Natural gas finds may alter Mediterranean geopolitics

Friday 08/01/2016
Egyptian President Abdel Fattah al-Sisi (L), Greek Prime Minister Alexis Tsipras (C), and Cypriot President Nicos Anastasiades shake hands after their trilateral summit in Athens, last December.

Cairo - The discovery of huge re­serves of natural gas in the eastern Mediterrane­an will likely give birth to new alliances that make regional powers bury old differ­ences and develop unprecedented security, economic and strategic cooperation, experts say.

New regional natural gas play­ers — Egypt, Israel, Greece and Cy­prus — are working to develop se­cure systems to deliver natural gas from the eastern Mediterranean to Europe, making the continent less dependent on gas from Russia and more capable of staving off Mos­cow’s influence, the same experts said.

“New finds in the region make cooperation among the new gas producers essential for delivering this gas to important markets, in­cluding Europe,” said Hossam Far­ahat, an oil and gas analyst. “What makes this cooperation more pos­sible is that most of the fields found in the region are so close to each other.”

In 2001, Egypt produced 21.2 bil­lion cubic metres (bcm) of natural gas. In 2011, the country produced 61.2 bcm. However, growing de­mand turned Egypt from an ex­porter to a net importer in the same period. By 2015, gas produc­tion was 121.8 million cubic metres (mcm) but domestic consumption totalled 127 mcm, creating an even bigger deficit.

Egypt’s natural gas export hopes were resuscitated in August 2015 when the Italian company Eni an­nounced the discovery of a super­giant natural gas field off Egypt’s coast.

The company, which has been operating in Egypt for almost 60 years, said the field, which covers 100 sq. km, had potential reserves of approximately 30 trillion cubic feet of lean gas, the equivalent of 5.5 billion barrels of oil.

Egypt says the reserves, which amount to almost 40% of its con­firmed natural gas reserves, would be specified for satisfying local de­mand. Eni has started work in the field, investing $12 billion, and it says production is expected within two years.

International energy research centres expect Egypt’s natural gas production to exceed local con­sumption by 2020. However, econ­omists say Egypt’s need for foreign currency may force it to speed up the export of its natural gas, even before 2020.

This opens the prospect for cre­ating alliances in the Mediterrane­an region, where rising gas powers can cooperate to deliver gas to Eu­rope. This was included in talks be­tween European Commissioner for Energy and Climate Action Miguel Arias Canete and Eni Chief Execu­tive Officer Claudio Descalzi when they met in September 2015.

After the meeting, it was said that the new discovery off Egypt’s coast, along with recent discover­ies off Israeli and Cypriot shores, would allow an eastern Mediterra­nean gas hub to contribute signifi­cantly to European energy security.

The same topic was high in the agenda for Egyptian President Ab­del Fattah al-Sisi and Greek Prime Minister Alexis Tsipras during their meeting in Athens in early Decem­ber. Tsipras had been in Tel Aviv a few days earlier for similar discus­sions, according to Israeli media.

Farahat points to the need for maritime boundary demarcation agreements between the countries to increase the possibility of coop­eration regarding the vast reserves.

Other oil and gas experts, mean­while, say talks between the three states focus on transferring the gas production — after satisfying local demand — to Europe via Greece.

They add that Egypt and Israel may build a pipeline from the Is­raeli port of Ashkelon to western Egypt where there are two giant gas-processing facilities on the Mediterranean coast.

There the gas would be trans­formed to liquefied natural gas (LNG) and shipped by tanker to Eu­rope. Strategists in Cairo say natu­ral gas was at the heart of conflict between Russia and the West and that exporting eastern Mediterra­nean gas to Europe would signifi­cantly contribute to reducing Eu­rope’s dependence on Russian gas.

Turkey, which depends on Rus­sia for a sizeable portion of its oil and gas needs, may find itself obliged to bury its differences with Tel Aviv and Cairo — and possibly Greece — to make up for Russian gas in case its showdown with Mos­cow becomes more confrontational following the downing by Turkey of a Russian military jet on the bor­der between Turkey and Syria.

Turkey has started moves to ease differences with Israel but Egyp­tian experts rule out the possibility that Ankara will do the same to­wards Cairo. The current Egyptian government is not in the highest regard of Turkish President Recep Tayyip Erdogan, a keen supporter of the Muslim Brotherhood, which was the movement of president Muhammad Morsi who was ousted by the Egyptian Army in 2013 fol­lowing mass protests against his rule.

Political science Professor Tarek Fahmi says the presence of a peace treaty between Egypt and Israel will make their cooperation in the regards to natural gas easy.

“But I really doubt that Turkey will be part of this cooperation with Egypt, at least in the foresee­able future,” Fahmi said.