Politics May Devour Exploitation of Mediterranean Natural Gas Reserves

It's understandable, given the potential offshore hydrocarbon reserves of the eastern Mediterranean that nations there might be in dispute about who owns what, and where maritime borders are.

The Republic of Cyprus, Israel, Lebanon and Turkey are now involved in a diplomatic dispute with more layers than a baklava over who owns what and to exploit what, where and when.

At issue is each country's claim to its Exclusive Economic Zone (EEZ) under the Third United Nations Convention on the Law of the Sea (UNCLOS), which came into force in November 1994. Under UNCLOS III, a nation can claim an EEZ of 200 nautical miles from its coastline.

Needless to say, in constricted waters such as the eastern Mediterranean, a number of ad hoc arrangements have come into force, but the recent discovery of vast potential natural gas and oil reserves have shredded the tacit concords, and all the nations involved are now vying for maximum advantage.

How many disputes overlay the potential exploitation of these reserves?

Where to begin?

The Republic of Cyprus, furious about the continued division of the island, which it shares with the Turkish Republic of Northern Cyprus (TRNC), has repeatedly blocked Turkish efforts to join the European Union. In 2010 the Greek Cypriot administration and Israel signed an accord demarcating their maritime borders to facilitate a search for mineral deposits in the Eastern Mediterranean.

Israel and Lebanon don't have a peace treaty.

In August 2011 Lebanon's Parliament passed an 18-article draft legislation unilaterally demarcating its maritime borders with Israel, the direct result of Israel's cabinet the previous month having approved a map of Israel's proposed maritime borders with Lebanon, maintaining that their map is in line with an armistice accord drawn up in 1949 and not contested by Israel. Lebanese President Michel Suleiman subsequently cautioned the Israeli government against taking unilateral actions of "the kind that Israel commonly makes in violation of international law."

Turkish-Israeli relations?

On ice since Israel's 31 May 2010 unprovoked assault by Israeli Shayetet 13 Naval Special Forces commandos in international waters on six civilian vessels attempting to deliver humanitarian aid to Gaza, which resulted in the deaths of eight Turkish civilians and an American. Despite Turkish insistence that Israel apologize for the assault Tel Aviv has steadfastly refused to do so, leading to a deep freeze in Israeli-Turkish relations. The current tension between Turkey and the Republic of Cyprus dates back to 2003, when the Republic of Cyprus signed a deal with Egypt over drilling rights and continued to expand cooperation in 2007 with Syria, Lebanon and Israel, ignoring the TRNC in the process

Blithely ignoring geopolitics, Israel is attempting to press forward to the swift development of its Mediterranean natural gas assets, the Tamar field, discovered in 2009 and Leviathan, discovered the following year. Initial prospecting estimates of the Tamar and Leviathan fields, off Haifa, concluded that the two sites between them could hold as much as 688 billion cubic meters of recoverable natural gas, potentially 10 times larger than Britain's North Sea discoveries.

In 2011 the U.S. Geological Survey estimated that the Mediterranean's Levant Basin Province, covering offshore waters of Israel, Lebanon, Syria, and Cyprus, could contain as much as 3.4 trillion cubic meters of gas and up to 1.7 billion barrels of recoverable oil.

But, in a state of conflict, Israel will have to take measures to defend the Tamar and Leviathan fields' gas installations and the miles of pipes, pumps and other infrastructure.

Negotiations?

On 11 February the Cypriot government published requests for bids in a second round of tenders for offshore gas and oil exploration concessions in the official journal of the European Union and on the Cypriot government gazette and Ministry of Commerce website, stating that successful applicants will have 90 days to search for mineral deposits inside the island's 19,700 square-mile Mediterranean offshore EEZ. Five days later Israel and the Republic of Cyprus signed a military pact allowing Israel Defense Force combat planes and ships to utilize Cypriot airspace and territorial waters to protect Cypriot offshore natural gas fields. The same day in Nicosia natural gas cooperation was on the agenda of issues to be discussed between the Republic of Cyprus and Israel during the visit of Israeli Prime Minister Benjamin Netanyahu there.

The Turkish response?

On 15 February the Turkish Foreign Ministry issued a formal protest about the Greek Cypriot administration's new international tender, writing, "We have learned from an announcement published in the EU Official Journal dated 11 February 2012 that the Greek Cypriot administration (GCA) has called for a new international tender for off-shore hydrocarbon exploration and exploitation within its so-called 'economic exclusive zone.' We protest this unilateral step, which is both irresponsible and provocative, taken by the Greek Cypriots despite all warnings. As it is known, Turkey, together with the Turkish Republic of Northern Cyprus (TRNC), from the onset has objected to the GCA-s activities aiming at unilaterally establishing maritime jurisdiction areas, granting off-shore licenses to international oil companies and conducting off-shore hydrocarbon exploration and exploitation. "

Given the U.S. Geological Survey estimates that the Mediterranean's Levant Basin Province, could contain as much as 3.4 trillion cubic meters of gas and up to 1.7 billion barrels of recoverable oil, maybe time for all concerned parties to make nice? Certainly enough to go around.

But, given Middle East history, one should not bet on it, however the dollars and cents, lira, pounds, shekels and euros might add up.

By. John C.K. Daly of Oilprice.com