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Risks Posed by Competing Claims to Eastern Mediterranean Oil and Gas Resources

NOVANEWS
JONATHAN GORVETT

(L-r) Greek Prime Minister Alexis Tsipras, Cypriot President Nicos Anastasiades and Israeli Prime Minister Binyamin Netanyahu shake hands following a Jan. 28, 2016 press conference at the Presidential Palace in Nicosia. The three had met to discuss plans for the EastMed pipeline. (IAKOVOS HATZISTAVROU/AFP/GETTY IMAGES)

Washington Report on Middle East Affairs, June/July 2018, pp. 34-35

Special Report

By Jonathan Gorvett

WHEN ISRAELI PRIME Minister Binyamin Netanyahu spoke in Nicosia in May of “building a great alliance” between his nation, Cyprus and Greece, he was also quick to praise the “unrivaled network of common interests” that exists among the three states.

And if advocates of a giant new project have their way, that network may be about to get a lot more physically tangible.

For Netanyahu was in Nicosia to solidify support for the proposed EastMed Pipeline, a 1,350-mile natural gas connector that aims to bring Israeli and Cypriot gas to energy-hungry European markets. If ever constructed, the pipeline would form a specialized steel and concrete tie among the three nations, stretching far across the deep of the (sometimes unstable) Eastern Mediterranean floor.

The $7 billion project would also likely provide considerable economic benefits to them all, helping solve both energy and financial deficits.

Yet the project would also bypass a much cheaper and shorter route to market—one via Turkey.

And there, of course, lies a major clue as to why these three nations ended up expressing such warmth for each other in May.

Relations between Athens and Ankara are at a recent low, while those between Cyprus and Turkey do not even officially exist. Israel, too, has been the object of increasing criticism from Turkish President Recep Tayyip Erdogan in recent times, especially as Turkey moves toward crucial parliamentary and presidential elections on June 24.

The back-slapping thus represents a geopolitical coinciding of interests, while also highlighting the growing gulf among many states of the Levantine littoral.

In this, not only Israel, Greece, Cyprus and Turkey are involved, but also the internationally unrecognized “Turkish Republic of Northern Cyprus” (TRNC), Egypt and Lebanon. The European Union also has a stake, along with the U.S., with a range of international oil and gas companies—from Italy’s ENI to ExxonMobil—all having investments in the mix.

All these parties are currently eying the potentially vast offshore oil and gas resources of the region, with the EastMed Pipeline just one of a series of competing methods of getting those assets to market.

Yet, despite the potential rewards of successfully exploiting these resources, a series of overlapping and contradictory claims and unresolved disputes, on land as much as at sea, is also propelling the same parties into increasing conflict.

“There was a lot of talk about how gas could be a driver of reconciliation in the region,” says Charlotte Brandsma, program officer with the German Marshall Fund’s Mediterranean Policy Program. “But rather than being a stabilizing force, it has only aggravated existing problems.”

This was put in stark relief last February, when an oil and gas drill ship commissioned by ENI found its path blocked by Turkish warships off the coast of Cyprus. Fearing it would be rammed, the Siapem 12000 eventually turned around and headed off.

The near collision occurred because Turkey has major disputes with the Republic of Cyprus (ROC) over maritime boundaries, and over Nicosia’s decision to award exploration tenders to a number of offshore blocks in areas that Ankara claims as its own.

Further complications here are that the TRNC also now has a claim to Cyprus’ offshore areas, with Turkey recognizing the legitimacy of these, even if no other country does. Nor is Turkey a signatory to U.N. Convention on the Law of the Sea (UNCLOS), which could otherwise provide a framework for arbitration.

U.N.-supported talks aimed at reuniting Cyprus—which would have gone a long way to resolving these disputes—collapsed last summer. In the resulting stalemate, the TRNC has called on Turkey to begin its own exploration and drilling in TRNC waters.

This leaves great uncertainty over what will happen when the ENI drill ship returns—as the oil company has said it will—and what might happen when other companies, such as Total and ExxonMobil, also begin drilling later this year.

Disputes and Ambiguities

This is by no means the only dispute clogging up oil and gas development in the region, either.

To the southeast, there is a longstanding dispute between Lebanon and Israel over their maritime boundaries.

This has started to heat up again recently, too, with February seeing Beirut award exploration concessions to ENI, France’s Total and Russia’s Novatek in the disputed waters. Some Israeli politicians have seen this as a justification for war.

Tel Aviv is also not a signatory to UNCLOS, although Beirut is. Moreover, both Israel and Lebanon have signed contradictory maritime border agreements with Cyprus, and while the Lebanese parliament has never ratified its version, this has added further ambiguity to the issue.

In addition, moving southwest, while Cyprus and Israel do have a boundary agreement, they do not have a deal—known as a unitization agreement—dividing up the gas underneath the adjacent Leviathan and Aphrodite gas fields. As both are likely part of the same underground reservoir, it is customary to have such a deal in place before beginning extraction.

Further west, Egypt demarcated its maritime boundary with Cyprus back in 2003, but still has no signed and sealed agreement with Israel. This may be on the way, however, as Israeli-Egyptian relations have warmed, with Egypt a major potential market for Israeli gas—a $15 billion deal to export Israeli gas to Egypt was signed back in February.

Egypt itself now has huge gas reserves, however, raising the question of why it would want such an arrangement. One possible answer is that Egypt possesses several gas liquefaction plants on its coast, which can turn natural gas into LNG. This could then be shipped to third countries without the need for an expensive pipeline like East Med.

Cyprus, too, has been eying Egypt for similar reasons, and has been pursuing its own gas supply deal, which the Cypriot energy minister claimed was close to inking in early May.

Thus, countries such as Israel and Cyprus have been pursuing a number of potential schemes for their future energy exports. These plans may be quite contradictory, unless a major new amount of gas is actually found. Thus, the pressure to find more is building, and there are likely to be even more drill ships at work in the region in the months ahead—even if they are in disputed waters.

The response of some to this will be “entirely predictable,” according to Brandsma. More near collisions thus look likely, as the Eastern Mediterranean summer heats up.


 

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