Burak Bekdil | Nov 5, 2018 | 0
Med Natural Gas Find Brings Conflict Dividends #CyprusGas
The dream was that the discovery of gas in the Eastern Mediterranean would bring about peace and cooperation in an unstable region. The reality is that greater resources means more disputes.
Last month, a long-awaited energy deal and a potentially significant hydrocarbon find off the coast of Cyprus sparked excitement over the prospect of a new gas hub on Europe’s borders, and the associated stability benefits that could bring.
But what should have been good news for the region’s economies — and the European Union’s mission to diversify its energy supply — quickly fell victim to the region’s torturous geopolitics.
On February 19, Israel and Egypt signed a multi-billion-dollar agreement to export Israeli gas to the Middle East’s most populous nation. Two weeks earlier, Italian energy company Eni announced a “promising” gas find in the waters surrounding Cyprus. And in January, Cypriot President Nicos Anastasiades met with Greece’s Alexis Tsipras and Israel’s Benjamin Netanyahu in Nicosia to discuss plans for a pipeline linking their countries.
Large quantities of natural gas are thought to lie below the Eastern Mediterranean seabed.
“The discovery of important hydrocarbon reserves in the Eastern Mediterranean can serve as a catalyst for peace, stability and cooperation in the region,” the three leaders said in a joint statement after the summit.
Then the trouble began. Last month, tensions escalated between Turkey and Cyprus when Ankara sent its navy to block Greek Cypriots from exploring for gas. Further south, Israel and Lebanon are engaged in a war of words over a gas deal in disputed waters.
Large quantities of natural gas are thought to lie below the Eastern Mediterranean seabed. In the past decade, Egypt and Israel have both discovered vast reserves.
Cyprus already found a smaller field in its waters — but Eni’s new gas field could be a game-changer for Nicosia’s dreams of transforming the island into an energy hub.
Yet getting access to any riches hidden in the area’s waters is fraught with difficulty, as Turkey is determined to prevent Greek Cypriots from exploring for gas.
Ankara, which supports the Turkish breakaway state in the north, claims that part of Cyprus’ maritime zone belong to Turkey or Turkish Cypriots. (Turkey is the only country that recognizes Northern Cyprus.)
“Turkey will not step back from its current position … unless any discovered reservoir is jointly developed and new exploration activities are jointly decided by the two communities on the island” — Necdet Pamir
On February 11, the Turkish foreign ministry condemned Cyprus’ “unilateral” exploration activities and accused the Greek Cypriot government of “acting as though it were the sole owner of the island.”
The same day, a Turkish military ship blocked the Saipem 12000, an Eni drilling vessel, off Cyprus. Two weeks later, the Eni ship’s course was once again intercepted by the Turkish navy — angering the Cypriot government, which accused Turkey of issuing “threats of violence” against Eni’s ship.
Brussels was quick to side with Cyprus, which became an EU member in 2004. Last week, European Council President Donald Tusk underscored EU support for Cyprus to “explore and exploit its natural resources.”
The EU considers developing a gas hub in the Mediterranean key to diversifying its energy sources and reducing its dependence on Russia, which supplies roughly one third of the bloc’s gas.
Tusk indicated that Ankara’s actions had prompted EU leaders to reconsider whether to hold a summit with Turkey in Varna, Bulgaria, planned for this month.
Yet the Turkish government is unlikely to back down. Earlier in February, President Recep Tayyip Erdoğan warned Cyprus not to “overstep the mark” and said that Turkish warships would “do whatever is necessary.”
“Turkey will not step back from its current position … unless any discovered reservoir is jointly developed and new exploration activities are jointly decided by the two communities on the island,” said Necdet Pamir, who chairs the energy commission of Turkey’s opposition party CHP.
The prospect of gas discoveries has also turned up the heat elsewhere in the Eastern Mediterranean, inflaming tensions between Israel and Lebanon as well as Egypt and Turkey.
In late January, Lebanon signed an agreement with a consortium comprised of France’s Total, Russia’s Novatek and Italy’s Eni. The deal allows the three companies to explore for gas in an area also claimed by Israel.
In response to the deal, Israeli Defense Minister Avigdor Lieberman accused Lebanon of “provocative conduct.”
Lebanon’s Hezbollah movement wasted no time stoking tensions, denouncing Lieberman’s words as “a new aggression” and vowing to “decisively confront any assault on our oil and gas rights.”
A week later, Turkey’s Foreign Minister Mevlüt Çavusoğlu enraged the Egyptian government when he questioned the validity of a 2013 border agreement between Egypt and Cyprus, which allows for gas exploration in the area.
Tareq Baconi, a fellow at the European Council on Foreign Relations focusing on oil and gas, believes that the regional flare-up was “inevitable” given the presence of resources.
He was skeptical about claims that gas could become a driver for peace in the region, as suggested by the leaders of Greece, Israel and Cyprus.
“If Exxon says ‘we do not want any escalation and we won’t do any exploration here,’ all hopes of Cyprus becoming a gas hub will break down” —Sohbet Karbuz
Rather than acting as a stabilizing force, Baconi said, the gas discoveries “just aggravate political disputes that remain unsettled — which is, whose waters are these really.”
But geopolitical rivalries are not the only obstacle to transforming the Eastern Mediterranean into a gas-exporting hub.
“Many people would say that the political issues are actually irrelevant because those gas deals aren’t commercially viable,” said Baconi, noting that the region’s gas exports would be too expensive to compete globally.
Neither Israel nor Cyprus has the infrastructure necessary to export gas to Europe. Gas reserves discovered until now — with the size of Eni’s recent find still uncertain — are too small to draw sufficient investment, Baconi added.
Greece, Italy, Cyprus and Israel agreed in December to support the construction of a pipeline connecting the Eastern Mediterranean’s newly discovered gas fields to Europe.
Yet many analysts doubt that this project is feasible, given the enormous cost and technological difficulty involved.
However, the potential difficulties of exporting Eastern Mediterranean gas have not stopped energy companies from exploring in the region — at least for now.
While Eni’s Saipem 12000 has withdrawn from Cyprus’ waters since being intercepted by the Turkish navy, U.S. energy giant ExxonMobil has sent two exploration ships to the island.
Sohbet Karbuz, who oversees the hydrocarbons division at the Paris-based Mediterranean Observatory for Energy, believes that Turkey’s reaction to the Exxon ships’ arrival, expected in a few months, will be crucial to Cyprus’ future as an energy hub.
He wonders whether Ankara will confront Exxon — and if Exxon would subsequently retreat, signaling to the rest of the industry that exploration in Cyprus is too risky an undertaking.
“That’s the big question mark, what will Exxon do?” said Karbuz. “If Exxon says ‘we do not want any escalation and we won’t do any exploration here,’ all hopes of Cyprus becoming a gas hub will break down.”
Originally published in https://www.politico.eu/article/natural-gas-mediterranean-cyprus-turkey-more-gas-more-problems/