A Look Ahead: the Evolving Eastern Mediterranean Natural Gas Industry | Natural Gas Europe

July 23rd, 2013 12:05am

Natural Gas Europe was pleased to interview Gina Cohen to discuss the situation as it evolves in the Eastern Mediterranean natural gas sector and the potential export routes.

“One should exploit its own resources and also trade them in order to make the best out of them for the long-term”

How has energy cooperation evolved between Israel and Cyprus both at a corporate and inter-state level?  What are the challenges ahead?

Having both countries discovering significant amounts of gas is certainly an amazing development and advantage for them. Natural gas is an ideal energy commodity that has distinct advantages compared to coal and nuclear energy which is certainly not appreciated especially after the Fukushima accident.  Gas is the best thing possible for power generation in our age.

Having said that, the discoveries by Israel should be coupled with cooperation between neighbors since quantities are large but not enough to do it on our own.

I estimate that Cyprus should look into exporting all of its gas to world markets, based upon the fact that it is a small country – there are economies of scale in place in that aspect because the more you export the more you decrease your costs and increase supply to the markets, thus the more potential buyers you have in order to make your project a success.   

The Asian markets in particular will appreciate such move, since they are also the largest buyers in the future as demand grows there, whereas in Europe its stabilized.

Israel and Cyprus should cooperate. Nevertheless, on one hand Cyprus wants to export to the EU in order to have the backing of Brussels but prices in Europe are much lower than in Asia and on the other hand Israel is very much security conscious and would like to have an export installation in its land

There is room for discussion amongst the two countries how they will accommodate their future partnership.

The Tamar and Leviathan discoveries are estimated to be quite large.  Are quantities sufficient enough to secure the long-term energy security of Isarel and satisfy its export strategy?

There are around 920 bcm out of which the government would like 400 bcm to be used in the future for the needs of the local market. I believe that an open market is preferable and we should and could export more.

The quantities are sufficient and there are further discoveries and other sectors offshore to be explored such as one off the coast of Gaza around 35 miles from Israel. By taking into account all of this, the domestic needs can be safeguarded for around 35-40 years ahead and be able also to supply either the Asian markets or to have an export route towards Jordan and the Palestinian side which require rather small amounts of gas for their needs. One should exploit its own resources and also trade them in order to make the best out of them for the long-term.

Continuing from the previous question, what is your estimation regarding the likely export route of Israeli gas - would that be an LNG platform towards European and international markets or towards the Middle East and in countries such as Jordan?

There a few options available, which are the pipeline routes and the LNG terminal.  

There is already a pipeline from Egypt to Israel which can have a reversed flow with an investment not exceeding $150 million. Another pipeline route is the one towards Turkey, although that is a complicated story because under the maritime Law of 1982 the Cypriot and Lebanese Exclusive Economic Zones are to be crossed and that implies that these countries should also permit upon that, which I find extremely difficult to happen. Moreover having a pipeline to Turkey makes Israel dependent and that is a disadvantage.

Another route could be a pipeline to Greece, but then again costs associated are great, due to the distance and the sea depth.  Simply a pipeline to the EU seems far-fetched at the moment.

In my view a pipeline which already exists and operates for years such as the Egyptian-Israeli one, I have already mentioned and additional small pipelines to Jordan through the Dead Sea are can be achieved with little cost and in a small period.

Regarding the LNG infrastructure there two versions available for planning. One is to construct one in the Mediterranean shores, close to the offshore fields, which has the advantage of being more economical in terms of transportation from production to exporting. Another alternative is to have it close to the Eilat area in the South of the country in the Red Sea. Although it will be initially costlier since gas will need to be travelled through an additional pipeline, it has the advantage of being after the Suez Channel, thus much closer and cheaper on its way for the growing markets in East Asia. Also the Eilat region has necessary capacity to host such project.

Lastly the option of a joint LNG project with Cyprus is available where a suitable location has been already found. In such case Israel hesitates to abandon control due the security concerns I mentioned earlier. In overall LNG plans have another disadvantage and that is the investment one should make not only in the initial construction but also in the hiring and training of  significant manpower, as long as, the installation is operating.

Would your company be interested in forming joint ventures for oil and gas explorations with Greek companies, including schemes for pipeline projects (i.e. East. Med. pipeline) or LNG terminals to supply the Balkan markets as well?

Most certainly I am sure the Israelis are very keen to expand cooperation, to gain and give knowledge and invest. There is a lot of activity in that field, in a preliminary level, since attention is concentrated in drafting a conclusive plan for the newly founded gas of our own, as it was mentioned in our discussion. Most energy companies in Israel have made plans though for regional expansion and already 5-6 of those are interested for Cyprus especially, while others are looking into Greece as well, where there may be potential natural gas reserves of importance reserves off the coast of Southern Crete for example. The Israelis know the locale and want really to cooperate with their neighbors. 

