Washington Helps Reunite Cyprus
U.S. Vice president Joe Biden visited Cyprus last week where he met with President Nicos Anastasiades. Biden said that Cyprus was on the verge of becoming an important `player in the energy scene, particularly vis-à-vis a Europe looking to diversify its geographical sources of energy. The visit of the senior official confirms Washington’s support for the development of the hydrocarbon industry in Cyprus. The island has been divided for the past 40 years and the Americans are putting efforts in trying to achieve a settlement. Biden’s presence in Cyprus was interpreted as a serious pledge by the Americans to help end to split of the island.
The Ukrainian crisis has triggered various efforts to lessen Europe’s dependence on Russia. Europe is determined more than ever to increase its energy security, by finding new sources of supply, developing its indigenous resources, decreasing demand (by implementing measures of energy efficiency; the EU has an energy efficiency target of 20% by 2020) and integrating the internal market.
The European Union currently imports 53% of its energy needs and is dependent on external suppliers for crude oil (almost 90%), natural gas (66%), solid fuels (42%) and nuclear fuel (40%). Some member states are particularly vulnerable and some others have Russia as single supplier. The EU’s commitment to improve the status quo is more palpable than ever and the European Commission will present a strategy to reduce Europe’s energy dependence ahead of the European Council on 26 and 27 June 2014.
It has been argued that the Eastern Mediterranean will not play but a negligible role in rendering Europe more robust in terms of energy security. That is because of the relatively small quantities of natural gas discovered to date in the Levant basin, the time required before the hydrocarbon can be delivered to export markets and the various political hurdles handicapping the region such as the problem of divided Cyprus.
With Washington’s helping hand, the reunification of Cyprus has a better chance of happening. A reunified island means that a route from Cyprus to Europe via Turkey can be conceivable. The latter would allow both Israel and Cyprus to transport the natural gas encountered in their respective Exclusive Economic Zones to the European market. Israel seems inclined to a pipeline solution to Europe via Turkey. Cyprus has adopted an LNG project as its top priority, but delays mainly due to a lack of financing threaten the island’s energy hub ambitions.
It is yet unclear what the outcome of the senior U.S. official’s visit will be. The failure of past peace talks and the embittered Cypriot-Turkish diplomatic relations would have given no reason to believe that this time it will be different, if it were not for the newly found riches that could in fact benefit all the concerned parties. The interests at stake are considerable, and collaboration could accelerate the Eastern Mediterranean’s entry in the energy scene. Time is of essence here before the entry of new players tremendously impacts natural gas prices.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Email Karen on karen@minoils.com. Follow her on Twitter: @karenayat