Author: Charles Ellinas
Affiliation: Writer, CEO of e-CNHC
Organization/Publisher: Atlantic Council Global Energy Center
Date/Place: February 2022/ US
Type of Literature: Issue Brief
Number of Pages: 18
Link:https://21stcenturywire.com/wp-content/uploads/2022/10/AC_EastMediterranean.pdf
Keywords: Eastern Mediterranean, Energy, Gas
Brief:
The Eastern Mediterranean region stands at a crossroads, balancing the promise of natural gas exploitation against the challenges posed by geopolitical conflicts, market dynamics, and environmental imperatives. As regional countries grapple with the competition from global gas exporters and strive to align with carbon reduction targets while maintaining competitive prices, the intricate interplay between energy development, regulatory frameworks, geopolitical conflicts, and market forces shapes the prospects for natural gas exploitation in this vital region. While the current elevated gas prices benefit producers, the extended timelines involved in Eastern Mediterranean gas projects emphasize the importance of considering long-term trends. Despite this, these projects might encounter diminishing export opportunities due to the growing inclination of potential markets, particularly in Europe, to prioritize renewable resources over gas, thereby impacting their viability.
Central to this discussion is the EastMed Gas Pipeline, a strategic project aimed at exporting gas from the Eastern Mediterranean to Europe. Despite initial political support and funding for studies, the pipeline faces formidable hurdles, primarily its high cost, making its construction improbable without substantial subsidies. While there is political backing from Israel, Cyprus, and Greece, and some interest from Italy, doubts persist about its feasibility, especially following the Biden Administration’s withdrawal of support, aligning with a growing emphasis on clean energy. Similarly, strained relations between Israel and Türkiye have impeded the development of the Israel-to-Türkiye Gas Pipeline, despite signs of a thaw. Recent infrastructure advancements in Türkiye have diminished its motivation for a gas pipeline with Israel. Both Cyprus and Israel consider floating LNG terminals as an alternative due to export challenges, yet they encounter obstacles amid low gas prices and commercial difficulties.
The potential of gas discoveries in the Eastern Mediterranean carries profound implication for the region’s politics, economics and conflicts. However, it necessitates cooperation among the United States, the EU, and the UN to mitigate tensions and promote renewable energy, serving as a crucial recommendation for policy considerations. The region’s past years (2017-2019) witnessed major gas discoveries and various agreements between countries in the Eastern Mediterranean, underscoring its potential. Yet, these positive developments occurred against a backdrop of persistent geopolitical tensions and challenges.
Significant natural gas discoveries in the Eastern Mediterranean over the past decade have indeed created potential for hydrocarbon exports. However, exporting gas faces challenges due to evolving market preferences favoring renewable energy, and the region’s political intricacies. Geopolitical challenges loom large in the form of ongoing disputes over Exclusive Economic Zones (EEZs) among countries like Cyprus, Greece, and Türkiye, significantly impacting gas exploration and export plans. The establishment of the East Mediterranean Gas Forum (EMGF) aimed to promote gas development and cooperation among member countries. However, the absence of key countries like Türkiye, Syria, and Lebanon presents substantial challenges.
Country-Specific Situations Vary:
Egypt possesses a substantial internal market and LNG terminals conducive to becoming a gas exporter. Cyprus grapples with finding markets for gas sales due to its small domestic market and global export complexities. Israel’s gas market liberalization and discoveries have export potential but face regulatory complexities and geopolitical tensions. Lebanon’s resource development remains hampered by political relationships and maritime disputes with neighbors. The Gaza Marine oil field’s presence adds complexity to the Palestinian-Israeli conflict, highlighting disagreements between Hamas and the Palestinian Authority over resource exploitation. Besides country-specific situations, market challenges and regulatory considerations compound the hurdles for regional countries striving to compete globally in the gas market while adhering to carbon reduction targets.
Policy Recommendations:
- Enhanced Diplomacy: Encouraging proactive involvement by the United States and the European Union to engage in diplomatic channels, leveraging their influence and expertise to facilitate dialogue and negotiations in order to de-escalate tensions arising from recent gas discoveries in the Eastern Mediterranean region.
