The East Mediterranean has become a highly contested region due to the discovery of major hydrocarbon reserves which has triggered a scramble for energy wealth. According to the United States Geological Survey, the Levant basin contains 3.6 trillion cubic meters and the Nile delta basin 6.3 trillion cubic meters of gas. While countries such as Israel, Cyprus, and Egypt have struck gold, has failed to discover significant deposits. Ankara, however, has set its eyes on a pipeline project to connect its mainland with occupied northern Cyprus which could potentially transform the geopolitical landscape.
The energy wealth of the Mediterranean has brought Cyprus, Greece, Israel, and Egypt closer to each other. Tel Aviv has already struck a deal with Cairo to export natural gas to the latter’s liquefaction plant at Idku for export purposes while Nicosia is discussing the same option. Next to this, Cyprus, Greece, and Israel signed a three-way agreement on January 2nd in Athens to build the subsea EastMed pipeline.
Although a diplomatic solution would be in the interest of all involv ed parties, Turkey’s hostile attitude towards virtually all littoral states in the Eastern Mediterranean rules out cooperation. Ankara has ordered exploration vessels in Cypriot waters’ and struck an agreement with Libya concerning the delimitation of the seabed without considering Crete. According to experts, these actions represent the Turkish desire to exert control in the region. Despite the counterproductive policies, Ankara’s intention for the construction of a pipeline of its own is intended to offer an alternative for regional cooperation on energy infrastructure. Related: The Biggest Wild Card In 2020 Oil Markets
Turkey’s aspiration to become an energy hub is not a secret. The country already boasts that it is a conduit for natural gas from the north and east. It would like to add the “south” to its list of accomplishments. Unfortunately, the fraught relations with gas-rich countries in the Eastern Mediterranean rule out a deal. Ankara, therefore, has decided to go its way and constructing an alternative.
Even though exploration vessels haven't found natural gas resources in the internationally recognized waters of Turkey, Ankara wishes to connect the mainland with the North of Cyprus. The proposed pipeline’s length is 80 kilometers and it should start pumping gas by 2025. The project’s main goal is to lower the northern inhabitants’ energy bill by exporting gas from north to south, but the pipeline’s reverse-flow feature also allows the export of natural gas to the mainland.
Turkey maintains that the new-found energy wealth of the internationally recognized Cypriot republic should be shared with the Turkish inhabitants to the north. According to experts the gas fields of the island’s coast contain approximately 227 bcm which could be worth $44.8 billion or €40 billion.
Turkey’s dual-use pipeline could compete with the EastMed pipeline as it would connect the Eastern Mediterranean with customers in Europe. Its main advantage is the relatively low construction costs. EastMed’s price tag is approximately €6 to €7 billion and requires state of the art technology for activities to commence at 2,000 meters depth. Turkey’s pipeline, in contrast, is much shorter and could connect to largely existing infrastructure on the mainland. Related: Iran's Retaliation Could Cause A Middle East Oil Shock
Despite the apparent advantages, Turkey’s plans have a low chance of success due to the ‘elephant in the room’ which is the country itself. Ankara’s adventurism and aggressive foreign policy have become a liability for investors who need to reckon with the risks before approving multi-billion dollar investments.
Although a land-based pipeline is significantly cheaper than a technically challenging subsea version, the latter has the advantage that it directly connects producers with consumers. This means that the risk of supply disruptions is significantly lower compared to a situation where a third party has control over a section of the pipeline.
The disagreements between Russia and Ukraine over natural gas exports have too often disrupted the flow of energy to European customers. Energy security is not only improved by diversifying suppliers but also increasing alternatives for transportation. Therefore, Turkey’s wish to become a conduit for Mediterranean gas seems unrealistic at the moment.
By Vanand Meliksetian for Oilprice.com
More Top Reads From Oilprice.com:
- A Bullish End To The Year For Oil Markets
- Joe Biden To Coal Miners: ‘’Learn To Code’’
- US Proved Oil & Gas Reserves Hit New Record High