• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes The Inconvenient Truth Of Electric Cars
  • 8 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 3 hours Here we go folks, the wish of so many: Pres. Trump threatens to lessen US security role in Strait of Hormuz, unveils sanctions
  • 5 hours Climate change & Wildfires: More Wildfires To The Western U.S., Will Affect Tens Of Millions Of People
  • 2 hours Wonders of Shale - Gas, bringing investments and jobs to the US
  • 1 min Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 3 hours The Plastics Problem
  • 8 hours Hard To Believe: UAE Will Work To Defuse Middle East Tension
  • 10 hours Oil Demand Needs to Halve: Equinor
  • 4 hours Looks like Trump is putting together a "Real" Coalition to protect Persian shipping lanes. Makes perfect sense. NO Fake "Coalition's of the Willing" UPDATE REUTERS Pompeo "Sentinel Program"
  • 6 hours Cherry Picking Climate Data
  • 16 hours Solar Panels at 26 cents per watt
  • 9 hours Green vs. Coal: Bavaria Seeks Fast-Track German Coal Exit in Snub to Merkel Plan
  • 18 hours Hydrogen FTW... Some Day
  • 17 hours Section 232 Uranium
Alt Text

War Worries Send Oil Prices Soaring

Bullish sentiment has returned to…

Alt Text

The Last U.S. Oil Major In Venezuela

Chevron is the last U.S.…

Alt Text

Can Artificial Intelligence Save The Nuclear Industry?

Nuclear plant decommissioning is a…

Vanand Meliksetian

Vanand Meliksetian

Vanand Meliksetian is an energy and utilities consultant who has worked with several major international energy companies. He has an LL.M. from VU Amsterdam University…

More Info

Premium Content

The Battle For Energy Dominance In The Mediterranean

The Eastern Mediterranean is easily one of the most important and hotly contested regions in the world due to several key factors: the Suez Canal is vital to international commerce, militaries of major powers are participating in the Syrian Civil War, and the region hosts two more unresolved conflicts in divided Cyprus and Israel/Palestine. However, recent major gas discoveries may have permanently altered the energy map of the region. If they play their cards right, Egypt, Israel, Lebanon, and Cyprus may soon go from energy importers to major exporters within a fortnight.

Four of the six Eastern Mediterranean countries have seen their fortunes change overnight due to these two discoveries. Two countries, however, have been left out: Turkey and Syria. While Damascus remains distracted by its raging civil war, Ankara is desperate for a potential discovery. Turkey’s economy has grown steadily in recent time and its consumption has followed suit, doubling in the last decade to 55.2 bcm in 2017. Lacking any major energy deposits of its own, Ankara has been importing most of its gas from neighbouring countries - notably Russia, Azerbaijan, and Iran.

While Turkey has missed out, Egypt has benefitted significantly from these most recent finds. Due to several significant discoveries in the past decades, Cairo had two liquefication terminals, with a capacity of 7.5 bcm, and export pipelines that could transport fuel to Israel and Jordan. However, the enormous growth in domestic consumption and the unexpected early depletion of several fields forced Egypt to stop exports altogether and start importing. The discovery of the mammoth Zohr gas field on the coast has been a gamechanger for Cairo. Egypt will, for the first time in years, not be importing expensive LNG in 2018 as production from the massive offshore field will be ramped up to meet domestic demand. Related:  Oil Prices Fall Despite Iran, Venezuela, Libyan Supply Outages

Together with its Arab neighbour, Israel has done the most in terms of developing its energy deposits. The participation of several international energy companies and the unanimous political support for energy independence in the government has made these projects a high priority. Israel's portion of this giant gas field should be enough for not only domestic consumption but also export. Geopolitics may impede the development of energy relations with some of its neighbours, but Egypt is set to be a key partner. Cairo and Jerusalem have agreed on a deal worth $15 billion over ten years for a total of 64 bcm gas to be imported by Egypt through a private company. These imports will add to Eygpt’ domestic production in order to supply its idle liquefication facilities in order to make Egypt an energy hub in the Eastern Mediterranean.

While it has missed out on the Zohr gas field, Turkey is determined to challenge Egypt as an energy hub in the region. As a bridge between Europe and the Middle East, Ankara is well placed to distribute energy. The diversification policy of the EU, due to strained relations with Russia, has further fuelled Turkey’s ambitions in this regard. So far, an additional pipeline from Russia through the Black Sea has been built to Turkey, and the first phase of the Southern Gas Corridor from Azerbaijan is almost completed, but other projects have struggled.

Israel had been considering an undersea pipeline to Turkey and the EU but Ankara’s continued support for Hamas led to a breakdown in those negotiations. The recent move of the U.S. embassy to Jerusalem and the killing of 62 demonstrators by Israeli soldiers in Gaza have led to even higher tensions in the region. In a sector with a long return period on investments, long-term stability is a high priority. Therefore, Israel has been begun exploring other potential export routes to Europe instead of Turkey. The leaders of Israel, Cyprus and Greece met in Nicosia in February to discuss the advancing of a pipeline that would run through the three countries to the EU, circumventing Turkey. Related: Iran: Trump’s Sanctions Can’t Touch Our Oil

Another area where Turkish saber rattling has added fuel to the geopolitical fire is in the southern shore of Cyprus. The discovery of energy deposits there promises to usher in an era of potentially cheap energy. However, Turkey insists that all of the island inhabitants, including Turkish Cypriots in the north, should enjoy the benefits. To this purpose, Turkish warships prevented exploratory drills in the seabed by Italian energy major Eni on the 9th February. The war of words waged by Ankara did not stop at Cyprus, with Egypt also coming under fire. When Cairo and Nicosia struck a deal for the joint exploration of hydrocarbons in 2013, the possibility of an undersea pipeline to Egypt’s liquefication terminals was also discussed. In reaction, Ankara stated that the accord was “null and void” stirring angry reactions from Egypt, warning Turkey not to contest a legal agreement that was supported by all parties, including the EU.

The discovery of natural gas in the region has brought together an unlikely group of countries. Turkey, having missed out on this great natural gas bounty, continues to pursue its goal of becoming an energy hub while undermining the power of its neighbours. The authoritarian style of governance practiced by the AKP party and its front man Erdogan, do not breed confidence in regard to the stability of the region. It will take a great deal of statesmanship from all parties involved in order to see the region reach its true energy potential.

By Vanand Meliksetian for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Chris on June 04 2018 said:
    Valeura Energy and Statoil made a huge natural gas discovery in the Thrace basin in Turkey in Nov 2017 !

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News