off the Israeli and Lebanese coastline has turned the Mediterranean into a potential new theater of conflict between the Israelis and Hizballah. The Lebanese group already boasts an amphibious warfare unit trained in underwater sabotage and coastal infiltrations. Hizballah's ability to target shipping - and possibly offshore oil-and-gas platforms - was demonstrated in the monthlong war with Israel in 2006 when the militants came close to sinking an Israeli naval vessel with an Iranian version of the Chinese C-802 missile. Hizballah fighters have since hinted that they have acquired larger antiship missiles, double the 72-mile (116 km) range of the C-802 variant. Last year, Hizballah chief Sheik Hassan Nasrallah warned that his organization now possesses the ability to target shipping along the entire length of Israel's coastline.

In January, Israeli Prime Minister Benjamin Netanyahu described the offshore gas fields as a "strategic objective that Israel's enemies will try to undermine" and vowed that "Israel will defend its resources." Last month, the Israeli navy reportedly presented to the government a maritime-security plan costing between $40 million and $70 million to defend the gas fields.

Upping the ante even further, Nasrallah promised last week that if Israel threatens future Lebanese plans to tap its oil-and-gas reserves, "only the Resistance [Hizballah] would force Israel and the world to respect Lebanon's right."
Then there is the recent passage of two Iranian navy vessels in the Mediterranean and the subsequent discovery last week by the Israeli navy of a smuggled consignment of arms and ammunition that included six C-704 antiship missiles believed destined for Hamas in the Gaza Strip. The missiles, though smaller than the C-802, could target Israeli shipping off Gaza as well as Israel's Yam Tethys oil rig off the coast of Ashkelon. Citing the Iranian vessels and smuggled antiship missiles, security analyst Luft said, "Such activities could present real threats to exploration activities off Israel." The potential oil-and-gas fields off the Lebanese and Israeli coasts look set not only to become a potential long-term source of wealth - but also a source of conflict in the years ahead.
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