Global Risk Insights, by Alex Damiano (read on here)
The recent natural gas find in Egypt ensures the country’s energy security, but also alters the energy and geopolitical dynamics in the eastern Mediterranean.Over the past few years, the discoveries of hydrocarbons in the eastern Mediterranean have quietly led to strategic realignment among the regions actors, including Egypt, Israel, Cyprus, Turkey and Greece.
The question now is whether ENI’s Zohr field discovery in Egypt will improve cooperation, or heighten competition, among eastern Mediterranean gas producers.
Following discoveries in 2009 and 2010 by Texan Noble Energy, Israel laid claim to the Tamar field, holding 10 trillion cubic feet (tcf), and the Leviathan field, holding 22 tcf. The finds ensure Israel’s energy security for some time; however, delays due to political wrangling have meant that a gas plan has yet to be established and exportation unrealized.
In 2011, the Aphrodite field in off the coast of Cyprus was discovered and estimated to hold about 4 tcf. For a country dependent on services and tourism, this was a welcome opportunity for energy security and diversification.
The Zohr gas find will likely scuttle Cypriot and Israeli plans to sell offshore gas to Egypt, less than a year after both signed preliminary agreements to do so. The Zohr field is the largest ever in the Mediterranean at 30tcf, with a total capacity potential estimated at 30 billion cubic meters (bcm). An additional 2-3 bcm is expected to cover domestic consumption.
Before the 2011 uprising, Egypt was a net exporter of natural gas, supplying the likes of Israel, but has shifted to a net importer in recent years due to rising consumption and depleted natural gas output. Aside from ensuring Egypt’s energy security, the discovery could turn Egypt into a regional natural gas hub.
Geopolitics at Sea
The hydrocarbons bonanza has led to closer cooperation in the Mediterranean. Multiple partnerships have emerged including Israel-Cyprus-Greece, Egypt-Israel-Cyprus and Cyprus-Greece-Egypt, all enhancing energy and security ties through agreements and joint naval exercises.
Indeed, in 2014, Cyprus, Egypt, and Greece held a tripartite summit meeting, culminating in the signing of the Cairo Declaration, enhancing cooperation on multiple fronts, such as energy, security, tourism, and economic development.
Apart from common interests in economic development and regional security, these actors all share poor relations with Turkey. Once strong partners, Israel-Turkey relations soured after the 2010 Mavi Marmara Gaza flotilla raid incident.
Egypt-Turkey relations deteriorated following the military ousting of former President Morsi, given the political and ideological relationship between the Muslim Brotherhood and Turkey’s leading AKP party.
Israeli-Egyptian relations have improved since Morsi’s departure as the new regime and Jerusalem both seek to contain radical Islam.
Turkish apprehension of an eastern Mediterranean gas hub between Israel and Cyprus has increased, given their own ambitions to become a transit hub to Europe. Indeed, Turkey ramped up naval exercises and in 2014 sent their own exploration vessel, Barbaros, to disputed waters, accompanied by Turkish warships.
Any sort of gun boat diplomacy should be deterred, however, given the improving relationship between Egypt, Cyprus, and Israel with Russia. Russia has conducted multiple naval exercises in the Mediterranean, as well, and has cooperation agreement with Cyprus to use its port and bases in cases of emergency.
All about transit
With their significant natural gas finds, Egypt, Cyprus, and Israel all look to become net energy exporters, while Turkey and Greece want to benefit as conduits for the European market. So, post Zohr field discovery, what options remain?
The easiest and cheapest option for both Cyprus and Israel is to create a pipeline to Turkey, which would act as a transit hub to reach the European export market. To date, politics have precluded this as a solution to the Cyprus conflict as a prerequisite, while any pipeline from Israeli fields would have to pass through Cyprus’ EEZ.
However, the gas finds have catalyzed unification efforts on the island, as the latest rounds of talksbetween the Greek-Cypriot and Turkish-Cypriot leaders look promising. And Israel will continue to seek ways to normalize relations with Turkey.
Given Turkey’s domestic turmoil and Syrian involvement, President Erdogan could divert attention and score a quick win here. In this scenario, Turkey can improve relations with its neighbors, establish itself as an energy transit hub, and remove obstacles to further European integration.
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