Renewed Tensions Between Cyprus and Turkey
Cyprus calls for help. The island, eager to pursue and accelerate its offshore activities in the hope of encountering more natural gas that would allow the construction of an LNG facility, has found itself in a new conflict with Turkey. Turkey, an EU candidate state, sent a research vessel and two navy ships in the disputed waters off Cyprus to express its opposition to ENI and KOGAS’ drilling in Block 9 southeast of the island.
The Turkish had repeatedly stated that all revenues generated from successful drilling activities off the island should benefit both Turkish and Greek Cypriots and that Turkey would undertake unilateral drilling in the absence of an equitable distribution.
As a result to Turkey’s action, Cyprus President Nicos Anastasiades this week suspended peace talks with the Turkish-controlled north of the island. Peace talks aimed at achieving a settlement to end the division of the island are now in danger. Cyprus has been divided since a 1974 coup and all attempts to reunify the island have failed thus far. “Turkey has no logical or legal basis for its actions”, said Yiorgos Lakkotrypis, Minister of Energy for Cyprus to Natural Gas Europe.
Since the discovery of natural gas in the Levant basin, each of the Eastern Mediterranean countries has been struggling with problems of its own. Neighbouring Lebanon has not been able to launch its first licensing round due to domestic political deadlocks. Israel allowed gas exports via Netanyahu cabinet decision dated 2013 but has since failed to achieve a finalised export strategy.
Cyprus is awaiting further natural gas discoveries off its coast to take a final investment decision for the construction of a multi-billion export terminal on the Vassilikos coast. The Aphrodite field discovered in 2011 by Noble Energy and believed to hold 3.6 to 6 Tcf of natural gas does not justify alone the commercial viability of the project.
The escalation between the Turks and the Cypriots may jeapordise peace talks but explorations activities are ongoing and will not be disrupted, according to a statement from the italian company.Fiona Mullen, director of Cyprus-based Sapienta Economics told Natural Gas Europe that Turkish-Cypriots were acting in a "tit for tat manner: You explore, I explore. You drill, I drill". Asked if Cyprus' offshore progress could be impeded due to Turkish complications, she said: “Turkey's actions raise investor risk perceptions, which can deter investors or raise company costs. As long as the Cyprus problem remains unresolved, this issue will not go away and may get worse, depending on political developments in Turkey.”
Dr Charles Ellinas, oil and gas expert with over 30 years of experience in the industry and previous Executive President of Cyprus National Hydrocarbons Company Ltd, Cyprus told Natural Gas Europe that Cyprus’ Exclusive Economic Zone was delineated in accordance with UNCLOS. He added that Cyprus’ delineation of its waters was recognized by its neighbours, Egypt, Israel and Lebanon as well as the UN and the international community. Ellinas said that ENI/Kogas were carrying on their exploration drilling programme as planned. “Noble also made it clear that its plan remained unaffected. In fact, Noble presented the government with the results of its detailed techno-economic studies on the possible export options, necessary for the preparation of the development plan for Aphrodite. They did this despite the threats from Turkey” added Ellinas.
If the immediate gas explorations are not threatened by the new conflict between Turkey and Cyprus, a permanent solution needs to be achieved. The Eastern Mediterranean, blessed with gas, seems hampered by historical discords that may jeopordise its long term growth and prosperity. In a discussion with Natural Gas Europe, Dr Alan Riley, professor of law specialised in the fields of energy and competition law commented on Turkey’s actions: "Legally, Cyprus has the right in international law to drill for offshore oil and gas. The issue here however, as ever with the ongoing conflicts in the Eastern Med is not law but politics".
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat