Lebanon and Israel came to an agreement this week on how to share the natural gas fields lying off their respective coasts. The two countries are technically still at war and have no diplomatic relations.

The deal has been hailed as historic in some quarters, including by the US and German governments, and as historically bad in others. Some observers say Israel won most from it, others believe the Lebanese got a better deal.

What's in the deal?

The two countries agreed on who has the rights to undersea natural gas fields off their coasts. Lebanon and neighboring Israel have been fighting over exactly who owns what in this part of the eastern Mediterranean Sea for around a decade now.

The disputed areas include around 860 square kilometers (332 square miles) in what is known as each nation's "exclusive economic zone" or EEZ. These sit outside maritime borders but a country has special rights to what's inside them.

The new deal sees Lebanon getting control of the Qana gas field, right in the middle of the disputed area. But Israel may now claim a percentage — around 17%, according to leaked documents — of any future profits from Qana, as part of it is in its EEZ.

Meanwhile Israel gets control over all of the Karish gas field, which lies further south, closer to the other Israeli-owned gas fields, Tamar and Leviathan.

Why was the deal finalized now?

Tensions around the maritime claims have come and gone over the past decade. Most recently, they were high again in June after Israel said it was ready for London-listed company Energean to start working at the Karish gas field.

In 2021 Lebanon changed the definition of its EEZ, from Line 23 to Line 29 (as you can see in the map below). This would have meant that some of the Karish gas field belonged to Lebanon. Hezbollah, a militant group inside Lebanon that considers itself Israel's enemy, then said it would attack any ships and equipment in that area.

This year though, several factors have influenced both nations' needs to resolve this issue.

The energy crisis in Europe played a major part, explained Heiko Wimmen, project director for Iraq, Syria and Lebanon at Brussels-headquartered thinktank, Crisis Group.

"Thanks to European needs, the door is open [for gas exporters]," he told DW. "Anyone who wants a foot in that door needs to act now, before somebody else gets in there, or before natural gas — ostensibly only a stopgap energy — is replaced by greener energies. So I'd say this made it urgent for the Israelis."

For example, he said, when the Lebanese first changed their EEZ demands from Line 23 for Line 29, the Israelis laughed it off. "But then this gas crisis arrived and they stopped laughing," Wimmen said. "They wanted this sorted out."

Lebanon also continues to labor under an economic crisis that the World Bank has said is among the "most severe episodes globally since the mid-19th century." Lebanese authorities could do with both the money that an offshore gas field could bring as well as the hope such an endeavor represents for voters.

Political chaos in both countries also hastened the agreement. Lebanon held parliamentary elections in May but is still being run by a caretaker government. The president of that caretaker government, Michel Aoun, is set to step down on October 31.

Meanwhile Israel is nearing its fifth election in four years after previous coalitions collapsed. The next round of voting is set to take place in November. The outgoing Israeli government has agreed to this deal but now only has about two weeks to set it in motion officially.

What's in it for Israel?

In economic terms, the deal means that Energean can start working on Israel's Karish field almost immediately without fear of coming under attack. Israel should be able to start making money there within weeks.

In political terms, Israel's current Prime Minister Yair Lapid has argued that the deal would promote regional stability.

"The agreement means that both countries now have vested economic interests in maintaining calm along their common border regions," Maha Yahya, director of the Beirut-based Carnegie Middle East Center, confirmed in a commentary this week.

This is perhaps the most important to Israel. In financial terms, Karish is the smallest of the gas fields Israel is working on, Crisis Group analyst Wimmen pointed out.

"If it had come to conflict, their entire [gas field] infrastructure would have been under threat," he explained. "This scenario is now off the table. So of course, that's a significant win in security terms."

What's in it for Lebanon?

Although nobody knows exactly how much gas there is in the Qana field, it is currently estimated to be worth around $3 billion (€3.08 billion) altogether. That could bring Lebanon between $100 and $200 million a year. 

However, Lebanon is far from pumping gas at Qana. The country has done a deal with French energy giant Total to work the field, but further exploration and infrastructure is needed before Qana makes any money. That likely won't happen until closer to the end of this decade, sector experts say.

As Mike Azar, an analyst based in Washington and former lecturer in international economics at the John Hopkins School of Advanced International Studies, wrote on Twitter, "this deal does not substantially move the needle in terms of Lebanon discovering and exploiting oil and gas reserves … [it] was ultimately much more profitable for Israel. What Lebanon got was avoiding problems it can't afford to deal with right now."

So who really won?

Neither country really came out on top. Israel likely gave up more territory than it had initially wanted to, observers said, but stands to benefit most in the short term with gas sales under improved security conditions. Lebanon gained territory but won't be able to exploit it immediately.

"Both sides could win here because both sides wanted different things, needed different things," diplomat Amos Hochstein, the US' special envoy for international energy affairs, who negotiated the deal, told Israeli media this week.

What happens next?

Both the Lebanese and Israeli caretaker governments are trying hard, in the limited time both have left in power, to push the deal through.

Israel’s cabinet voted on Wednesday in favour of the deal. Over the next two weeks, Israel's parliament must review it, to proof its legality. But the final decision will be made by the cabinet, and they are likely to approve it. 

A serious challenge to the deal could still come from Israel's right-wing politicians. The opposition leader, Benjamin Netanyahu, has accused the Lapid government of "surrendering to Hezbollah's blackmail." If he returns to power after the November 1 elections, Netanyahu has sworn to cancel the deal. 

In Lebanon, President Aoun announced acceptance of the deal on Thursday.

But the agreement's specifics leave much to be desired, sector analysts said. Many of the details will apparently only be negotiated in the future, analyst Azar noted. There's also the fact that when it comes to ironing these out, Lebanon and Israel are not speaking to one another directly, which leaves the energy companies with this difficult job, Azar added.

So how historic is the deal really?

Because Lebanon and Israel do not officially speak to one another, US diplomat Hochstein had been shuttling between the two countries. The deal was done via a series of letters from the two countries to the US and the United Nations, and representatives from the two nations may not ever meet. The Lebanese government has stressed this does not mean "normalization" of ties with Israel. 

But the deal sets a precedent, observers suggest.

While it isn't about actual borders and there are still plenty of unclear details, Crisis Group analyst Wimmen believes the deal is important. 

"That's because Israel and one of its neighbors — a neighbor that doesn't officially recognize Israel — have come to a constructive solution for a conflict," he told DW. "Of course, they're not talking directly to one another … but in the end, they found a diplomatic solution that satisfied them both. And that's certainly historic."

Edited by: Kate Hairsine