- Renewable Energy Advocacy: Advocating for robust support and active promotion of renewable energy sources within the Eastern Mediterranean region, aiming not only to bolster the adoption of cleaner energy alternatives but also to significantly reduce the region’s reliance on fossil fuels and external energy imports.
- Collaborative Energy Approach: Urging for inclusive and comprehensive discussions, particularly through the Eastern Mediterranean Gas Forum (EMGF), to encourage cooperative measures addressing challenges posed by a competitive energy market and the uncertain demand for gas in the European Union, thus fostering a more stable and mutually beneficial energy landscape.
- Policy Enhancement and Problem Solving: Recommending the establishment of a dedicated envoy within the European Union specifically focused on Eastern Mediterranean energy affairs, and entrusted with the formulation of clear and comprehensive policies. This role would involve conducting in-depth assessments of viable gas export options while concurrently prioritizing the development of renewable energy resources alongside gas initiatives, all aimed at addressing regional challenges and conflicts.
- Conflict Resolution and Negotiation: Urging collective efforts from the United States, European Union, and United Nations to actively engage in diplomatic efforts to resolve disputes over the Exclusive Economic Zones (EEZs) in the Eastern Mediterranean. These efforts should encompass preventive measures against maritime conflicts, discourage aggressive actions, and create conducive negotiation platforms for all involved parties.
- Aid in Reunification Talks: Emphasizing the critical need for international assistance, particularly from the United Nations, to facilitate and guide the reunification discussions between Turkish and Greek Cypriots in order to reach a sustainable resolution for both parties involved.
- Regional Opportunity Promotion: Highlighting the significance of fostering energy integration among Eastern Mediterranean countries while exploring and capitalizing on opportunities extending beyond the region. This includes evaluating the potential role of the region’s gas resources in supporting Europe’s ambitions for energy independence and addressing the rising demand for natural gas in Asian markets.
- Geopolitical Planning and Long-Term Vision: Recognizing the pivotal role of geopolitical stability in effectively harnessing and managing natural gas resources. This involves addressing prevailing issues such as energy subsidies that significantly strain regional economies while ensuring comprehensive long-term planning for sustainable resource utilization.
- Merging Energy and Political Diplomacy: Recommending a cohesive approach by the European Union and the United States that harmonizes energy strategies with diplomatic initiatives. This approach aims to create synergies between energy cooperation and political diplomacy, thereby fostering enhanced cooperation grounded in established geopolitical frameworks.
In conclusion, the discourse on energy resources, particularly natural gas, in the Eastern Mediterranean reflects evolving dynamics, geopolitical challenges, recent developments, and the potential for regional collaboration. Despite substantial export potential, challenges like cost, geopolitics, and environmental concerns impede progress. Efforts directed at defusing tensions, promoting renewable energy, and addressing geopolitical frameworks emerge as imperative for stability and energy development in the region. Balancing these factors is crucial for navigating the complexities and harnessing the energy potential of the Eastern Mediterranean region.
To some extent, I believe the author’s background in Southern Cyprus lead him to take for granted Türkiye’s rights in the Eastern Mediterranean. In his brief, he states that Türkiye’s “aggressive” strategy in the region could be emboldened because of its gas finds. I believe it is not neutral to call Türkiye aggressive since it is one of the countries with a firm claim to rights in the region. In a general sense, while his policy recommendations were mostly reasonable, except for his recommendation for more proactive involvement and influence by the US and the EU. I believe that the US and EU’s influence would only benefit Israel and Cyprus, with whom they have deep economic and political relations. This would lead them to underestimate the rights of other countries in the region – which would not be healthy, keeping in mind that the EU and the US do not recognize Northern Cyprus as an independent state with rights in the region- especially given that the United States already has a conflict of interest when it comes to Cyprus, Israel-Türkiye, Palestine (Gaza Strip), Lebanon-Israel, etc. However, I do agree with the author that there should be more solutions created to facilitate Turkish-Greek Cypriot issues and reach a more sustainable resolution, since that is one of the biggest issues affecting Eastern Mediterranean natural resource development, as the author highlights.
By: Dilara Özdemir, CIGA Research Intern