Gina Cohen is Consultant to the natural gas industry in Israel and she has been involved in projects spanning the full gas chain: from exploration and development; to involvement in the enactment of the country’s Gas related laws from the first Gas Law in 2002 and up to the Petroleum Profit Taxation Law in 2011; to GSPA negotiations (both as buyer & seller); to regulatory and permitting aspects for the establishment of the natural gas facilities either onshore or offshore; to projects relating to the establishment of natural gas generated power station and other issues.

Gina Cohen lectures at the Technion University’s Graduate program for Petroleum Engineers and is the author of the Hebrew-English energy lexicon (www.hebrewenergy.com)

Link to article: http://www.naturalgaseurope.com/gina-cohen-east-med-israel-cyprus

Will the Eastern Mediterranean become the next Persian Gulf? | AEI

Will the Eastern Mediterranean become the next Persian Gulf?

Niklas Anzinger | American Enterprise Institute

July 25, 2013

Reuters

A worker checks the valve gears in a natural gas control centre of the Turkey's Petroleum and Pipeline Corporation, 35 km (22 miles) west of Ankara, May 18, 2007.

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Article Highlights

• The 2010 discovery of vast oil and gas deposits in the Levant Basin brings Eastern Mediterranean security to the forefront.
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• In April 2013, the Israeli Navy requested a one-time budget increase of $760 million to assemble new forces and protect its gas fields.
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• The United States should replicate in the Eastern Mediterranean a presence similar to that which it maintains in the Persian Gulf.
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For more than two decades, the United States has placed the issue of Eastern Mediterranean maritime ­security on the backburner. But the 2010 discovery of what may potentially be 3,450 billion cubic meters of natural gas and 1.7 billion barrels of oil in the Eastern Mediterranean’s Levant Basin brings that region’s security to the forefront. Turkey and Cyprus have competing interests in tapping the newfound oil and gas and in defending their access to those resources, while Israel and Lebanon continue to dispute their shared maritime boundary and territorial waters. Against this backdrop, political tensions are escalating in Egypt, Moscow seeks to expand its influence in Syria, and Iran continues to facilitate terrorist activities through its aides in the Gaza Strip and Lebanon. Current US force posture in the Persian Gulf reflects the type of investment that may become necessary in the Eastern Mediterranean as conflicts loom: establishing cooperative security sites with favorable geographic locations, building on-call operating facilities, and establishing pre-agreements with the host nations that permit the US military to utilize the sites.

Key points in this Outlook:

• The United States has long taken Eastern Mediterranean maritime security for granted, but the 2010 discovery of vast oil and gas deposits in the region’s Levant Basin is eliciting competition over exclusive economic zones among countries such as Israel, Cyprus, Turkey, and Lebanon.
• The naval activities of Iranian-backed terrorist groups, Russia’s quest to expand its international influence, Turkey’s over- confident posture, and political unrest in Syria and Egypt have collectively exacerbated tensions in the Eastern Mediterranean.
• As Eastern Mediterranean security becomes increasingly important, the United States must bolster its force posture in the region by establishing new cooperative security sites and by helping develop a regional defense partnership.

The United States has for more than two decades taken Eastern Mediterranean maritime security for granted. The 1978 Camp David Accords ended the state of war between Egypt and Israel, and the fall of the Soviet Union diminished Moscow’s influence in the region. The triangular relationship between the United States, Israel, and Turkey also provided a foundation of stability.[1] But with the recent discovery of vast oil and gas deposits in the region, the Eastern Mediterranean is in flux.

In 2010, the US Geological Survey estimated that the Eastern Mediterranean’s Levant Basin—which is surrounded by Israel, Gaza, Lebanon, Syria, and Cyprus—may hold up to 3,450 billion cubic meters (bcm) of natural gas and 1.7 billion barrels of oil, putting it on par—at least when it comes to natural gas resources—with onshore lands and state waters off the Gulf Coast of the United States.[2] The Cypriot government believes it alone has 1,770 bcm of natural gas within its territorial waters.[3]

While Saudi Arabia and Alaska are richer in gas and oil, the Levantine gas fields’ proximity to shore and to the European markets make it attractive to many investors.[4] A number of American and European companies work in the region. Houston-based Noble Energy Inc., for example, has started production in Israel’s offshore Leviathan field, and may soon exploit smaller fields nearby.[5]

"In 2010, the US Geological Survey estimated that the Eastern Mediterranean’s Levant Basin—which is surrounded by Israel, Gaza, Lebanon, Syria, and Cyprus—may hold up to 3,450 billion cubic meters (bcm) of natural gas and 1.7 billion barrels of oil, putting it on par—at least when it comes to natural gas resources—with onshore lands and state waters off the Gulf Coast of the United States."

