Eastern Mediterranean Gas Forum a powerful new global player

The EMGF creates a “systematic dialogue” between producers and consumers on gas policies.
Sunday 20/01/2019
EU Commissioner for Energy and Climate Action Miguel Arias Canete (C) visits the Zohr gas field facilities, off Egypt’s Mediterranean coast. (Twitter)
International standing. EU Commissioner for Energy and Climate Action Miguel Arias Canete (C) visits the Zohr gas field facilities, off Egypt’s Mediterranean coast. (Twitter)

CAIRO - A planned Eastern Mediterranean Gas Forum is expected to expand cooperation between natural gas producers and consumers in the region, creating a powerful global energy player and potentially providing Europe with an alternative supply of gas.

“This is particularly true with major producers in the region agreeing to join hands in maximising benefits from new finds,” said oil and gas expert Ramadan Abul Ela. “Regional discoveries will change the international map of energy supply but this will materialise only when producers join hands.”

The Eastern Mediterranean Gas Forum (EMGF) was announced January 14 in Cairo at a meeting of energy ministers from Egypt, Cyprus, Greece, Israel, Italy, Jordan and the Palestinian territories.

The forum, with headquarters in Cairo, is planned to ease exploitation of Eastern Mediterranean gas reserves to further economic development in the region.

“The forum will support producing countries by enhancing their cooperation with consumer and transitory parties in the region,” a statement from Egypt’s Ministry of Petroleum said. “It will take advantage of existing infrastructure and develop further infrastructure options to accommodate current and future discoveries.”

The EMGF creates a “systematic dialogue” between producers and consumers on gas policies. Senior energy officials in the countries forming EMGF will begin consultations on its structure and then recommendations to their energy ministers who are to meet in April to officially launch the forum.

Plans to establish the forum come as Eastern Mediterranean countries look to exploit recent energy discoveries. Egypt has used production from its huge Zohr gas field, discovered off its Mediterranean coast in 2015, to halt costly imports, satisfying local demand and making plans to become a natural gas exporter.

Israel will start selling gas to Egypt this year under a $15 billion deal for the export of 7 billion cubic feet of gas annually over ten years from its Leviathan field for re-export.

Cyprus is intensifying gas exploration amid expectations that drilling north of the Zohr gas field will produce results.

Gas produced in the region will likely end up in Egypt for processing before being sent to international markets, helping Cairo become a regional energy hub.

Apart from securing its domestic needs, this would allow Egypt to increase its international standing at a time that reliance on natural gas is growing, especially in Europe. Europe is dependent on imports from Russia but increasing tensions between western European countries and Moscow is making this problematic.

“Egypt will be the main player in the regional gas business,” said Gamal al-Qaluibi, a member of the board of the Egyptian Society for Petroleum, an advisory body of the Ministry of Petroleum. “It will play this role for strong reasons, including its geographic location.”

Egypt has a strong petroleum and gas infrastructure, including several refineries, liquefaction plants and petrochemical factories, which is why it was chosen as headquarters for the EMGF.

The EMGF is a first step in a broader plan to develop the Eastern Mediterranean’s energy profile, including increasing gas exports and production and finding new ways to transport natural gas to international markets at a competitive price.

However, the EMGF has notable absences from Eastern Mediterranean gas players, including Syria, Lebanon and Turkey.

Turkey, an influential political and military player in the region, has opposed gas exploration off Cyprus in areas it considers disputed waters. Political tensions between various EMGF members and Ankara also explain why it was not part of the Cairo meeting.

Turkish energy experts, including some with close ties to the government, have put forward the idea of Ankara establishing a north-eastern Mediterranean gas forum with Northern Cyprus, Lebanon and Syria. However, few say this could be a genuine rival to the EMGF.

“It is in Turkey’s best interests to come on board as far as the new forum is concerned,” said Rashad Abdo, an economics professor at Helwan University. “Eastern Mediterranean producers can help it secure some of its gas needs but, for this to happen, Ankara needs to mend fences with its Mediterranean neighbours, which is why I say the new forum will change the rules of the game in the region.”

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