The energy “arena” in Southeastern Mediterranean

In 2010 the US Geological Institute released a report on energy reserves in the Eastern Mediterranean and the discovery of gas fields in Israeli, Cypriot and Egyptian waters. The survey estimated that the meastern-mediterranean-gas-fields-630x385aritime areas of the Republic of Cyprus (RoC), Gaza, Israel, Lebanon and Syria contained 3420 billion cubic meters (bcm) of recoverable gas. The exploration work continued for the next years and revealed that the Aphrodite field (RoC) , Tamar and Leviathan fields (Israel) held approximately 127 bcm, 300 bcm and 620 bcm of gas respectively. (Gürel, 2014)

This article will examine the politics of gas in the Eastern Mediterranean and the possible developments in the region as a result of the recent gas finds. Gas reserves in the region are for sure going to shift alliances. On the one hand, estranged states have been drawn together. Israel, Cyprus and Greece have already signed in 2013 the “EuroAsia Interconnector” Project, which would install a 2000 Megawatt underwater electric cable to connect their power grids. In addition, energy cooperation has been the driving force behind the Greek-Cypriot-Israeli growing defence and economic cooperation. On the other hand Israeli- Turkish relations are also expected to be redefined due to the possibility of Turkey becoming an Energy Hub through which the Israeli and probably Cypriot gas will be transferred to the European Market. Turkey is the largest energy market in the region with increasing energy needs. Turkey, moreover, wants to diversify its suppliers in order to avoid over-dependence on Russia’s gas. Nevertheless, the problematic Israeli – Lebanese and Turkish- Cypriot relationships will pose an obstacle to further enhance cooperation in the region.

A short overview of the politics in the Region

Political situtation in the Eastern Mediterranean remains volatile. The conflict in Syria is intensified, while the refugee crisis is worsening. Russia and the US-led coalition did not manage to end up with a secure plan regarding next moves in the area. Furthermore, US- Russian relationships are going through a storm. German Minister of Foreign Affairs, Frank Walter Steinmeier said in an interview for Build that tension between Russia and US is rising and that the situation is much more dangerous compared with the Cold-War Era.

Turkey, after the coup attempt in July, is facing numerous challenges regarding both domestic and international politics. Relations with the US are in swamp and only recently, Turkey’s President, R.T. Erdogan, began an effort to normalize relations with Israel and Russia. With regard to the Cypriot issue, the Greek Cypriot side have stalled any initiative for a productive dialog over the territorial dispute. In this case the gas findings have triggered more tensions over sovereignty on the island.  Ankara and Nicosia have clashed over offshore gas exploration.Currently, diplomatic ties between the RoC and Turkey are absent. Cyprus is going through an economic crisis and the prospect of exporting gas would for sure help the country to get valuable economic resources to support its economy.

Exploitation and Transfer

Before any final decision is made and construction work commences, it must be assured that the energy project is commercially feasible. And that is because every private company involved with such a project aims to increase its profits. However, there are cases that decisions have been made to proceed with projects whose economic rationale was open to question, like the Russian-sponsored South Stream Pipeline.

In the case of gas, firms will only move ahead if sufficient volumes are available to be extracted at a reasonable cost. Then, if the gas is going to be exported, planned transportation routes should also be financially viable. However, politics have also their role in this procedure. Political issues may lend weight to the support of a particular pipeline project.

In the case of the Eastern Mediterranean there are numerous economic but also political issues that might hinder any development.

First of all, in Cyprus, the government cancelled initial plans to built an LNG processing facility at Vasilikos because of the failure to discover enough gas in offshore Cypriot fields. Initial estimates falsely indicated that the Aphrodite field holds as much as 200 bcm of reserves. The alternative plan, examined by the RoC government was to produce 8 bcm/year and export part of it through a new  underwater pipeline to Egypt where an LNG facility already exists. A second, but extremely expensive plan is to build a pipeline from Cyprus to Greece and then to the  European Market. This option is not only financially unfeasible but impossible due to the deep waters in the area.

With regard to the Leviathan bonanza, only a 40% of the possible 16 bcm/year would be available for export through underwater pipelines that are absent and probably difficult to build without Turkey’s and RoC’s rapprochement. Onshore pipelines through Lebanon is not an option for the Israeli Government as relations between the countries are hostile.

The most feasible solution for the gas reserves in the Eastern Mediterranean would be a pipeline from Tamar and Leviathan fields to Cyprus and then from Cyprus, through Turkey, to the European Market. The EU struggles to diversify its energy resources in order to avoid blackmailing from Russia, especially after the Crimean Crisis, as more than 60% of Europe’s energy demand is covered by Russian Gas, so the Commission is willing to support such a decision.

To conclude, an improvement in relations between Turkey – Israel and RoC would definitely give a solution to the energy issue and will  further US interests in the Eastern Mediterranean and could have beneficial results for the EU. In any case though it is inevitable that Turkey will move on from a transit state to an important energy hub in the region.

 

 

 

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