The gas fields have already begun to reorient strategic alliances. For instance, the prospect of economic cooperation between Israel and Cyprus has led to their diplomatic reconciliation.[6] In February 2012, Benjamin Netanyahu became the first Israeli prime minister to make an official visit to the island nation, just 175 miles off Israel’s shore. The two governments are now considering laying a Cypriot-Israeli pipeline through the Greek island of Crete to the European markets or building a shared liquefied natural gas (LNG) plant at Vassiliko on Cyprus’s southern shore.[7] Netanyahu and Cypriot President Dimitris Christofias signed agreements to enable Israel to use Cypriot airfields and to protect Cypriot gas fields.

But security concerns loom over development plans, as certain exclusive economic zones (EEZs) are disputed. Ankara’s recognition of the Turkish Republic of Northern Cyprus in the northern third of the island muddies Cyprus’s EEZ. Israel and Lebanon likewise dispute their maritime boundary, and Palestinians claim a gas field off the Gaza Strip. Unrest in Egypt and Syria and the activities of Iranian-sponsored terrorist groups only further threaten security.

Every US president since Richard Nixon has declared “energy independence” a US goal.[8] For the first time in generations, extraction technologies make this goal attainable.[9] The United States has already become self-sufficient in gasoline and natural gas; it may well become self-sufficient in oil by 2030 and an exporter of oil a decade later.[10] However, much of the industrialized world remains dependent on Middle Eastern oil. Even if the United States does not import oil or gas directly from Iraq, Saudi Arabia, Kuwait, or Qatar, the fungibility of prices means that Persian Gulf disruptions adversely impact the US economy. Should Israel and Cyprus develop the oil and gas resources in the Eastern Mediterranean, Europe could potentially reduce its dependence on Middle Eastern oil and Russian gas.

Turkish Turmoil

Much as Iran and Saudi Arabia dominate the Persian Gulf, simple geography makes Turkey a paramount player in the Eastern Mediterranean. While the Persian Gulf littoral states, with few exceptions, profit from gas or oil, Turkey lacks indigenous energy resources. It has instead sought to cash in on its geographical position, which links the energy-rich Caspian Sea region to the energy-hungry West.[11]

As new gas fields are identified in the Eastern Mediterranean, Turkey is not only loath to lose its position as an energy hub but it also seeks its own cut of the action. Ankara has used the Turkish Republic of Northern Cyprus—a proxy state formed after Turkey’s 1974 invasion of Cyprus and recognized only by Ankara—to dispute sovereignty over Cypriot gas and oil fields. Turkish Energy Minister Taner Yıldız said in March 2013 that the Turkish government would suspend businesses that are involved in Cyprus—such as the Italian oil and gas company Eni—from working on projects in Turkey.[12]

After Noble Energy Inc. began drilling for oil and gas in the Eastern Mediterranean in September 2011, Turkey’s European Union Affairs Minister Egemen Bağış threatened to use military force against Cyprus. “This is what we have the navy for,” he declared, adding, “We have trained our marines for this; we have equipped the navy for this. All options are on the table; anything can be done.”[13] The same month, the state-owned Turkish Petroleum Company conducted an exploration drill under Turkish armed escort close to Greek Cypriot waters.[14]

Bağış and Yıldız may not be among Turkey’s most diplomatically refined officials, but it would be negligent to ignore their threats. Given its embrace of Hamas and agitation against Israel, the United States can no longer assume Turkey will help encourage stability in the region. In March 2012, the Turkish government introduced a five-year strategic plan to make the country’s defense industry one of the world’s 10 largest by 2016, which reflects the ruling Justice and Development Party’s ambition to wean Turkey out of the US and European orbits.[15]

The Turkish administration views not only Israel and Cyprus as threats, but also Russia.[16] And Turkey is well positioned to defend itself: it retains the strongest navy in the region, with a 200-ship mix of frigates, corvettes, tactical submarines, fast-attack craft, amphibious vessels, and logistics ships, and has a fleet command at Gölcük on the Sea of Marmara.[17]

Russia’s Quest for Power Projection

Turkey is not the only country looking anew at an Eastern Mediterranean presence. In 1967, Moscow formed the 5th Operational Squadron in the Mediterranean to counterbalance the North Atlantic Treaty Organization (NATO) and the US Sixth Fleet. The 5th Operational Squadron remained in the region until 1992, when it withdrew after the Soviet Union’s fall.[18]

