Eastern Mediterranean Gas: A New Source of Energy for Europe
The EU and the US increased efforts towards a solution to the division of Cyprus could be in large part justified by Europe’s quest to diversify its energy portfolio. Russia’s invasion of Crimea has resuscitated Europe’s need to increase its energy security. While the Eastern Mediterranean is unlikely to completely replace Russia as a major supplier of energy to Europe, it can at least contribute in loosening Russian grip over the European market.
Cyprus and Israel have both made substantial natural gas discoveries in their waters. Israel’s 19 Tcf Leviathan field discovered in 2010 represents Noble Energy’s largest exploration success. Noble has also made another discovery in 2011 in Block 12 of Cyprus’ EEZ. The Cypriot discovery was named after the mythical goddess Aphrodite. Noble Energy announced in October 2013 preliminary findings suggesting natural gas volumes of 3.6 to 6 tcf with a gross mean of 5 tcf in Aphrodite.
Bringing the gas to market is where it gets a little more complicated for both Israel and Cyprus. Cyprus’ original plan was to build an LNG plant in the Vasiliko coastal site. Liquefying gas for shipment offers flexibility in the choice of the consumer. Large amounts of gas need to be proven first before the multi-billion dollar project can be brought to fruition. The current estimates of the Aphrodite field do not commercially justify the onshore LNG terminal. Further exploratory activities off Cyprus’ coast in the two years to come will be key in determining the fate of the project.
Noble is expected to carry out further exploratory drilling in Block 12 of Cyprus’ EEZ towards the end of 2014. The ENI-KOGAS consortium granted concessions on blocks 2, 3 and 9 is also expected to start drilling in the last quarter of this year. Total will start drilling in Blocks 10 and 11 in 2015. Successful exploratory results would allow the Cypriot government to move ahead with its strategic LNG project that could transform the island’ economy severely hit by the financial crisis.
A Turkish-Israeli rapprochement in March 2013 has also hinted that the two countries may be considering an energy partnership. A pipeline from the Leviathan to Turkey would allow Eastern Mediterranean gas to reach Europe and Turkey to play the role of a transit route. Such a pipeline would have to pass by Cypriot waters and a resolution of the Cypriot-Turkish conflict is hence a prerequisite.
Cyprus has been divided since an invasion of troops from Turkey in 1974. The Greek Cypriots control the southern two-thirds of the island and the Turkish Cypriots the northern third. The sovereignty of the Republic of Cyprus over the whole island of Cyprus is recognized internationally by the UN and all foreign governments - except Turkey. Efforts to solve the dispute have all failed in the past.
The gas factor now comes as a new element that could play a tremendous role in altering the equation. Turkey could also eventually play the role of a transit route for Cypriot gas should the division of the island end. Turkey, with an energy consumption expected to double in the next decade is in desperate need for energy from alternate sources. Like the rest of Europe, Turkey is looking to diversify its energy portfolio away from Russia. Although natural gas is now a major incentive in resolving the Cypriot dispute, changes may not happen overnight.
Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat