A year ago, a tempest was looming in the Eastern Mediterranean. A Turkish exploration vessel named Piri Reis accompanied by warships and jets approached a contested area of newly discovered natural gas fields around Cyprus. Direct confrontation was eventually avoided, thanks in no small part to US and European calls for restraint. Nevertheless, the incident stoked fears of further instability in an already tense region.
Oil and natural gas exploration is gearing up all across the Mediterranean with potentially far-reaching implications on European energy security and relations with current suppliers. Due to a number of unresolved issues – that range from a still divided Cyprus through conflicting claims on maritime borders and exclusive economic zones to Israeli-Turkish diplomatic quarrels – harnessing the resources in the Eastern Basin leads through a geopolitical minefield. The gas-rich basin stretches from Egypt through the Gaza Strip’s and Israel’s coast all the way up to the Cypriot and Lebanese waters. The area off the coasts of Cyprus and Israel may contain natural gas worth up to 9 years of EU gas demand at current consumption rates, as well as significant oil reserves, according to the United States Geological Survey. The Leviathan field off the coasts of Israel was the world’s biggest offshore gas find in 2010. Smaller American and Israeli companies started off with the development, but more financial firepower and deepwater technological prowess is needed to scale up production. Hence major European, American and Russian companies are bidding for the 12 blocks around Cyprus in the ongoing second round.
This new energy rush in the Eastern Mediterranean holds great promise. Abundant natural gas reserves could increase Israel’s security and wealth, jumpstart the Palestinian economy, provide an incentive for the reunification of Cyprus and help satisfy Turkey’s increasing energy demand. Many in Central Europe hope that – in addition to Caspian gas via the Southern Gas Corridor – Eastern Mediterranean gas fields could one day help ease their dependence on Russia.
But the Piri Reis incident showed how elusive these dreams could prove to be. As drilling activities scale up southeast off Cyprus, Turkey feels left out and threatened. The Turkish Cypriots and Ankara demand the halt of all drilling and licensing activities around the island until the status issue is resolved and their claims heeded.
That is unlikely to happen. Natural gas is an existential question for Israel. The country lost access to Egyptian gas last year and has had to use expensive and dirty fuel oil to generate electricity. The cash-strapped government of Cyprus hopes to shore up state coffers from gas exports while providing cheap energy to its citizens. As unification talks are deadlocked, there seems to be no sensitivity for Turkish and Northern Cypriot concerns.
Regional stability is at stake. Given the nervous state of the entire region, tensions can escalate again overnight. Yet none of the stakeholders show genuine interest in exploring sustainable compromise solutions. While Washington and Brussels monitor developments closely and exert a soothing pressure, they too seem disinclined to tackle the underlying conflicts.
These are admittedly tough nuts to crack. In the short term, a comprehensive resolution may not be within reach – political capital to invest is too low, distrust is too high between the key players. But with US and European assistance, building blocks can slowly be put in place. Early next year, as the Cypriot EU Presidency ends, the new US Secretary of State and EU High Representative Lady Ashton should join forces to develop a framework for confidence building and a closed door regional dialogue to discuss key issues including a temporary revenue-sharing scheme until the Cyprus status issue is resolved, maritime border delimitation talks and cooperation on infrastructure development, export routes and technology transfer. That would not only be elemental for the stability and prosperity of the region but could also be the test for the European External Action Service’s much caved role in energy diplomacy.
David Koranyi is deputy director of the Atlantic Council’s Patriciu Eurasia Center. Adnan Vatansever is a senior associate at the Energy and Climate Program of the Carnegie Endowment.
This piece was first published on the European Council on Foreign Relations blog.