March 6, 2018
Looming Conflicts over Energy Resources in the Eastern Mediterranean
By David Koranyi
The need for such engagement is even more crucial given the level of activity over the last three months.
Exploratory drillings by Eni and Total in Cyprus’ offshore revealed a potentially major natural gas find, called Calypso, in Block 6. Egypt’s giant Zohr gas field commenced production in December 2017. In February of this year, Egypt and Israel entered into a preliminary agreement to transport gas from Israeli gas fields Tamar and Leviathan to Egypt. Lebanon awarded exploratory licenses to Total, Eni, and Novatek, including in Block 9, which lies in an area also claimed by Israel.
The Israeli-Egyptian gas deal, while not yet final, could have positive implications for regional stability, with the potential to strengthen the ‘cold peace’ between Egypt and Israel. Most of the 64 billion cubic meters (bcm) of gas to be produced over a decade will likely go to the fast-growing Egyptian domestic market, though it is unclear through what physical route. An agreement in the arbitration case Israel won over the past cessation of shipments of Egyptian gas to Israel in 2012 is also pending and needs to be resolved before the deal is finalized.
In Cyprus, the discovery of Calypso in Block 6, which Eni has called a “Zohr-like discovery,” could be a game changer. The additional development of Calypso could supplement the 2011 discovery of the Aphrodite field in Cyprus’ Block 12, which, combined with potential reserves in Block 3 (Eni and Kogas) and 10 (ExxonMobil and Qatar Petroleum), could make Nicosia’s plans to produce and commercialize the gas (perhaps in the form of LNG) much more realistic.
It is likely this possibility prompted Ankara to step up the pressure and prevent further drillings offshore Cyprus. Turkish Energy Minister Berak Albayrak warned that Turkey would block “unilateral exploration” until there is an accord to reunify Cyprus and, subsequent to the Calypso announcement, Turkish warships prevented an Eni drilling ship from carrying out scheduled exploration in Block 3.
In the near future, the prospects for the reunification of the island are dim. Even if pro-settlement leaders remain in power in both the North and the South, given the internal political dynamics within Turkey, as well as the Turkish Cypriot and Greek Cypriot communities, resumption of negotiations will be difficult. To ensure exploration activities can continue unhindered, it would be wise to launch a separate dialogue between the Greek and Turkish Cypriot communities to discuss matters of hydrocarbon exploration and development (in addition to electricity interconnections, as Matt Bryza suggests). This dialogue—which would require coordinated pressure and support by the United States and the European Union—could not only defuse tensions but perhaps even facilitate the conditions necessary for a Cyprus settlement. The energy dialogue should not be considered as acquiescing to Ankara’s demands or giving up leverage in the settlement talks, but as a way to craft a joint path to exploit energy resources in a manner that benefits both communities and the whole island.
Tensions between Cyprus and Turkey over offshore development are not the only diplomatic row plaguing the future of gas development in the Eastern Mediterranean. The cooling in the Israeli-Turkish relationship signals the end of plans to build a pipeline between Leviathan and Turkey. Rhetoric between Israel and Lebanon is also heating up, and Lebanon’s decision to award exploratory licenses in disputed waters prompted a harsh exchange between the two countries, including Hezbollah threatening Israeli gas installations. David Satterfield, the acting US assistant secretary of state for Near Eastern Affairs traveled to Israel and Lebanon to defuse tensions, with little success thus far.
Renewed efforts to push for a maritime delimitation agreement between Israel and Lebanon are essential. An actual agreement may be difficult to reach given the political environment in Lebanon and Israel, as well as the wider region. Nevertheless, high-level US engagement aiming at the resumption of mediated talks on the basis of demarcating the line proposed by US diplomat Fred Hof in 2012 would go a long way in preventing any escalation.
Energy resources can serve as a bridge between nations and peoples, yet they often induce tensions and trigger conflict instead. The new US special envoy and coordinator for international energy affairs, once in office, should prioritize engagement in the East Med in close coordination with the European Union to ensure the peaceful development of resources to the benefit of all countries and communities involved.
David Koranyi is the nonresident senior fellow for energy diplomacy at the Atlantic Council Global Energy Center.