Israeli security cabinet ministers were briefed on Wednesday, on the U.S. mediated negotiations in the maritime border dispute with Lebanon.
According to some ministers, despite progress having been made, not all outstanding matters have been resolved.
U.S. mediator, Amos Hochstein was due to return to the region next month.
The ministers were told that although the Karish gas field was not a part of the dispute, drilling was delayed for technical reasons and would not begin before September.
Energy Minister Karil Elharar said Energean, the company chosen for the drilling, was urged to complete preparations. "Our instructions are to begin gas production as soon as possible," Elhara said. "Israel is waiting for the gas to fulfil the needs of its local market and to meet gas export commitments," she said.
A senior official said it was still unclear whether a deal could be finalized but Israel's proposals are according to its security requirements, while proposing creative ways to ensure income from Gas to both countries.
"An agreement to end the dispute is a good thing for the Israel," a senior source told Ynet.
"Natural gas production by Lebanon could stabilize that country's economy and would be to Israel's advantage," the source said. "It is a win,win situation and would also provide Israel with a target should our gas rigs be attacked," he said.
Security officials briefed ministers on the risks in an already volatile situation, should negotiations fail.
If Israel would begin drilling in the Karish field while Lebanon would remained without a natural gas source, the Iran-backed Hezbollah group, would be obliged to live up to their threats and attack, possibly leading to war, the officials warned.
Hezbollah leader Hassan Nasrallah said in a speech last week that he would attack all of Israel's off shore drilling unless Lebanon's rights are met.
Hezbollah, in what was seen as a show of force, dispatched three UAVs to the Karish offshore rig last month. All were shot down by the IDF.