In May 2013, against the backdrop of the Syrian civil war, Russian President Vladimir Putin ordered a new Russian taskforce comprised of 16 warships and support vessels to the Eastern Mediterranean.[19] Russian officials announced plans to make this task force a permanent presence in the region and to set up headquarters, perhaps in the Syrian port of Tartous, which may have become a hub for Russian supply of heavy weaponry to the Syrian government during Syria’s civil war.[20] Certainly Putin seeks to return Russia to superpower status and believes Russia should have the same ability to project power that the Soviet Union did.[21]

What the Kremlin does not do directly, it seeks to do through client states. Bashar al-Assad’s Syria enjoys Russian protection and weaponry. In May 2013, Russia reportedly equipped Assad with Yakhont shore-to-ship “sea-skimming” cruise missiles (P-800 Oniks).[22] Russia’s supplying of weaponry to the Eastern Mediterranean remains a destabilizing factor, especially since terrorists might seize Syrian arsenals should Assad fall.

Energy resources provide both the bulk of Moscow’s revenues and Putin’s chief geopolitical leverage.[23] In 2012, hydrocarbon exports accounted for at least half of Russia’s budget.[24] Accordingly, Russia is loath to encourage the development of a network beyond its control.[25]

This is also why Russia’s state-owned energy giant Gazprom has bid for Cypriot and Israeli share contracts in LNG marketing to ensure Moscow’s control over the flow from a future Mediterranean energy production center. Hence, Moscow seeks to use its leverage over Cyprus to increase Russian influence.[26]

"Turkey retains the strongest navy in the region, with a 200-ship mix of frigates, corvettes, tactical submarines, fast-attack craft, amphibious vessels, and logistics ships, and has a fleet command at Gölcük on the Sea of Marmara."

The Israel-Lebanon Maritime Boundary

Lebanon’s desperate need for cash—the country is $55 billion in the red, equivalent to 175 percent of its gross domestic product—means that Lebanese exploration of offshore waters is inevitable. Already, Lebanese Admiral Nazih Baroudi has laid out a10-year strategy that includes defense of offshore platforms.[27] While Kofi Annan, former secretary general of the United Nations, certified Israel’s withdrawal from Lebanon in 2000, the countries’ maritime boundary and 330 square miles of territorial waters remain in dispute.[28]

While oil or gas fields have yet to be unearthed in this area, seismic studies allude to the possibility of discovery. Politics, however, preclude settlement of the dispute between Lebanon and Israel.[29] Nabih Berri, speaker of the Lebanese parliament and a close ally to Hezbollah, said in September 2012 that “we will not compromise on any amount of water from our maritime borders and oil, not even a single cup.”[30] Moreover, a December 2012 US State Department initiative to settle the maritime border between Lebanon and Israel failed. Hezbollah may use the disputed waters to justify continued terrorism against Israel and, in turn, to provide an opportunity for Iran to further involve itself in the region.

Enter Iran

The Iranian government increasingly seeks to expand its naval reach. Hossein Salami, deputy commander of the Islamic Revolutionary Guards Corps (IRGC), has declared that Iran intends to extend “our security borders to the East Mediterranean” and bragged that “deceptive ploys [by Israel and the United States] failed to stop our movement.”[31] In February 2011, Iranian warships entered the Mediterranean through the Suez Canal for the first time since the Islamic Revolution in 1979.[32]

Iranian activity in the Eastern Mediterranean poses security challenges to the United States and its allies and to offshore oil and gas infrastructure. Iran has made repeated attempts to smuggle weaponry into the Gaza Strip. On January 3, 2002, the Israeli navy captured the Karine-A, a ship loaded with 50 tons of Iranian weaponry bound for the Palestinian National Authority, the Hamas-led administration in the Gaza Strip.[33] This was the third attempted Iranian weapons shipment in less than a year.[34]

In recent years, Tehran has renewed its attempts to smuggle weaponry through the Mediterranean. On November 3, 2009, Israeli naval forces seized the MV Francop, a cargo ship reportedly carrying 320 tons of weapons from Iran bound for the Lebanon’s Hezbollah branch.[35] Furthermore, in March 2011, Israel intercepted a ship carrying weaponry that was intended to be delivered to Hamas in the Gaza Strip.[36] And in August 2012, an Iranian frigate and cruiser transited the canal and docked in the Syrian port of Latakia.[37]

Iranian-supplied weaponry poses a threat to international shipping, including commercial and military freights. During its 2006 war with Israel, Hezbollah crippled the Israeli warship INS Hanit, which was cruising eight to nine miles offshore, with an Iranian version of the Chinese C-802 missile.[38] Israeli army intelligence suspects Hezbollah has acquired M-600s, Syrian-guided missiles modeled after Iran’s Fateh A-110 that have a range of 160 miles.[39] Hezbollah may also maintain an amphibious sabotage and coastal infiltration unit. Recruits may receive training in an IRGC underwater combat school in Bandar Abbas and in a camp near the Assi River in the northern Bekaa Valley.[40]

Both the Iranian Navy and the IRGC Navy have extended their operations to the Sea of Oman, Gulf of Aden, and Red Sea, and Sudan appears ready to allow Iran to use its naval base at Port Sudan.[41] A Sudanese base would allow Iran to extend its reach if not into the Mediterranean itself, then into the northern Red Sea. Should Iranian shipping become more frequent in the Red Sea, the risk of IRGC Navy operations, mining, and commando operations will increase and also become possible in the Eastern Mediterranean.[42]

The Rise and Fall of the Muslim Brotherhood

The 1978 Camp David Accords ended the state of war between America’s two chief allies in the Eastern Mediterranean and brought a modicum of security to the region. Israel achieved border security and Egypt gained control of the Suez Canal. While diplomatic relations between Cairo and Jerusalem remained cool, the two countries cooperated economically. In 2005, Israel and Egypt built, under a 20-year contract, a 60-mile subsea pipeline from gas fields in the northern Sinai Peninsula to Ashkelon, Israel.[43]

"Should Iranian shipping become more frequent in the Red Sea, the risk of IRGC Navy operations, mining, and commando operations will increase and also become possible in the Eastern Mediterranean."

After the February 2011 ouster of former Egyptian president Hosni Mubarak, however, a security vacuum in the Sinai resulted in 15 pipeline attacks. Islamist groups mobilized against Israel and pressured the Egyptian Natural Gas Holding Company to cancel the 20-year contract, even as Egyptian hard currency reserves dwindled.[44]

Terrorism in the Sinai continues to challenge Israeli-Egyptian military cooperation. On August 18, 2011, 12 terrorists dressed as Egyptian soldiers attacked a civilian bus near Eilat close to the Sinai border, killing 8 Israelis and wounding 30. Israel’s retaliation killed five Egyptian policemen and soldiers.[45] On September 9, protestors attacked the Israeli embassy in Cairo and demanded that Egypt scrap the Camp David Accords.

President Mohammed Morsi’s July 3, 2013, ouster may exacerbate instability. In the wake of the Egyptian coup, Morsi supporters clashed with troops in both Suez and Ismailia alongside the Suez Canal, through which 8 percent of seaborne trade passes.[46] Not only the Muslim Brotherhood but also other radical groups have begun to resist the Egyptian military. Further instability could threaten Suez Canal shipping more than any event since the 1973 Arab-Israeli war.

Defense in the Eastern Mediterranean

In January 2011, Prime Minister Netanyahu described the offshore gas fields in the Levant Basin as a “strategic objective that Israel’s enemies will try to undermine” and vowed that “Israel will defend its resources.”[47] Israel’s Mary-B and Noa fields are in range of Gaza-based Hamas missiles, and the Leviathan and Tamar fields are within Hezbollah’s range. For this reason, in April 2013, Israel’s navy requested a one-time budget increase of $760 million to assemble new forces to protect the gas fields.[48]

Still, the Israeli Navy has to overcome significant challenges to adequately secure its new interests. At present, the Israeli Navy can patrol and conduct basic coastal defense, but with just 3 corvettes, 10 missile boats, 3 operational submarines, and 42 patrol boats, the naval fleet remains too small for wider sustained missions.[49] The navy will need to conduct round-the-clock surveillance to protect against gunboats and suicide maritime attacks targeting infrastructure far off Israel’s shore. This will also require more than just new ships. In recent months, Israel has also installed a Barak-8 antiair and antimissile naval defense system to protect production rigs.[50]

Israel maintains air superiority to deter conventional naval attacks. However, because Turkey has promised to use its membership in international organizations to hinder broader cooperation with Israel, NATO may not be the platform upon which to base Eastern Mediterranean defense.[51] Because NATO operates by consensus, Turkey has an effective veto over any NATO cooperation with Israel. There is no indication that Turkey plans to end its attempts to isolate Israel any time soon.

