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The gas quandary: it’s not so much the find but the route

Crew members of an amphibious landing ship tank after a landing drill during Turkey's Blue Homeland naval exercise

Turkey, Israel, Egypt and Cyprus – conflicting political aims and practical difficulties are the stumbling block to extracting East Med gas

By Elias Hazou

A lot has happened over the past fortnight: Turkey flexed its muscles, mounting the largest naval drill in its history in the Aegean and the eastern Mediterranean, regional superpower Israel talked up the mooted East Med pipeline, vowing to protect it with its navy, while Cyprus announced ExxonMobil’s discovery of a significant gas reservoir off the island. Are tensions over resources flaring in this corner of the globe?

Media coverage in Cyprus certainly hasn’t helped. The narrative pushed on television screens – accompanied by the stock menacing soundtrack – went something like this: Ankara is going hell for leather in a bid to stamp its mark on the eastern Mediterranean, potentially bringing it into confrontation with Cyprus’ partners Israel and Egypt.

In reality, the state of play is far more nuanced. To help unpack the geopolitics, the Sunday Mail spoke to two analysts.

“On the one hand the media coverage of the Turkish exercises was indeed hyperbolic due to the traditional Greek and Greek Cypriot threat perceptions, which is exactly what Ankara aimed for, and of course because of how the media seek to boost their ratings,” commented Zenonas Tziarras, a geopolitical analyst.

“On the other hand, one should not underestimate the symbolic and essential statement that Turkey wanted to make through the ‘Blue Homeland’ drills. In a nutshell, Turkey is putting its naval forces at the centre of its external activities – in conjunction with military bases abroad, economic and diplomatic activity – and moves to a new stage in its foreign policy where the expansion of its sphere of influence even beyond the eastern Mediterranean is actively sought.”

He added: “Moreover, Ankara is sending the message to Russia and the US that it is indispensable for their interests in the region and that they need to be treating it on equal terms, instead of imposing their will, if they want to get things done. In other words, Ankara wants the world to recognise its new self and new role.”

Turkey wanted to make a symbolic and essential statement through the ‘Blue Homeland’ drills analysts say

Tziarras, a researcher with PRIO Cyprus Centre, said one should definitely not discount Turkey drilling inside Cyprus’ Exclusive Economic Zone (EEZ). But it depends.

“No one can know for sure whether Turkey will actually drill in Cyprus’ EEZ. However, Turkish officials have warned of the possibility multiple times, and if there’s one thing we should learn about the Turkish foreign policy of recent years is that it rarely bluffs.

“From this perspective, a Turkish drilling offshore Cyprus is highly likely. The two factors that will make this scenario even more likely are: the absence of a negotiations process, and further progress in the Republic’s energy programme. Turkey acts methodically and it thus keeps the option of drilling both in the north and south in its toolbox, in case it decides to follow a strategy of escalating pressure. If drilling in the north doesn’t have the desirable results for Turkey (e.g. inclusion in energy deals, agreement on co-exploitation with Turkish Cypriots, etc.), drilling in the south will become more probable.”

What does Turkey really want? According to the analyst, Ankara seeks to satisfy its domestic energy needs and at the same time become a hub that will transport energy from the east and south to the west. Therefore, in the long-term, participation in the energy architecture of the eastern Mediterranean is essential.

“The above goal is also part of its broader vision of becoming a trans-regional power, if not a hegemon, which entails the ability to set the geopolitical agenda and dictate the terms of the game – this includes its revisionist claims over maritime areas in the East Med. Control over natural resources and energy exportation routes would be instrumental to that end.”

As Cyprus and its eastern Mediterranean synergies are an impediment to these goals, Turkey is trying to circumvent the obstacles and impose its will using mostly coercive means as it is not willing to compromise.

President Anastasiades and Egypt’s Abdel Fattah al-Sisi – Cyprus has signed a framework agreement with Egypt for a pipeline from Aphrodite

But, stresses Tziarras, Turkey would be satisfied with multiple outcomes: a deal on gas co-exploitation between the Republic and the Turkish Cypriots, not necessarily in the context of a comprehensive solution to the Cyprus Problem; inclusion in the Eastern Mediterranean Gas Forum; a delay in Cyprus’ energy programme and the development of separate collaborations with Israel and/or Egypt (provided that political relations are normalised); a solution to the Cyprus problem that would serve its strategic interests, including its energy interests and perhaps a deal between the Republic and Turkey on natural gas.

