A few months ago, this blog noted a push by Cypriot leaders to present the immense gas potential of the Eastern Mediterranean as a diplomatic catalyst in a fragmented region. After decades of tension and division at home, Cyprus reasoned that billions in energy revenue and the potential for energy independence would be enough to revive and stabilize reunification talks between the island’s two parts after nearly 40 years of division. Further, they saw the trillions of cubic feet of natural gas in nearby waters as a way to ease tensions throughout the region.
Now, with reunification talks back on the table with U.S. support, Cyprus’ positive diplomatic outlook is gaining steam. This week, Cypriot President Nicos Anastasiades told the Associated Press that reuniting the Mediterranean island was the surest way to ensure energy cooperation throughout the region, allowing Turkey easier access to plentiful gas reserves and even put them on track towards closer relations with Israel.
“A Cyprus settlement, reached as quickly as possible, will assist not only in Israeli (gas export) planning, but also contribute greatly to restoring relations with Turkey,” Anastasiades said.
The President’s comments as Turkey continues to express strong reservations about Cypriot exploration efforts in the region, insisting that any energy projects include the Turkish Republic of Northern Cyprus (recognized by only Turkey). After sending naval vessels to Cypriot waters shortly after Nicosia announced offshore plans, Turkey has kept up the pressure on both the leadership in Nicosia and energy firms working alongside them. Earlier this month, Ankara was accused of halting a Norwegian ship commissioned by Nicosia to conduct offshore surveys for energy exploration, alleging that they had been told to “abandon position” and “leave Turkish waters”.
Insisting that moving current projects forward and continuing reunification talks will be beneficial for all involved, Anastasiades continued by saying, “This would be very significant for Turkey and at the same time significant for Israel and it could be another way Cyprus contributes to peace in the region”.
This is hardly the first time Cyprus has worked to set themselves up as a well-intentioned middleman in the tense Eastern Mediterranean. Since first announcing plans to pursue their own exploration efforts as well as explore potential export projects with Israel, Nicosia has worked to calm the waters of the Eastern Mediterranean, offering to get involved in discussions with just about everyone from Cairo to Tel Aviv to Beirut. However, the need to create and sustain a stable production and investment environment has never been greater for the cash-strapped island nation.
With Israel exploring export options to move the 40 percent of available reserves it has designated for sale beyond its own borders, Cyprus needs to find funding for a proposed Liquefied Natural Gas plant if they want to establish themselves as a viable transport hub in the region, as well as offering a cheaper and more flexible export alternative to a Turkish-bound pipeline. However, with a price tag near $10 billion, completing a plant will require substantial investment from beyond Nicosia – a reality that will require more political and financial stability than the country currently offers. Cyprus has received some international support for the LNG project, including an MOU signed with Italy’s energy giant Eni.
By linking the reunification talks to gas benefits for Turkey, Cyprus is presenting the Eastern Mediterranean’s gas potential as a win for everyone involved and the best reason to move towards ending the 38 years of division. Cyprus is reunited and Turkey gets access to cheap, plentiful gas. What more could Ankara want?
Cyprus currently boasts access to almost half of an estimated 122 tcf of natural gas below waters in the Eastern Mediterranean. According to a U.S. Geological Survey, the country’s ability to exploit the offshore reserves could bring in about $400 billion in revenue over the coming years, not to mention address any domestic needs they might have.
Despite the President’s recent comments, there is a long and difficult path ahead. Turkey remain anxious both about Cyprus’ offshore progress and challenges at home. Even as talks have resumed with both Nicosia and Israel, Ankara has reportedly moved towards expanding its naval capabilities in the region. Considering tension at home, unrest in Syria and uncertainty in Egypt, this is hardly surprising, but it does not exactly send the message that Turkey is preparing for peace.
Link to source: http://www.forbes.com/sites/christophercoats/2014/02/19/the-diplomatic-potential-of-eastern-mediterranean-gas/