Turkish behavior may mandate that the United States act independently from NATO. The United States has acted similarly in the past: in 2012, the US Navy supported joint Greek-Israeli naval exercises to signal its disfavor with Turkey’s isolation of Israel.[52]

The Case for a New US Force Posture

If protecting freedom of navigation in the Persian Gulf and safeguarding American allies among the gulf’s littoral states is a US interest, then certainly security within the Eastern Mediterranean will become increasingly important over the next decade. US force posture in the Persian Gulf reflects the type of investment that may become necessary in the Eastern Mediterranean. The US Navy has for more than two decades kept at least one carrier strike group in the Persian Gulf at all times, with another nearby in the Arabian or Red Seas.[53] In addition, the US military maintains a number of other facilities: a naval base and regional headquarters in Bahrain; an army base in Kuwait; and a combined air operations center and a US Air Force Central Command forward-deployed headquarters in Qatar.[54]

So should the United States replicate in the Eastern Mediterranean a presence similar to that which it maintains in the Persian Gulf? Former secretary of defense Donald Rumsfeld was right when he argued, “We should take advantage of advanced capabilities that allow us to do more with less. The old reliance on presence and mass reflects the last century’s industrial-age thinking.”[55]

"In April 2013, Israel’s navy requested a one-time budget increase of $760 million to assemble new forces to protect the gas fields."

The US Sixth Fleet, headquartered in Naples, Italy, commands frigates, destroyers, and aircraft carriers transiting from the Atlantic Ocean to the Red Sea.[56] American forces in Europe have a threefold base structure, with main operating bases, forward-operating sites, and cooperative security sites. The main operating base for naval forces is in Rota, Spain, a small port on the Atlantic Coast just outside the Strait of Gibraltar. In 2011, Souda Bay, Crete, became a forward-operating site for the US Navy to support US and NATO contingency operations.[57] An effective US Eastern Mediterranean defense posture needs new cooperative security sites that have favorable geographic locations and on-call operating facilities and that are based on pre-agreements with the host nations that permit the US military to utilize the sites.[58]

Israel might host US forces in Haifa, the most frequent port of call for US Sixth Fleet service members. The US Department of State and Pentagon might also negotiate a naval security site in Limassol, Cyprus. The British maintain a Permanent Joint Headquarter in 98-square-mile Sovereign Base Areas in Akrotiri—close to Limassol—and in Dhekelia, which they use for electronic intelligence gathering and communications.[59]

Greece and Britain could join a US-led “Eastern Mediterranean Defense Partnership” designed to ensure Israel’s and Cyprus’ exploration rights and seaborne defense against threats from nearby littoral states and terrorism from the Middle East. It is essential that the US government convince Greece and Cyprus that the United States, United Kingdom, and Israel can guarantee their diplomatic and economic interests more than Russia and the Arab Middle East.

The Eastern Mediterranean in 2023 will look far different than the Eastern Mediterranean in 2013. The United States must be ready for this outcome.

Niklas Anzinger (niklasanzinger@gmail.com) is a foreign and defense policy intern at AEI.

