Volatile Energy Resources in the Eastern Mediterranean (7/25)     Print Email

By: Joseph Bebel, Washington, D.C.

Reunification remains a distant hope for the nation of Cyprus. But the recent collapse of reunification talks was particularly disappointing for those who hoped exploitation of new energy finds in the Eastern Mediterranean would push the island nation towards reconciliation. Cypriot Minister Neoklis Sylikotis had hoped that newly found resources would serve as “a catalyst for reunification.” However, as Professor Hubert Faussman from the Universtiy of Nicosia noted, instead the peace talks “became a victim” of the recently discovered resources.

In 2011, a rich deposit of natural gas was discovered off the coast of Cyprus. (See diagram below.) French company Total indicates that the “Aphrodite” gasfield, could contain up to five trillion cubic meters of natural gas. Aphrodite is one among several gasfields recently discovered in the Eastern Mediterranean. The addition of Aphrodite to Zohr (Egypt), Tamar (Israel), and Leviathan (Israel), pushes estimates to 2,000 billion cubic meters (bcm) of natural gas that could be harnessed from these newfound deposits. With the untapped potential of these deposits, there was optimism they could help solve the geopolitical flashpoint in the region—divided Cyprus

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Many hoped the new resources would help bring the country together. United States official Michael Leigh supported the notion that natural gas may provide an “incentive to Turkey to support the process.”

Due to the discovery of Zohr, Egypt is predicting self-sufficiency in natural gas by the end of 2018 and a restart in exports by 2020. High costs and overreliance on energy imports have had a crippling effect on Egypt’s economy. The new discovery should also facilitate much needed reforms in the energy sector to attract more international investors.

In the Middle East, Israel has already secured a deal with Jordan for $10 billion in natural gas and hopes are high that deals can be struck with other neighbors including Turkey, Egypt, and Lebanon. Thus, allowing Israel to pursue, as Prime Minister Benjamin Netanyahu puts it, the “great and revolutionary process” of normalization with Arab neighbors.

For the EU, the deposits represent a chance to improve its energy security. The EU relies on Russia for a third of its energy needs, prompting European Commissioner Miguel Arias Canete to declare the EU “far too vulnerable” in its energy security. With the EU consuming 426 bcm of natural gas in 2015, the new deposits promise a strong alternative to offset reliance on Russia.

Yet, despite this optimism, the ever-volatile Eastern Mediterranean is proving to be quite difficult. Reunification talks in Cyprus have collapsed. Head of the United Nations Special Envoy Espen Barth Eide said negotiations came “close, but not close enough.”

Since then, the new energy resources have become a source of contention. Greek PM Alexis Tsipras has argued that Cyprus is exercising its “sovereign rights” in accessing the newly discovered natural gas. However, Turkish President Recep Erdogan has warned energy companies that they “risk losing a friend in Turkey” if they assist Cyprus.

Additionally, hopes that Israel’s new finds will improve relations with its Arab neighbors need to be taken with caution. With the discovery of Zohr by Egypt, Israeli Energy Minister Yuval Steinitz worries that there will no longer be “a need for Israeli gas” in the region. Moreover, Lebanon could find similar deposits in the same Levant basin as Egypt. Lebanese gas expert Rabih Yaghi recently cited reports showing that there is a “substantial amount of oil and gas” in Lebanon’s offshore fields. If Lebanon were also to become a major player in this growing natural gas hub, it is doubtful that Israeli gas would have the same appeal.

Finally, exporting the natural gas to buyers in the EU will be problematic. In 2016, Italy, Greece, Israel, and Cyprus began plans to construct the EastMed pipeline. Natural gas would be taken from the Eastern Mediterranean reserves and then pumped through Cyprus to Greece and Italy. However, Turkish Foreign Minister Mevlut Cavusoglu has already promised Turkey would “take action” if Cyprus continues drilling for gas. Cyprus PM Tsipras responded that Greece was “ready to defend” Cyprus if needed. As geopolitical disputes between Cyprus and Turkey continue, Chief Executive of Israeli firm Eco Energy calls plans to export Eastern Mediterranean gas to Europe merely “a pipe dream.”

Another option is to export the gas through Egypt, a strategy that Cyprus supports. However, as a report from the European Council on Foreign Relations points out, “security concerns” and “authoritarian tendencies” push investment firms away from Egyptian energy. Additionally, widespread protests in Jordan against the energy deal with Israel has Egyptian officials worried they could experience the same backlash.

Joseph Bebel is an Editorial Assistant at European Affairs.