By Costanza Concetti. The new found hydrocarbon resources in the Mediterranean may represent the pretext for long-awaited regional integration.
With Eni’s discovery offshore Egypt of the Zohr Field, whose 850 bcm of lean gas make it the largest gas trove in the Mediterranean to date, the Eastern Mediterranean has officially become a viable supply basin for the needs of gas-hungry Europe. The collective 3,500 bcm of natural gas reserves found offshore Cyprus, Lebanon, Israel, Gaza, and Egypt, and a predicted 10,000 bcm more lying in the ground, will predictably challenge the previous monopoly held by current suppliers like Russia, Algeria, and Nigeria. Contemporarily, as previous historical importers set out to become natural gas exporters, neighboring countries that harbored frosty relationships are already being brought together in the interest of effectively exporting and marketing the newfound resources. The Eastern Mediterranean gas reserves and their export may therefore transform the geopolitics of energy that currently connect Europe, Russia, Turkey, the Middle East, and the African continent in a complex web of interdependencies.
A common trend in the basin is that of thawing relations between Israel and the countries who could help the export of Israeli gas. Between 2009 and 2010 Israel discovered two major gas fields offshore its coasts, Leviathan estimated around 500 bcm, and Tamar at circa 280 bcm, thus boasting the second largest reserves in the region. Thanks to the discoveries of the Israeli fields and the most recent Egyptian Zohr, Egyptian-Israeli relations may be said to be at their highest level in history, as the two countries have found mutual beneficial economic opportunities in gas. Cairo and Jerusalem may be close to reaching a multi-billion dollar deal which would unblock the export of Israeli gas to Egypt. Cairo needs the gas until Zohr is fully developed and Israel could greatly benefit from the large export infrastructure boasted by Egypt, which is now remaining idle. Similar dynamics have been created by the discovery in 2011 of Aphrodite, a 190 bcm field offshore Cyprus. Both Israel and Cyprus are looking to export their gas, however the kind of infrastructure development needed to do so calls for significant, long-term investment, the kind more easily done in cooperation than by a single actor. It is no surprise then that Israeli-Cypriot relations, before 2011 almost non-existent, have thrived in the five years since the discovery of Aphrodite, with the Cypriot President Christofias visiting his counterpart in 2011, and Netanyahu becoming the first Israeli Prime Minister to visit Cyprus in 2012. The Cypriot Navy is said to be planning to buy Israeli high-tech offshore patrol vessels to guard its exclusive economic zone, for Nicosia and Jerusalem both want to divide the Mediterranean seabed in areas of exclusive rights of extraction – ambition that they also share with Athens. Despite historical pro-Arab foreign policies used by Greece to protect Greek minorities in Egypt, ensure import of cheap Arab oil, and score the support of Arab countries in their dispute against Cyprus in the United Nations, Athens is indeed also finding common grounds with Jerusalem when it comes to Eastern Mediterranean gas.
The Eastern Mediterranean gas reserves and their export may therefore transform the geopolitics of energy that currently connect Europe, Russia, Turkey, the Middle East, and the African continent in a complex web of interdependencies.
After years of thawing relations between Israel and Greece as a result of the rise of Erdogan’s AKP party in Turkey, the two countries are now finding an opportunity for real cooperation in gas. Jerusalem and Athens find themselves on the same side of the dispute over the delimitation of the hydrocarbon-rich Eastern Mediterranean. They both favor the seabed division into exclusive economic zones of 200 nautical miles and both requested that the 1982 UN Convention of the Law of the Sea be applied to the exploration and exploitation of the Mediterranean. Furthermore, Athens stands to greatly benefit from the successful development of Israel’s Tamar and Leviathan fields because its shipping industry could play an important role in transporting gas liquefied in Israel. Similarly, the construction of the East Mediterranean Pipeline, inserted by the European Commission in its list of projects of common interest, and envisioned to bring Israeli and Cypriot gas to Europe via Crete, could bring large profits to the country. The European Union indeed remains the most likely long-term end buyer of Eastern Mediterranean Gas even if the newfound resources have the potential to fuel multiple markets. Despite the recent reduction in its demand growth for this particular fossil fuel, the EU maintains a large pipeline network, which makes it effectively dependent on gas, a strong political will to diversify its energy risk basket away from Russia, and current large infrastructural projects offering possible input points for new gas injections. After all, the recent downward trend reflected more the combination of overly subsidized renewable intermittent capacity and low carbon prices than a real falling in regional energy demand.
Although the discovery of Eastern Mediterranean gas has produced the positive trends just exposed, like all natural resources in contestable territory the offshore gas is also creating some regional tension. Israeli-Lebanese relations have for example been seriously strained by a dispute regarding approximately 330 square miles of seabed in an area that is potentially rich in hydrocarbon resources. When in December 2010 Jerusalem chose to sign a bilateral agreement with Nicosia to officially delimitate its waters, Beirut took it as a serious affront and accused both countries to violate Lebanon’s maritime rights. This meant for Cypriot-Lebanese relations to worsen and for the 2007 delimitation agreement between the two countries to be voided by the new Lebanese government. Moreover in 2011, during the televised event for the fifth anniversary of the 2006 war with Israel, Hezbollah’s secretary general Hassan Nasrallah directly warned Israel against ”extending its hands” to Lebanese waters. Such a statement, seen by Israel as a sign that Lebanon may use its arsenal of missiles and rockets to harm its gas infrastructure, was met with Jerusalem’s purchase of at least two patrol vessels, unmanned aerial vehicles, and remote-control gunboats armed with missiles able to reach Lebanese land. The already shaky political relationship between Beirut and Jerusalem is therefore more precarious than ever but at least the military balance of power seems to have stabilized. Contemporarily, Cyprus’ warming relations with Israel and the economic and diplomatic strength that the island state is deriving from its newfound offshore resources are seriously alarming Ankara. As a matter of fact, a strong Cyprus is an unacceptable scenario for the neighboring country. This has manifested in actions like Ankara entering Cypriot waters in 2014 with the declared intention of collecting seismic data, which Nicosia considered a violation of its sovereign rights. This particular instance was particularly concerning if considering the fact that Cyprus had already licensed the area entered by Turkish vessels to foreign energy companies. Turkish-Israeli relations have also been worsened by disputes over Mediterranean gas. The Turkish government is concerned about the warming in relations between Cyprus and Israel, something it had not predicted, especially because it fears that energy cooperation may lead to similar collaboration in terms of security management, trade and diplomacy. Ankara refuses to accept the delimitation of the Mediterranean in exclusive economic zones and has threatened Israel that it would intervene to stop it from exploiting land that it does not have a right to. Jerusalem takes the threats seriously and has positioned Israeli fighter jets in the Cypriot airbase of Paphos, which enjoys vicinity to Ankara. Despite all of this purported tension, a serious conflict between Ankara and Nicosia or Ankara and Jerusalem is ultimately unlikely. Turkey strongly benefits from its role as a regional transit state between gas-rich east and gas-hungry west and destabilizing the eastern Mediterranean would make investors in its precious energy infrastructure dangerously weary.
New Routes: Pipelines
When it comes to new export routes, Eastern Mediterranean gas may be directed to a number of markets through several different paths. Israel is for example looking to export its gas to Europe by triangulating with Cyprus and Greece and constructing an underwater pipeline, which would bypass Turkey and land in Greece through Crete. The feasibility study of this pipeline, preliminary called the Eastern Mediterranean Pipeline is still underway, but many fear that the deep water it would need to cross would create too insurmountable of an obstacle for the project to come online. A more probable export route for Israeli gas in the short term is that to Egypt thanks to the exploitation of reverse-flow capacities of the pipeline that used to bring Egyptian gas to Israel. As mentioned above, the agreement for this export is underway and the flow should maintain for a few years, thus quieting Egyptian domestic demand while the country looks to export northward. Moreover, Israel is also looking to export its gas to Jordan through what seems to be the only new pipeline in the Mediterranean set to become operational in the near future. The Tamar pipeline will cross the Dead Sea and bring gas from the Tamar reservoir to Jordan as early as 2017. This pipeline is strategic for Israeli-Jordanian relationships, effectively laying the basis for cooperation between the two historical adversaries. For what regards pipeline exports from the Levant basin through Turkey, BP’s recent buy of 10% of Eni’s shares in the Zohr field has increased the still slim possibility that these may occur. If Egyptian gas were to flow to the Tamar Pipeline, BP would have to build only a few miles of a new underwater pipeline connecting Israel to Cyprus, and then pass through Turkish territory to reach Europe. Compared to the Eastern Mediterranean Pipeline that Nicosia, Athens and Jerusalem are trying to push for, this pipeline would be much less complicated in terms of engineering, never crossing deep waters and extending for only a fraction of the length. However, the political alliances and antipathies explained above certainly make the project complicated. Even if not likely, the possibility of such a pipeline to be built remains, especially since BP has successfully helped coordinate the construction of the political marvel that will be the Southern Gas Corridor, where a myriad of opposing interests are all represented at the investor level. At least in the near future, what is more likely to happen is that Eastern Mediterranean gas will be exported through LNG unless it remains in the region. Currently the country that boasts the largest LNG infrastructure among those who have found gas in the basin is Egypt, which hosts three LNG facilities, one in Idku, one in Damietta, and one in Port Said. For this reason, in early 2015 the Athens, Nicosia, and Egypt agreed to explore the possibility of an undersea pipeline that would bring Aphrodite gas to t Idku and Damietta by early 2018. From here, the gas could enter the spot market as LNG and travel on large vessels to end consumers. Israel, Cyprus, and Greece are all interested in possibly pursuing LNG exports outside of the Egyptian terminals, but this would imply serious investments in costly facilities and would only become a reality in the medium-far future. For example, Nicosia is trying to convince Israel to pull together their gas reserves and share the capital cost of a LNG facility on Cypriot territory. Negotiations are underway but the plant faces political and financial obstacles as well as engineering hurdles for the LNG terminal would need to be constructed as a floating facility. As mentioned at the outset, the Mediterranean is geographically positioned in the strategic crossroad between the Levant, Northern Africa, and Southern Europe, effectively functioning as a connector of multiple markets with changing energy demands. For this reason, any discovery made in this basin implies serious opportunities in terms of intercontinental connection and integration. Despite some concerning political dynamics de facto only worsening already unsteady relationships, the new found hydrocarbon resources in the Mediterranean may represent the pretext for long-awaited regional integration. Moreover, an increased import of natural gas from Northern Africa may offer the momentum necessary to actualize the North-South energy connection that many among politicians and energy practitioners have been anticipating.