Trilateral Meeting Brings Eastern Mediterranean Gas into Focus

The leaders of Cyprus, Greece and Israel held a tripartite meeting on 28 January in Nicosia. The main issues on their agenda, and the basis of the signed joint declaration, were the economy, energy, tourism, research, water-management, anti-terrorism and immigration. Their entourage included energy ministers.

Speaking at a joint press conference the three leaders – Israel’s prime minister Benjamin Netanyahu, Greece’s Alexis Tsipras and Cyprus’ Nicos Anastasiades stressed that the cooperation was not directed at any one country but at promoting wider cooperation in the eastern Mediterranean region.

The success of the meeting was summed up by Netanyahu who described it as historical because of the ties between the three countries and the challenges that exist: “We live in a turbulent, fluid environment,” he said, adding that “we have an unprecedented opportunity to advance our common goals.” Further, he noted that "if we work together we will promote more effectively these goals, rather than as individual countries," relying on our common values.

Referring to the energy sector Netanyahu said they agreed on developing two joint projects, specifically:

• Creating a gas pipeline that will link gas-fields off Israel and Cyprus to Greece and from there to the rest of Europe.
• Installing an undersea electric cable linking the electricity networks of the three countries.

Both of these are included in EU’s list of projects of common interest (PCI).

Netanyahu stressed that "we have been blessed with natural gas and decided to investigate a courageous way to allow the prospect to create a pipeline that will transport our common resources and transport natural gas from Israel to Cyprus and from there to Europe via Greece ".

"This is a bold plan, which runs parallel with our other plans,"  Netanyahu said, referring to the prospect of an electricity cable which will connect the power grids of Israel with those of Cyprus and later to Greece’s networks to have a common grid, which would greatly help the energy markets and the three countries.

In order to achieve the agreed objectives, with particular reference to the energy sector, the three leaders set-up a tri-partite steering committee to monitor and follow up actions under the signed declaration.

Tsipras said that, after a similarly successful meeting with Egypt in December in Athens, this was a particularly important development, and a model of constructive cooperation between states in the region. Other countries in the region, but also EU member states, expressed interest in joining these tripartite meetings. He referred to Greece as playing the role of an energy bridge between the eastern Mediterranean and Europe.

The Jerusalem Post said that Israel’s energy minister Yuval Steinitz, who was part of the Israeli delegation, told reporters on the plane en route to Cyprus that Israel wanted to have the ability to export the gas both through Greece and Turkey. Laying the pipeline to Turkey is considerably cheaper than through Cyprus and Greece.

The Cyprus government spokesman was asked if he expected developments regarding the unitization agreement between Cyprus and Israel. He said that there is a formal dialogue in progress, and added that Cyprus’ energy minister George Lakkotrypis met with his Israeli counterpart, Steinitz, in the context of the tripartite meeting, but said nothing more specific.

The central plank of Cyprus gas export plans has been sales to Egypt for its domestic use as well as liquefaction at Idku and export as LNG to Europe. However, these plans have always been challenged by the low global and EU gas prices, which are expected to go even lower by the end of this decade and stay low even longer.

Similar problems apply to Israel. With the possibility of gas exports to Egypt challenged by the low global and EU gas prices and, at least for now, blocked by the Egyptian government, Israel’s export options are limited.

Where else can the gas go?

As a result, Cyprus and Israel may have to look elsewhere for gas exports. The eastern Mediterranean pipeline is commercially challenged but an EU-funded feasibility study is expected to be completed in February. Another option is the possibility of exports to Turkey. This might become possible following solution of the Cyprus problem, which this year looks more likely.

Cyprus and Israel have had a close relationship for a long time, and particularly between the two state leaders Anastasiades and Netanyahu. But this has not yet been converted into success and development of joint energy projects on the ground. In a way this inability to convert this special relationship into something more tangible is evidenced by the inability to reach a successful conclusion to the tortuous unitization agreement negotiations over the last five years.

But now there are compelling reasons to take this relationship much closer and the meeting on January 28 contributed to this. The serious prospect of a solution of the Cyprus problem, Turkey’s quest for alternative sources of gas, as a result of its deteriorating relationship with its main gas-supplier Russia, and the deteriorating situation in Syria, open up opportunities.

With these developments in mind, the meetings of the leaders of Cyprus, Israel and Greece in Nicosia have particular importance. Cyprus and Israel should strengthen their relationship at all levels, starting with concluding the unitization agreement and be ready for closer future cooperation.

Dr Charles Ellinas

Nonresident Senior Fellow – Eurasian Energy Futures Initiative - Atlantic Council