Will EastMed gas fuel tensions?
June 24, 2019
Opening the newspapers in Cyprus these days, gas developments pop out as a priority issue. It is one of the most discussed topics in the media and by the local population. There are a number of reasons for this — on economic, political and security levels.
On June 5, the Cypriot government said it has reached a production sharing agreement (PSA) for the development of the Aphrodite field, claimed to be worth a staggering $9.5 billion (€8.35 billion), which is over $11,000 per citizen.
"Enough deals with other countries are marginalizing Turkey from the eastern Mediterranean. They are legal, unlike Turkish actions, but because of Turkey's reactions tensions arise," Zenonas Tziarras, a researcher with the Peace Research Institute Oslo, told DW from his office in Nicosia, located less than 200 meters (656 feet) from the Ledras-Lokmaci checkpoint, which divides the northern and southern parts of the city.
"Cypriot people need hope because they feel weak. They don't have the means to react to Turkish actions or to the results of the 1974 invasion. The natural gas and regional synergies provide some of that hope," added Tziarras.
Strategic planning
Apart from the de facto state that Ankara calls the Turkish Republic of Northern Cyprus (TRNC), there is also a dispute on maritime borders between Turkey and Cyprus. Additionally, Turkey is asking not to be left out of the EastMed gas riches.
A few hours after the Cypriot Aphrodite announcement, Turkey reacted to the isolation (the PSA doesn't mention Turkish Cypriots like Ankara requested) by promising to double its operations off the coast of Cyprus. Ankara is sending a second drillship to the area, reportedly escorted by frigates.
Cypriot experts say that Turkey is not simply reacting to the announcement, but that its plans have been in place since 2013.
On June 13, Cyprus issued arrest warrants for the crew of the first Turkish drillship, which reportedly already started drilling "west of Cyprus" off Paphos, a tourist destination in the south of the island.
The leaders of the Mediterranean EU states threw their political weight behind the Republic of Cyprus during a meeting in Malta on June 14. And America's State Department said that it "is deeply concerned by Turkey's announced intentions." Despite the joint EU-US requests, Ankara is not backing down.
"We will continue our efforts to achieve regional peace by distributing the riches of Cyprus island and the Mediterranean in a fair manner … Turkey never surrenders to any threats, and it never will," Turkish Energy Minister Fatih Donmez was reported saying on June 11.
Gokhan Sorus, a Turkish natural gas specialist, thinks that Ankara should indeed be involved due to its large gas market and key geographic position. Yet, "if things continue the way they do, the risk of increasing frictions is high. There has to be positive statements and steps coming from both Turkey and the 'anti-Turkish bloc' for halting hostilities and starting talks," Mehmet Ogutcu, chairman of the London Energy Club, wrote in a note to DW.
A new 'geopolitical era'
Meanwhile, Israeli actors recently hailed a new "geopolitical era" as they work to increase gas exports to Jordan through a second pipeline to its eastern neighbor. They are also testing another pipeline to ship gas to Egypt in the coming weeks.
"The export deals establish Egypt's status as a regional energy center which allows the supply of gas both to the Egyptian domestic market and for export, and allowing economic development of the Egyptian and the Israeli economies," Yossi Abu, CEO of Delek Drilling, told DW.
On June 12, Noble, Delek, and Ratio also signed a $700 million gas deal to ship the fossil fuel to Israel Electric Corporation from the Leviathan gas field, which promises to be one of the world's largest offshore natural gas fields when it goes online at the end of the year.
"I absolutely don't see rising tensions in the east Mediterranean. For the first time in history Israel and Lebanon are about to sit at the same table and discuss face to face. That is historic," commented Joseph Paritzky, private energy broker and former Israeli energy minister, referring to last month's announcement about coming talks on maritime borders.
Friends and neighbors
In January 2019, seven energy ministers in the region penned a deal to set up the East Mediterranean Gas Forum. Lebanon and Turkey didn't join. However, Beirut might have an interest in settling existing issues to proceed with its plans. Total, ENI and Novatek signed exploration and production agreements with the government in early 2018.
Paritzky argues that Turkey is, in the last years, the only exception to regional tranquility.
"Turkey doesn't only have problems with Israel, it has problems with Cyprus, Greece and now with the US over the S400 [anti-aircraft weapons it is purchasing from Russia]. I also think that the collaboration with Russia is short-lived, and it will end up in a bad fight," argued Paritzky, adding that Turkey has issues with Egypt, too.
At the same time, despite the tensions or perhaps because of them, Turkish experts support dialogue.
"Given that Turkey, together with TRNC, is the party to so many disputes in the region it was only normal to engage in a dialogue with Ankara rather than rushing into unilateral decisions," added Ogutcu.
On the move
Firms anyhow are on the move in Cyprus. The Aphrodite gas field was first discovered in 2011. Calypso was discovered in 2018. And the latest one, Glaucus-1, was announced in February 2019 by ExxonMobil and Qatar Petroleum.
Today a drill bit used by ExxonMobil is on display at the entrance of Cyprus' energy ministry, close to a European flag. Alongside symbolism, numbers matter too, though. The government said that $9.3 billion should enter the Cypriot coffers over the next 18 years. Some experts are not quite sure.
"There are a couple of jumps from reality … Given prevailing gas prices in Europe, the profit should be between $60 and $180 million per year. It is not bad, but it is not what the Cypriot government says," according to Charles Ellinas, CEO of eCNHC, referring to an article he wrote for Cyprus Mail about the difference between political announcements and business realities.