Thursday, July 20, 2017

Turkey Lobbying Israel to Push Cyprus on Approving Gas Pipeline - BLOOMBERG

July 20, 2017, 3:25 PM GMT+3
Selcan Hacaoglu
  • Officials of both nations discussed gas cooperation last week
  • Negotiations over creating a new federal Cyprus have collapsed
Turkey wants Israel to use its clout to push Cyprus into allowing a pipeline to pass through its waters so the region’s natural gas can be exported to Europe.

“Israel, as a dominant force in the region, could push Cyprus to agree to a compromise deal on the drilling of gas and construction of an export gas pipeline via Turkey” to the benefit of all sides, said Reha Denemec, an adviser to Turkish President Recep Tayyip Erdogan. Officials from both countries discussed possible cooperation on gas during a conference last week in Istanbul, he said. Israel’s Energy Ministry had no immediate comment.

Israel and Turkey patched up ties recently after years of diplomatic estrangement and are eager to advance an energy deal that would help transform Israel into a gas exporter and bolster Turkey as a key gas portal for European states. One key obstacle has been Turkey’s conflict with Cyprus, which has been divided since 1974, with northern Cyprus controlled by a self-declared state supported by Turkey. The latest round of United Nations-sponsored reunification talks faltered earlier this month.

In the past, Turkish officials have said that a pipeline could be built through Cypriot economic waters even without Cypriot consent under international maritime laws. Cyprus disputes that stance. A government official on Thursday said that a pipeline passing through the nation’s waters would only be viable and sustainable once Turkey respects Cypriot jurisdiction over its maritime zones. No third party could dictate the “excellent” relations between Cyprus and Israel, the official said, requesting anonymity in line with government policy.

Energy companies developing Israel’s largest natural gas reservoir, led by Israel’s Delek Group Ltd. and Houston, Texas-based Noble Energy Inc., have earmarked 9 billion cubic meters for regional export. The companies are in talks with Turkish firms on a potential deal, but have several hurdles to clear first.

“Europe is the biggest market for the gas from the Mediterranean basin. Countries in the region, including Israel, are looking for a way out,” Denemec, who is also a co-founder of Turkey’s ruling Justice and Development Party, said Wednesday in an interview in his Ankara office. “The only solution is to use existing natural gas pipelines in Turkey and that would only require construction of a short pipeline between Cyprus and Turkey under the sea.”

Cyprus has been divided since 1974, when Turkey invaded the north to protect the Turkish Cypriot minority against a coup to unite the island with Greece.

During a visit to northern Cyprus on Thursday to mark the military intervention, Turkish Prime Minister Binali Yildirim scolded Cyprus for its “unilateral, timeless and dangerous” search for gas in the Mediterranean, adding that such moves damage the spirit of regional cooperation. “Turkey will continue to protect its and Turkish Cypriots’ rights and interests in the Mediterranean under international law,” he said.

Earlier this month, the Cyprus Foreign Ministry said revenue from hydrocarbons would be deposited in a fund to be used “for the benefit of all Cypriots.”

Cyprus has some leverage. Undersea pipelines have become more attractive to companies seeking to develop energy projects, as plunging oil prices have dented the economics behind building new and costly liquefied natural gas terminals, Denemec said. That means Turkey and Cyprus need to figure out a compromise that satisfies both sides.

“There may not be a reunification,” Denemec said. “But a solution could be found that could bring good to both sides.”

— With assistance by Yaacov Benmeleh, and Georgios Georgiou