The Big Picture
Geopolitics and natural gas go hand in hand in the eastern Mediterranean, a region that entered the great game of natural gas competition 10 years ago with the discovery of the Tamar natural gas field off the coast of Israel. While Israel has since become a producer, Cyprus has struggled to follow suit despite striking gas just two years later. In the past year, however, new discoveries of natural gas reserves have reinvigorated the Cypriot natural gas sector, culminating in what may be the island country's largest discovery to date.
What Happened
ExxonMobil ended weeks of speculation with its announcement on Feb. 28 that it had struck a significant gas deposit at its Glaucus prospect, southwest of Cyprus in the eastern Mediterranean Sea. Initial assessments suggest the reservoir could have between 142 billion and 227 billion cubic meters (5 trillion and 8 trillion cubic feet) of gas in place. Though just how much of this gas is recoverable remains unclear, the discovery adds to the growing amount of natural gas found in Cypriot waters.
When coupled with Noble Energy's Aphrodite gas field, discovered in 2011, and Eni's Calypso, discovered in 2018, Cyprus could well possess 500 billion cubic meters of gas without taking future potential discoveries into account. Though this quantity of natural gas would justify the construction of an undersea pipeline or a gas liquefaction plant for shipping via tanker, the geopolitical complications of the eastern Mediterranean must be taken into account.
Turkey's Reaction
Disputes with Turkey and the Turkish Republic of Northern Cyprus on one side and Greece and Cyprus on the other have already hampered Cypriot natural gas exploration efforts. While neither Turkey nor the so-called "Turkish Republic of Northern Cyprus" claims the waters where the Glaucus prospect lies, Ankara is nevertheless likely to react to the discovery by further promoting its regional energy ambitions — and blocking those of its rivals.
Over the past six months Turkey has been expanding its exploration efforts. In November, it started drilling the Alanya-1 well and has prepared to start drilling another site. Though the outcome of these efforts has not yet been made public, Turkish Energy and Natural Resources Minister Fatih Donmez said Feb. 25 that results from Alanya-1 would be announced in the coming weeks.
Meanwhile, Turkish Foreign Minister Mevlut Cavusoglu said earlier in February that Turkey would soon begin drilling in waters south of Cyprus, though state-owned Turkish Petroleum — which would be responsible for any such operation — said it has no immediate plans to do so before results from ongoing seismic surveying in the area can be studied.
While the Alanya prospect is not in waters claimed by Greece or Cyprus, whether Ankara will stake a claim in disputed waters is an open question. Since Turkey previously did not own drillships, it has not been able to do this. But it has acquired two drillships since 2017, which it could give a naval escort to disputed sites along the lines of what China has done in the South China Sea.
Turkey is also likely to increase its efforts to obstruct exploration on blocks claimed by it or its puppet state in northern Cyprus, like in February 2018 when the Turkish navy prevented Eni from drilling on the promising Cuttlefish prospect in waters east of Cyprus. And Turkey will also continue to try to block any pipeline project to Europe that passes through Greek and Cypriot waters and that also passes through waters it claims.
Egypt's Overlapping Ambitions
The outcome of the new discovery in Cyprus will also be complicated by Egyptian ambitions. To satisfy its energy needs, Egypt wants to take a prominent role in the natural gas rush in the eastern Mediterranean. Cairo announced in January that it would host the Eastern Mediterranean Gas Forum and help set up a regional gas market. Egypt wants to see exploration successes in Israel and Cyprus piped to its domestic market, where it can supply the Egyptian industrial sector or be sent to two natural gas liquefaction plants, Idku and Damietta, that have barely operated since Egypt ceased to be a net exporter of natural gas earlier this decade. Cairo sees Idku and Damietta, which would receive Cypriot and Israeli gas, respectively, as potential hubs for large-scale liquefied natural gas (LNG) exports.
To this end, Egypt and Cyprus have been negotiating an intergovernmental agreement for a pipeline to connect to the LNG plant at Idku, which restarted small levels of exports in 2016. The Glaucus discovery could increase investor interest in such a pipeline. Rumors have also emerged from the Egyptian Energy and Mineral Resources Ministry that exports from the Damietta LNG export plant could begin as early as April, though the deal is not finalized.
Cairo sees involvement in eastern Mediterranean natural gas as an important part of its efforts to return to Egypt's regional role after its retreat inward post-Arab Spring. Cairo sees blocking Ankara's energy ambitions and broader ambitions to become the regional hegemon in the eastern Mediterranean as critical to Egypt's goal of making itself a natural gas hub — and to its own ambitions to be the regional hegemon — and to responding to Turkish support for regional Islamist parties it opposes. And this means the great game for eastern Mediterranean gas will be fought between a Greek-Cypriot-Israeli-Egyptian alliance against Turkey and its allies.
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