Notes

1. Jon B. Alterman and Haim Melka, “Shifting Eastern Mediterranean Geometry,” Washington Quarterly(Summer 2012): 111–25.
2. US Geological Survey, Assessment of Undiscovered Oil and Gas Resources of the Levant Basin Province, Eastern Mediterranean (March 2010), http://pubs.usgs.gov/fs/2010/3014/pdf/FS10-3014.pdf.
3. Jen Alic, “Cypriot Bailout Linked to Gas Potential,” OilPrice.com, March 21, 2013,http://oilprice.com/Energy/Natural-Gas/Cypriot-Bailout-Linked-to-Gas-Potential.html.
4. Central Intelligence Agency, “The World Factbook,” 2011–12, www.cia.gov/library/publications/the-world-factbook/.
5. Noble Energy, “Eastern Mediterranean,” www.nobleenergyinc.com/operations/international/eastern-mediterranean-128.html.
6. Poly Pantelides, “Closer Ties with Israel High on State’s Agenda,” In Cyprus, May 3, 2013,www.incyprus.eu/cyprus- news/closer-ties-with-israel-high-on-states-agenda/.
7. “Cyprus Signs LNG Deal with US-Israeli Partnership,” The Daily Star, June 26, 2013,www.dailystar.com.lb/Business
/Middle-East/2013/Jun-26/221655-cyprus-signs-lng-deal-with-us-israeli-partnership.ashx#axzz2YZk5urQX.
8. Daniel Yergin, The Quest: Energy, Security and the Remaking of the Modern World (New York: Penguin Press, 2011), 267.
9. Daniel Yergin, “The Real Stimulus: Low-Cost Natural Gas,” Wall Street Journal, October 23, 2012.
10. US Energy Information Administration, Annual Energy Outlook 2013—with Projections to 2040(April 2013), www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf.
11. Karen Ayat, “Will Turkey Benefit from its Centrality?,” Natural Gas Europe, March 14, 2013,www.naturalgaseurope.com/will-turkey-benefit-from-its-centrality.
12. Emre Peker and Liam Moloney, “Eni Faces Clash with Turkey Over Energy Work Off Cyprus,” Wall Street Journal, March 27, 2013.
13. Adam Taylor, “Turkey Threatens Naval Action Against Cyprus If They Look For Oil,” Business Insider, September 6,
2011, www.businessinsider.com/turkey-cyprus-oil-2011-9# ixzz2WxndAapa.
14. Anshel Pfeffer, “Turkey to Deploy Warships over Gas Dispute with Cyprus,” Haaretz, September 25, 2011, www.haaretz.com/news/diplomacy-defense/turkey-to-deploy-warships-over-gas-dispute-with-cyprus-1.386659.
15. International Institute for Strategic Studies, “Chapter Four: Europe, ” The Military Balance 113, no. 1 (2013): 104.
16. Mahir Zeynalov, “Turkey, US Seek Countering Russian Naval Dominance in Eastern Mediterranean,” Today’s Zaman, July 22, 2012, www.todayszaman.com/news-287264-turkey-us-seek-countering-russian-naval-dominance-in-east-med.html.
17. Yuri M. Zhukov, “Trouble in the Eastern Mediterranean Sea,” Foreign Affairs, March 20, 2013,www.foreignaffairs.com
/articles/139069/yuri-m-zhukov/trouble-in-the-eastern-mediterranean-sea; and “Türk Deniz Kuvvetleri—Turkish Naval Forces,” GlobalSecurity.org, www.globalsecurity.org/military/world/europe/tu-navy.htm.
18. Ibid.
19. Vladimir Isachenov, “Russian Navy to Deploy Mediterranean Fleet in Bid to Protect National Security,” Christian Science Monitor, www.csmonitor.com/World/Latest-News-Wires /2013/0606/Russian-Navy-to-deploy-Mediterranean-fleet-in-bid-to-protect-national-security.
20. “Russia’s Mediterranean Task Force to Include Nuclear Subs—Navy Chief,” Ria Novosti, May 12, 2013, http://en.rian .ru/military_news/20130512/181098977.html; and Ronen Solomon, “The Weapon Route from Russia to Syria: How it Works,” Israel Defense, June 6, 2013, www.israeldefense.com/?CategoryID=484&ArticleID=2177.
21. Leon Aron, “Structure and Context in US-Russian Relations at the Outset of Barack Obama’s Second Term,” AEI Russian Outlook (Winter 2013), www.aei.org/issue/foreign-and-defense-policy/regional/europe/the-putin-doctrine-facts/.
22. Michael R. Gordon and Eric Schmitt, “Russia Sends More Advanced Missiles to Aid Assad in Syria,”New York Times, May 16, 2013.
23. Yergin, The Quest, 40–42.
24. Leon Aron, “The Political Economy of Russian Oil and Gas,” AEI Russian Outlook (Spring 2013),www.aei.org/outlook/foreign-and-defense-policy/regional/europe/the-political-economy-of-russian-oil-and-gas/.
25. Peter C. Glover and Michael J. Economides, “Russia’s New Middle East Energy Game,” The Commentator, March 26, 2013,www.thecommentator.com/article/3048/russia_s_new_middle_east_energy_game.
26. Nathan Morley, “Russia Eyeing Cyprus Bases,” Cyprus Mail, June 30, 2013, http://cyprus-mail.com/2013/06/30/russia-eyeing-cyprus-bases/.
27. “The Commanders Respond: Lebanese Navy,” Proceedings Magazine 138 (March 2012): 309,www.usni.org/magazines/proceedings/2012-03/commanders-respond-lebanese-navy.
28. United Nations, “Security Council Endorses Secretary-General’s Conclusion on Israeli Withdrawal from Lebanon as of 16 June,” June 18, 2000, www.un.org/News/Press/docs/2000 /20000618.sc6878.doc.html; and United Nations Security Council, “Security Council Calls for End to Hostilities between Hizbollah, Israel: Unanimously Adopting Resolution 1701,” August 11, 2006,www.un.org/News/Press/docs/2006 /sc8808.doc.htm.
29. Mohamad El Amin, “PGS: Too Early to Speculate on Lebanon’s Oil, Gas Wealth,” The Daily Star, March 6, 2013, www.dailystar.com.lb/Business/Lebanon/2013/Mar-06/208982-pgs-too-early-to-speculate-on-lebanons-oil-gas-wealth.ashx#ixzz 2XKa4Wn8o.
30. Nicholas Blanford, “U.S. Plan May Break Maritime Border Deadlock,” The Daily Star, December 20, 2012,
www.dailystar.com.lb/News/Local-News/2012/Dec-20/199184-us-plan-may-break-maritime-border-deadlock.ashx#axzz2Y0ooPJmq.
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Link to article: http://www.aei.org/outlook/foreign-and-defense-policy/regional/middle-east-and-north-africa/will-the-eastern-mediterranean-become-the-next-persian-gulf/

