The Geopolitics of Energy in the Eastern Mediterranean
February 11, 2014 / Washington, D.C.
On Tuesday, February 11th, GMF convened a public event in the United States Capitol complex to examine the geopolitics of energy in the Eastern Mediterranean under the auspices of its Eastern Mediterranean Energy Project. The event brought together an audience of fifty senior representatives and leading issue experts from a host of Washington Embassies, think tanks, and the U.S. Congress.
Four members of the U.S. House of Representatives attended and delivered remarks: Congressman John Sarbanes (D-Maryland), Congressman Gus Bilirakis (R-Florida), Congressman Ted Deutch (D-Florida), and Congressman Michael Turner (R-Ohio). Their speeches echoed common sentiment across political party lines that developing natural resources in a thoughtful and multilateral way can support stability in tense neighborhoods, such as the Eastern Mediterranean. All four members expressed their support for continued engagement by leaders in the U.S. and in countries in the region.
Following the remarks by the members of Congress, nonresident fellow Neil Brown opened the panel discussion, which featured experts Anastasios Giamouridis, senior consultant at Pöyry Management Consulting; Simon Henderson, director of the Gulf and Energy Program at the Washington Institute for Near East Policy; and Eric V. Thompson, vice president and director of CNA Strategic Studies. The subsequent conversation bore out many of the practical and political difficulties and opportunities presented by recent finds of natural gas in the Eastern Mediterranean.
Henderson made the point that although the discovered gas reserves are believed to be large enough to cover the domestic consumption of both Israel and Cyprus, further exploration is hampered by the small scale of the finds in absolute terms. He also pointed out that Turkey would be the most logical market for Israeli gas, should the resource develop, however Israel would likely remain a small player in the Turkish gas market, competing with the likes of Gazprom and others.
Giamouridis emphasised that the exploration of energy resources in the Eastern Mediterranean is still in an early phase, particularly in Cyprus. It is unclear exactly how much natural gas may be available in commercial terms, given the deep water nature of the resource and dry gas properties. He also highlighted that discussions of a pipeline to Turkey as the most logical export option for East Med gas fail to understand commercial complexities and risk factors and that the Turkish market may in fact not offer the best economic returns for East Med gas sellers in the long term. Finally, according to Giamouridis, linking the exploration and extraction of Eastern Mediterranean natural gas to the peace process would be a “recipe for disaster” that would make potential investors very nervous about financing costly extraction projects.
Thompson discussed the potential economic benefits of developing natural gas reserves by Cyprus and Israel, which could promote economic and political stability within each country. However, new infrastructure, such as offshore drilling rigs and pipelines, present new targets for groups such as Hezbollah. This could create a more complicated maritime security environment which could make it more difficult for the U.S. to operate there. Thompson also argued that the manner of development of potential gas reserves by Cyprus could orient that country more towards EU or Russia.
Link to source: http://www.gmfus.org/archives/the-geopolitics-of-energy-in-the-eastern-mediterranean/
