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Cyprus Energy

Gas future hinges on regional cooperation, and Cyprus solution

IF COUNTRIES in the Eastern Mediterranean do not resolve their political differences and learn how to share infrastructure, most of the natural gas in the region will stay in the ground, a top US energy official has warned.

He also said he hoped Turkey understood the critical element of energy discussions when it came to the Cyprus issue because wider plans could not proceed without a political solution to the island’s division.

US Special Envoy for International Energy Affairs Bureau of Energy Resources, Amos Hochstein, replying to questions during a joint House subcommittee in Washington, said the future he sees for the region includes new and old pipelines connecting Israel’s offshore resources to Jordan, Egypt, Turkey, and the Palestinian Authority, and Cypriot gas exports to Turkey and/or Egypt.

The latter would allow Egypt to satisfy its own power needs and export surpluses to international markets via existing, but now idle, LNG terminals, Hochstein said.

All of this was a ‘top foreign policy priority’ for the US, he said.

“The success of all these plans however hinges on cooperation. Countries will save billions if they share infrastructure and market access. If they don’t share those resources, most of the gas will have to stay in the ground,” he added.

“In order to be able to realise the economic benefit of energy security from the normalisation you have to have an agreement on Cyprus because the pipeline from Israel to Turkey would go through the EEZ [exclusive economic zone] of Cyprus.  And I truly hope and we believe that Turkey understands the critical nature and the strategic nature of the element that is going to be added in on the Cyprus discussion, that is energy,” said Hochstein.

The US official expressed the belief that the Eastern Mediterranean remained an underexplored and underdeveloped area, noting that he expects that significant discoveries will continue to be made there. However, the market was still looking for validation that historic political differences will not get in the way of investment and development, said Hochstein.

Asked if he believed that Turkish President Recep Tayyip Erdogan was positively contributing to the settlement of the Cyprus problem being aware of the importance of the energy issues, Hochstein said that energy affairs were not a substitute the settlement of long-standing political issues or differences.

He said however, that they provided motive and could work as a catalyst.

“I believe that countries in the region understand the benefits that will come up from the energy security and welfare, if a Cyprus settlement is found,” he said.
“I don`t know if it will be found, but it is clear for me that everyone in the region understands the connection with regard to the benefits for all parties, he noted, adding that this is why this period is crucial.”

He added that new resources would allow Turkey to diversify its heavy dependence on a small number of suppliers and use its extensive pipeline network to reach Europe as well.
Hochstein expressed US support for the third licensing round for offshore exploration in Cyprus` exclusive economic zone and said he was in contact with Cypriot energy minister Giorgos Lakkotrypis and other Cypriot ministers on a weekly basis to see how the US could be a help in supporting Cyprus.

“We strongly support the bulk of Cyprus’ rights to develop natural resources in its own turf, we have continuously when there have been any obstacles to them worked to clear that and to make sure that they and everybody understands the US position,” Hochstein said.  “We support American companies and international companies in working in all the blocks that have been tendered this far. We supported the third round that was announced just a few weeks ago and was so successful.”

The gas discoveries offshore Cyprus, Israel, Egypt, and potentially Lebanon had already redefined regional relationships and would  continue to be a catalyst for increased economic and political cooperation through interconnection and integration.

For example, many credit regional energy development for the deepening of the relationship between Israel and Cyprus, Hochstein added, noting that the successful exploration, production, and export of the natural gas resources in the Eastern Mediterranean would require exactly the political cooperation and economic integration that the US has long supported in the region.

“This remains a top foreign policy priority for the United States, which is why I have spent a significant amount of my time devoted to these opportunities, and why engagement by Vice President [Joe] Biden and Secretary [John] Kerry on these issues has been so robust,” Hochstein said. “Clearly energy will not solve the political differences in the region but it can provide incentives to accelerate political accommodation and encourage compromise.”

Chairwoman of the Subcommittee on the Middle East and North Africa Ileana Ros-Lehtinen Israel and Cyprus have been at the centre of these discoveries and have worked together in an effort to take advantage of these resources, but there are still some hurdles slowing down progress, she noted.

“It is true that energy has emerged as the key incentive that can help resolve the Cyprus problem and end Turkish occupation of the northern part of Cyprus. We have yet to see the tangible contribution from Ankara regarding Cyprus reunification, an issue that is of utmost concern to this committee,” she said.

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