Cyprus talks need rethink as gas hardens divides
Cypriot President Nicos Anastasiades (centre) and Turkish-Cypriot leader Dervis Eroglu at peace talks in March. (PA)
While it has been hailed as a catalyst for re-uniting Cyprus, the potential gas bounty off the coast of the island has only entrenched political divides. The latest flare-up in tensions came when Turkey issued a Navigational Telex (NAVTEX) on 3 October stating it was reserving areas south of Cyprus for seismic surveys from 20 October to 30 December. In response, Cypriot President Nicos Anastasiades suspended peace talks.
Cyprus and Turkey were in the same position three years ago. When Noble Energy started drilling in Block 12 offshore Cyprus in September 2011, Turkey also sent seismic ships to the area, observed by military vessels.
“The only difference this time seems to be the NAVTEX notice and the stronger Greek Cypriot reaction by suspending the settlement negotiations,” said Fiona Mullen, of Nicosia-based energy advisory Strata Insight.
Turkey’s stance
Turkey has two claims over Cyprus’s exclusive economic zone (EEZ). The first is on behalf of Turkish Cypriots, whom it believes have equal rights to exploit the island’s offshore resources. The second is its own claim its continental shelf stretches to the west of Cyprus and partly covers blocks 1, 4, 5, 6 and 7 as delineated by Nicosia. Cyprus has only issued licences for blocks 2, 3, 9, 11 and 12.
Turkey is one of only seven countries in the world not to have signed the United Nations Convention on the Law of the Sea (UNCLOS) – a treaty that has become customary international law for governing rights and responsibilities over maritime territory.
The law asserts the EEZ of a state – which includes islands – runs up to 322 km from its shore. This means that, although Turkey has a long coastline, under UNCLOS its access to the sea is limited by Cyprus and the archipelago of Greek islands, Marianna Charalambous, a Cyprus-based legal consultant with expertise in maritime boundaries, told Interfax.
But since Turkey has not signed UNCLOS and recognises neither the Republic of Cyprus nor the EEZ of islands, it divides its territorial waters using the median line between itself and the states it recognises (Egypt, Lebanon, Israel, Syria and mainland Greece).
“However, under international law Turkey has absolutely no legal right to the EEZ of Cyprus,” said Charalambous.
Turkey’s NAVTEX has not yet affected Cyprus’s latest exploration campaign. A joint venture between Eni and Kogas, which started exploratory drilling at Block 9 on 26 September, is continuing its activities, independent LNG expert Charles Ellinas told Interfax. Eni has not commented on the issue.
However, even if operations continue as normal for now, the fear of an escalation adds another layer of investment risk in Cyprus. “I worry the way in which it has been reported – talk of sending warships when all ships have right of passage in a country’s EEZ – could put off anyone considering investing in gas export infrastructure,” Mullen told Interfax.
A new route to negotiation
Cyprus cannot afford further costly obstacles to exploiting its gas. It already has to address the challenge of its limited reserves, its junk credit rating and – if it misses the 2018-2020 window to market its gas – the prospect of falling global gas prices, according to a report by the PRIO Cyprus Centre.
However, the prospect of unilateral gas development seems only to have frustrated the prospects for a reunification agreement, meaning there is perhaps a stronger case than ever for negotiating a settlement under a different framework.
Under a proposal put forward by International Crisis Group, Greek Cypriots would give Turkish Cypriots independence and the EU would then offer them the right to join the EU – reunifying the island in all but name and government. In return, the Turkish side would give Greek Cypriots full rights over gas in the future Republic of Cyprus waters, offer full compensation for property, withdraw troops, return occupied territory and end the demand for ‘guarantees’ over the country that accompanied the island’s independence in 1960, Hugh Pope, Crisis Group’s Deputy Program Director, Europe and Central Asia, told Interfax.
While such a gas-for-land deal would allow Cyprus to exploit its reserves unhampered and – after normalising relations with Turkey –access to a large and lucrative gas market, the proposal has gained little traction.
“I think that right now it would be political suicide for any Greek Cypriot politician to promote it,” said Mullen. “It is also likely to lead to inflation in property compensation so it would be a terrible waste of gas revenues.”
It looks for now as if both sides will continue with the status quo, meaning a stalemate in resettlement talks and an uncertain economic future for both sides.