What of the apparent contest within the Cyprus-Israel-Egypt triangle? Media clickbait notwithstanding, on a political level Egypt and Israel do not appear to be antagonists in some zero-sum game of hydrocarbons arm-wrestling.

Certainly the proposed East Med pipeline – vigorously pursued by Israel – and the piping of Cypriot gas from Aphrodite to Egypt are in competition with one another. But it doesn’t have to be this way, said energy expert Charles Ellinas.

Israel and Egypt are indeed seeking to export their substantial natural gas reserves, but the two nations are not at odds with each other over politics.

It is just that the two countries are – for practical reasons – on different tracks.

Cairo already has the infrastructure in place – two liquefaction plants – to treat and export its gas to markets.

During a recent gas conference hosted by Egypt, the country’s petroleum minister made it clear that his country aspires to become the regional trading hub for gas, and will not wait for others to catch up.

Despite hostility from the local populace, Egyptian leader Abdel al-Sisi as well as the political elite in Cairo are not averse to importing Israeli gas. But that endeavour – building a pipeline – would take time, and Egypt has more than enough gas as it is.

On their side, the Israelis are desperate for an export route for their own gas from the rich Leviathan reservoir. That is why – absent a deal with neighbours Egypt – they are driving hard to make the East Med pipeline happen.

President Anastasiades and Israel’s Benjamin Netanyahu – Israel is vigorously pursuing the East Med pipeline

In turn, and for technical reasons alone, the proposed East Med would leave Egypt out of this particular equation. The depth at which the East Med pipeline would be laid involves high pressures, so the conduit has to built with a smaller diameter, to withstand those pressures. In turn this limits the pipeline’s capacity. In short, there’s no ‘room’ for Egyptian gas, only for Israeli and Cypriot gas.

Regardless of the foregoing, the East Med is a political pipe dream, Ellinas says. It may get much lip service from politicians in Israel and Cyprus, but the construction costs involved would render the price of the gas uncompetitive in European markets.

“That’s why you haven’t seen any energy companies backing the project. Take Noble for instance. Though desperate to sell their Leviathan gas, they haven’t said a word in support of the East Med. And for good reason: they can’t find any buyers.”

Last year, Israel’s latest licensing round for gas exploration attracted scant attention. In the end, only two companies – India’s ONGC and Energean – were awarded concessions. No oil majors bothered to bid – again, because they see no viable export route were they to discover gas offshore Israel.

Which leaves a pipeline from Israel’s offshore fields to Turkey the sole remaining alternative. But the project is fraught with tensions between Ankara and Tel Aviv over Gaza, and more recently the shifting situation in Syria.

Still, says Ellinas, even if politics were not an issue, an Israel-Turkey pipeline is likewise problematic financially, as the end-product wouldn’t be able to compete in markets against Russian and Azeri gas.

As for Cyprus, in September 2018 it signed a framework agreement with Egypt for a subsea pipeline to carry natural gas from Cyprus’ Aphrodite field to Egypt. A few weeks ago, the Cypriot cabinet took another step forward by rubberstamping the September deal.

According to an item in Haaretz published on February 27, in doing so Cyprus went “behind Israel’s back”, ignoring the latter’s claims to a portion of the Aphrodite reservoir, a small part of which cuts into the Israeli EEZ.

On the surface, it might seem that Nicosia is double-dealing: talking up the East Med pipeline while at the same time concluding an agreement to export to Egypt.

But as Ellinas notes, Cyprus likewise cannot sit idly by: talks between Nicosia and Tel Aviv for a unitisation deal have dragged on for years. This week in parliament, when asked by MPs, energy minister Giorgos Lakkotrypis could only say that talks with Israel are “ongoing”.

Ellinas, who is also Senior Fellow with the Global Energy Centre of the Atlantic Council, emphasises that despite the incendiary rhetoric coming out of Cairo and Ankara – more often than not for public consumption– the two nations are not locked in a geopolitical struggle vis a vis hydrocarbons.

“No, and they are certainly not squabbling over Cyprus. In fact Egypt and Turkey continue to trade. Only last week two shipments of liquefied natural gas arrived in Turkey from the LNG plant in Idku, Egypt. Turkish businessmen often buy Egyptian LNG on the spot market.

“Nor is France stationing its navy in Cyprus in order to ‘protect’ us from the Turks. That is just low-hanging fruit, nonsense served up by a section of the media here.”



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