Cypriot FM calls on EU Med countries to work together | ANSA Med

Kasoulides in Rome; energy sector 'boosting relations'

24 JULY, 20:07

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Cypriot Foreign Minister Ioannis Kasoulides

(ANSAmed) - ROME - EU Mediterranean countries should start consulting each other and working as a team on the issues affecting them the most, said Cyprus's Foreign Minister Ioannis Kasoulides in an interview on Wednesday. The head of Cypriot diplomacy was in Rome to meet with his Italian counterpart, Emma Bonino, with whom he discussed EU issues as well as the humanitarian emergency in Syria and its potential consequences for immigration towards European coasts. 

''It would be good if the EU Mediterranean members were to commence consulting among themselves, in the same way that Nordic members consult within the European Union, like the way that Visegrad countries (Poland, Hungary, Czech Republic and Slovakia, Ed.) consult within the European Union, the Benelux consult,'' the minister said in the interview with ANSAmed. ''So why not Mediterranean countries? It will not be an official kind of institution, but it will be a group of reflection and exchange of views, without being a front against anyone. It will not be a sort of lobby. But, on the other hand, (it will focus on) experiences, in the need to strike the right balance between fiscal consolidation and growth. How to face migration from North Africa and the Middle East, how we reinvigorate the Union for the Mediterranean. These are all of particular interest for us.'' 

''Now, in addition to this we have the serious problem of security and stability in the eastern Mediterranean. Cyprus is the most proximal European country in that part of the world, but Italy, Greece, (and) Malta are also facing first among others this situation. And this situation is becoming extremely alarming in Syria - particularly the humanitarian situation, the risk of people getting onto boats to escape from the war, and in this case coming first and most to Cyprus but then to other neighboring countries like Italy.'' On this issue, the minister went on to say that ''I heard some very interesting ideas (from Italian) Minister of Defense Mario Mauro, which, of course we will consult among ourselves (about) how we can deal with it''. 

Italy and Cyprus enjoy excellent relations, which are likely to receive an extra boost from recent developments in the energy sector. ''ENI, as you know,'' Kasoulides said, ''has acquired three blocs from the Exclusive Economic Zone (EEZ) of Cyprus and probably will negotiate for another two, which means that it will have the biggest share.'' ''We consider ENI a very experienced company, who knows how to handle natural gas in deep waters and knows the markets and how this can become a profitable venture - both for the company, for Cyprus and for Italy. So, this is another vehicle of getting Italy and Cyprus even closer together. In the past we had culture, tourism, trade, commonality of Mediterranean issues - but now we have something much, much more important, which is natural gas. 

This is extremely important and is why I visited the headquarters of ENI today and was invited for lunch by the chairman of the company. Of course, I deal only with the geopolitics of the matter.'' In Kasoulides' view, Turkey's attitude on the EEZ has been unproductive, noting that Cyprus had acted in compliance with the UN Convention on the Laws of the Sea. Even though Turkey has not ratified the convention, he said, Cyprus had acted within its legal rights. He also noted that it seemed to him Turkey had tried to dissuade large corporations but had not succeeded, noting that ''we have ENI, Total and Noble Energy from Houston, Texas''. Kasoulides also expressed optimism on the Cypriot economy, which has been straining under a crisis for several months and whose program for economic restructuring is currently under the troika's magnifying glass.

''We are very optimistic that the results of this examination will be good,'' he said, ''because we are implementing the program as foreseen. The figures are better than those foreseen.

The impact following the bail-in into banks and taking depositors' money - which was a very serious event - overnight, despite this, the recession was foreseen to 8.7% and it's hardly 7%, which is better than reported so far.'' ''The same applies (to) the deficit, which is better than predicted.'' The minister said that ''what is important here is confidence, confidence (in) the banking system, which has received a blow during the 'haircut'.'' On the issue of the 'haircut', he said ''it was used as an experiment, and it is obvious that they now say that they will implement it elsewhere if the same situation appears elsewhere.

So, in my view, it is our (own) interests most - but also in those of our creditors - that the experiment succeeds.

Otherwise, how are we going to use it elsewhere? So I am sure that the Bank of Cyprus will be supported by the European Central Bank in order to make it a successful experiment.'' (ANSAmed) .

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