At the start
it was the Arab spring and the unrest that followed in the northern coastal
strip of
Africa
which is a
net oil and gas exporter. From a European energy point of view
Libya
is what really matters, although
Egypt
’s
position is pivotal since a sizeable amount of oil and gas, a cumulative 2.0
to 2.5 bbl per day , flows through the
Suez canal
and the country itself is a net gas exporter. Next came
Syria
,
a small oil and gas producer by
Middle East
standards, but long viewed as one of the most stable countries of the region in
spite of the ongoing regional conflicts. A fully fledged revolt is currently in
progress in several parts of the country with thousands of dead since its start
last March and with the Assad regime desperately trying to cling on to power.
Now we have
another crisis brewing up in the southernmost tip of our region, in
Cyprus
where the government is going ahead with plans to carry out exploratory
offshore drilling in order to determine its apparently rich natural gas
deposits estimated as high as 280 BCM’s. The area where these deposits lie,
known as Block 12, is bordering with a
giant n.gas deposit belonging to Israel known as Leviathan which according to
recently released data holds some 450 BCM’s of gas.
Turkey
is deeply annoyed with
Cyprus
’s
plans since it does not recognize the island’s right to its own Economic
Exclusive Zone (EEZ), and hence its right to prospect for hydrocarbons, in view
of the as yet unresolved
Cyprus
question.
Cyprus
has been divided since 1974 in the Turkish occupied north and the Greek
dominated south, which is the only internationally recognized government of the
island- state and a member of the EU since
2004.
Turkey
’s
Foreign Minister Ahmet Davutoglou has repeatedly stated that the
Republic
of
Cyprus
has no right to start gas exploration activities on its southern coast unless
the Turkish Cypriot minority also share in the resources and revenues.
As we are
approaching September 21st, the date the drilling platform is
scheduled to arrive in Block 12, tensions are growing as
Turkey
appears ready to send naval forces in order to prevent any drilling activity.
On September 6th the Turkish Prime Minister Mr.Tayyip Erdogan
adopted a belligerent tone by commenting that “Turkish warships would display
themselves more often in the waters of the
Eastern
Mediterranean
”.
Israel
,
with whom
Cyprus
shares natural gas deposits and with which it has a close economic, political
and defense relationship, will come to its assistance as it will seek to
protect is own deposits from Turkish interference, quite a probable scenario
given the latest severe rift in diplomatic ties between the two countries.
If the above
were not enough from a conflict building point of view,
USA
,
a close ally of
Turkey
over the last 60 years or so, has said that it will not dissuade
Cyprus
from going ahead with its gas exploration activities. According to a latest
statement by the State Department every country has the right to use any means
at its disposal to develop its indigenous resources and thus reduce its energy
dependency from imported fuels. Furthermore American diplomats observe that
according to the International Maritime Law (Montego Bay 1982) which is an
international convention fully ratified by the vast majority of UN member
countries, but not by Turkey, Cyprus has
every right to its own EEZ which extends south and south west up to 200
nautical miles off the island’s coast. As market sources point out, the
American government’s unequivocal support for Cyprus’s hydrocarbon exploration
programme is not entirely unconnected to the fact that the company which is in
charge of drilling operations and has signed PSA’s with both Cyprus and Israel
for the development of their n.gas deposits is
Texas based ‘Noble Energy’.
If USA
pledges not to interfere may have sounded a little vague or non committal to
some diplomats, the Russian government quickly cued in by expressing solidarity
with Cyprus’s plans and its readiness to partake in the island’s efforts to
develop its hydrocarbon resources. Likewise EU has taken a positive stance in
commenting on
Cyprus
’s
latest energy policies. Given such unilateral support and approval of
Cyprus
’s
actions it remains to be seen if and when
Turkey
will make true its so far veiled threats and actually move in to stop drilling
activity in Block 12.
If such
action is taken by
Turkey
we shall see a rapid escalation, of what has until now been a verbal conflict,
into a fully blown crisis with Israeli and Greek air and naval intervention. So
far there appears little prospect for reconciliation or abstinence as both
Cyprus and Turkey have stood by their stated positions, which means that a
naval incident leading to a broader military conflict involving all four
countries can no longer be excluded.
As a new
crisis in the East Med is now waiting to happen, this time over natural gas
deposit development, hydrocarbons once more tend to dominate regional
developments. Oil geopolitics are clearly in evidence, for different reasons,
in both
Libya
and
Syria
.
The former is now feeling the breath of the oil majors as it is trying to
restart its oil industry while the latter is facing oil export sanctions from
EU as the international community is trying to reason with the Assad regime
over human rights.
More oil and
gas related conflicts could be on the way in
SE Europe
as countries
are trying in earnest to strengthen their indigenous energy resource base. As
it is clearly shown in
IENE
’s
latest ‘SE Europe Energy Outlook 2011’ study (see www.iene.gr) the region is a
net oil and gas importer to the tune of 1,6
bbl per day for oil and 60.0
BCM per year for gas. Given the current high oil prices that means
that the region’s annual total oil and gas import bill may easily exceed $80.0.
In view of
SE Europe
’s
anemic economic development, bar that of
Turkey
’s,
such a high energy bill is draining resources away from much needed
infrastructure and social development needs.
Therefore it
is to the interests of all countries in the area, including those of
Turkey
,
that efforts to develop local oil and gas deposits are accelerated as this
appears to be the best way for minimizing energy import dependence. Although
national differences over land claims and peripheral conflicts may be part of
the game, the truth is that any substantial gains from oil and gas production
on a sustainable basis can only be achieved through close cooperation and
peaceful coexistence between neigbouring countries. If such conditions are not
met then all countries stand to loose and indeed at a multiple level.
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*Costis
Stambolis is the executive director and deputy chairman of the
Athens
based
Institute
of
Energy
for SE Europe (
IENE
)