THE EUPHORIA surrounding the gas find announced by ExxonMobil on Thursday was understandable to an extent. It was a piece of good news even though the discovery was nothing spectacular, the quantity being nowhere near that of Egypt’s Zohr or Israel’s Leviathan gas field. The discovery announced was between 5.5 and 8 trillion cubic feet, and according to some papers, it was estimated to be worth $35 billion, which was a rather premature forecast considering that nobody knows what the price of natural gas will be when it is eventually extracted, if it is extracted. It is a significant amount of gas, but to put a value on it seemed rather pointless, considering the exploration data has not yet been properly assessed.
Although decisions of companies in the oil and gas industry are always changing, influenced by a variety of external factors, the basics were encouraging. This was a significant find, the biggest deposit in the world discovered in the last two years, said energy minister Giorgos Lakkotrypis, who felt duty-bound to put a positive spin on the news, and big enough to cover the country’s energy needs for the next 200 years. On the minus side, the quantity is not big enough to make a liquefied natural gas terminal financially viable, but this could change as Exxon Mobil plans more drilling in Block 10 some time next year. What is important for now is that after the gas find, the oil giant considers there are good prospects in the Cypriot EEZ.
Reading political significance into the find and the presence of ExxonMobil, however, seems a bit far-fetched. One newspaper wrote on Friday that the find at the Glafcos gas field “now links the Cypriot EEZ with powerful financial and geopolitical interests of the US”, the implication being that this would act as a bulwark against any possible act of aggression by Turkey. The reasoning is that Turkey would not dare try to intimidate or bully a giant US oil company that is well connected with the US administration, as it had done in the case of Italy’s ENI a year ago. On the surface, this seems a rational evaluation, although it is based on the simplistic assumption that US foreign policy was dictated by the business interests of ExxonMobil.
Yet the US policy regarding Cyprus’ hydrocarbons has not changed. On the same day that the Glafcos gas find was announced, US Deputy Assistant Secretary at the State Department Matthew Palmer was quoted, during a visit to Athens, as saying: “We hope the development of hydrocarbons in Cyprus would proceed in a way that would act as an incentive for all those that want a settlement. We also support the fair distribution of the revenue from the exploitation of the hydrocarbons, within the framework of an overall settlement.” He also urged “restraint, responsibility and the avoiding of provocations by all those involved in the Cypriot EEZ”, which was directed at Turkey.
In short, the policy of the US in relation to hydrocarbons in Cypriot EEZ has not changed, as it has been suggested. Given this, is it not also a possibility that the State Department might influence the decisions of US companies so that they serve the strategic and foreign policy interests of the US? In the Cyprus case, ExxonMobil may be advised by the State Department to put its plans for the Glafcos gas field on hold until there was, if not a settlement of the Cyprus problem, some agreement between Cyprus and Turkey. It is rather naïve to think the US would sacrifice its relations with Turkey for 8tcf of natural gas, which for ExxonMobil is not exactly a big find.
Another factor ignored is that the licence for Block 10 is held jointly by Exxon and Qatar Petroleum, the state-owned company of Qatar which is one of Turkey’s closest allies. In fact there has been speculation that the joint bid was made in order not to antagonise Turkey that would have received some assurances by its Qatari friends. Finally, could we ever feel secure that Turkey’s unpredictable President Tayyip Erdogan will not cause problems in our region that affect our energy plans because a US company has an interest in one block. He could cause instability and frighten away most companies. Last week’s launch of what Turkey described as the “largest navy drill in its history”, could have been meant as a warning or message.
This brings us back to what has been evident all along and should temper the euphoria generated by the government and the media this week. Without an agreement on the Cyprus issue or at least an understanding with the Turkish side on the exploitation of hydrocarbons, it is extremely difficult to see how we will ever cash in on the discovery of deposits we are so eager to celebrate.