Lebanon's parliament has approved a new energy law which paves the way for exploration of offshore oil and natural gas.
The law was passed unanimously on Tuesday amid fears that neighbouring Israel could intrude on Lebanese maritime territory as it starts to drill for gas in the Mediterranean later this year.
Lebanon has said it has identified reserves with promising quantities of natural gas, a resource that could help the government pay off its high national debt.
"The amount of debt and Israeli greed are major concerns," Ali Hamdan, an aide to the parliamentary speaker, said of why consensus finally emerged around the new law after years of debate.
"Passing the law is a message that shows Lebanon is serious and persistent."
Lebanon has said it would "use all means" to defend its rights if Israel was found to be drilling in Lebanese waters.
Hamdan said he expected exploration rights to be up for auction by the end of 2011.
US-based Noble Energy has announced plans to begin drilling in the massive Leviathan field offshore Israel in the fourth quarter of 2010.
Noble has also said it had discovered enough natural gas at the Israeli Tamar and Dalit offshore fields to meet Israel's needs for years.
The announcements have increased tensions between Israel and Lebanon which do not have formal maritime borders and remain technically in a state of war.
The mistrust between the two neighbours is high and was embroiled in a deadly border clash earlier this month.
Hamdan said Lebanon planned to outline its own maritime borders and submit them to the UN Security Council.
Even though Lebanon has passed the energy law, it still has a long way to catch up with the Israelis in any offshore drilling.
It has to identify blocs, supply data to interested investors, select bidders and have
companies start exploration work, while the Israelis already have firms ready to drill for gas.
Lebanon's national debt currently stands at more than $50 billion, equivalent to about 148 per cent of gross domestic product.