• 2 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 2 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 2 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 3 days British Utility Companies Brace For Major Reforms
  • 3 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 4 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 4 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 6 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 7 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 7 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 7 days Aramco Says No Plans To Shelve IPO
Major Oil Traders See Upside For Oil Prices

Major Oil Traders See Upside For Oil Prices

The world’s oil trading majors…

Global Risk Insights

Global Risk Insights

GlobalRiskInsights.com provides the web’s best political risk analysis for businesses and investors. Our contributors are some of the brightest minds in economics, politics, finance, and…

More Info

Egypt’s Gas Find Could Make Or Break Geopolitics In The Region

Egypt’s Gas Find Could Make Or Break Geopolitics In The Region

Over the past few years, the discoveries of hydrocarbons in the eastern Mediterranean have quietly led to strategic realignment among the regions actors, including Egypt, Israel, Cyprus, Turkey and Greece.

The question now is whether ENI’s Zohr field discovery in Egypt will improve cooperation, or heighten competition, among eastern Mediterranean gas producers.

Following discoveries in 2009 and 2010 by Texan Noble Energy, Israel laid claim to the Tamar field, holding 10 trillion cubic feet (tcf), and the Leviathan field, holding 22 tcf. The finds ensure Israel’s energy security for some time; however, delays due to political wrangling have meant that a gas plan has yet to be established and exportation remains unrealized.

In 2011, the Aphrodite field off the coast of Cyprus was discovered and estimated to hold about 4 tcf. For a country dependent on services and tourism, this was a welcome opportunity for energy security and diversification.

The Zohr gas find will likely scuttle Cypriot and Israeli plans to sell offshore gas to Egypt, less than a year after both signed preliminary agreements to do so. The Zohr field is the largest ever in the Mediterranean at 30tcf, with a total capacity potential estimated at 30 billion cubic meters (bcm). An additional 2-3 bcm is expected to cover domestic consumption.

Related: Fund Managers Have Their Own ‘Black Monday’ Thanks To The Saudis

Before the 2011 uprising, Egypt was a net exporter of natural gas, supplying the likes of Israel, but has shifted to a net importer in recent years due to rising consumption and depleted natural gas output. Aside from ensuring Egypt’s energy security, the discovery could turn Egypt into a regional natural gas hub.


Geopolitics at Sea

The hydrocarbons bonanza has led to closer cooperation in the Mediterranean. Multiple partnerships have emerged including Israel-Cyprus-Greece, Egypt-Israel-Cyprus and Cyprus-Greece-Egypt, all enhancing energy and security ties through agreements and joint naval exercises.

Indeed, in 2014, Cyprus, Egypt, and Greece held a tripartite summit meeting, culminating in the signing of the Cairo Declaration, enhancing cooperation on multiple fronts, such as energy, security, tourism, and economic development.

Apart from common interests in economic development and regional security, these actors all share poor relations with Turkey. Once strong partners, Israel-Turkey relations soured after the 2010 Mavi Marmara Gaza flotilla raid incident.

Egypt-Turkey relations deteriorated following the military ousting of former President Morsi, given the political and ideological relationship between the Muslim Brotherhood and Turkey’s leading AKP party.

Israeli-Egyptian relations have improved since Morsi’s departure though, as the new regime and Jerusalem both seek to contain radical Islam.

Turkish apprehension of an eastern Mediterranean gas hub between Israel and Cyprus has increased, given their own ambitions to become a transit hub to Europe. Indeed, Turkey ramped up naval exercises and, in 2014, sent their own exploration vessel, Barbaros, to disputed waters, accompanied by Turkish warships.

Any sort of gun boat diplomacy should be deterred, however, given the improving relationship between Egypt, Cyprus, and Israel with Russia. Russia has conducted multiple naval exercises in the Mediterranean as well, and has a cooperation agreement with Cyprus to use its port and bases in cases of emergency.

Related: Trouble Ahead For The World’s Next Shale Boom?

All about transit

With their significant natural gas finds, Egypt, Cyprus, and Israel all look to become net energy exporters, while Turkey and Greece want to benefit as conduits for the European market. So, post Zohr field discovery, what options remain?

The easiest and cheapest option for both Cyprus and Israel is to create a pipeline to Turkey, which would act as a transit hub to reach the European export market. To date, politics have precluded this, given that a solution to the Cyprus conflict is a major prerequisite, as any pipeline from Israeli fields would have to pass through Cyprus’ EEZ.

However, the gas finds have catalyzed unification efforts on the island, as the latest rounds of talks between the Greek-Cypriot and Turkish-Cypriot leaders look promising. And Israel will continue to seek ways to normalize relations with Turkey.

Given Turkey’s domestic turmoil and Syrian involvement, President Erdogan could divert attention and score a quick win here. In this scenario, Turkey can improve relations with its neighbors, establish itself as an energy transit hub, and remove obstacles to further European integration.


Another option that has been preferred by the Cypriots has been the establishment of a floating LNG terminal, providing flexibility in exporting to global markets. The problem is that the Aphrodite field isn’t large enough to make such an investment commercially viable, and would require the incorporation of Israel’s Leviathan field.

Related: Iran Deal Opponents Try A New Approach

If Israel finds relations with Egypt perennially unstable, and if there is no progress on Turkish cooperation, a safe option may be to just work with Cyprus, even though such an LNG plant would be competing with Egypt’s two. In the meantime, Israel can still supply gas to Jordan.

An undersea pipeline from Israel and Cyprus to Greece in order to service Southern Europe has been discussed, but the long distance and financial viability make it unrealistic.

Lastly, Cyprus and Israel may decide to just use Egypt’s LNG plants to export their respective gas globally. The Zohr find should provide the Sisi government with an economic and political boost, generating some confidence in the country’s stability and the tripartite alliance.

As a gesture of goodwill and effort to not burn bridges with neighbors in a period of political turmoil and extremism in the Middle East, and as the Zohr field is being developed, Egypt could still accept some gas from Israel and Cyprus.

The Zohr discovery has further catalyzed regional energy cooperation and security, and has the potential to once again shift the Mediterranean’s geopolitics. The impetus is there, but at a time when there is a glut of global LNG and when Europe is seeking energy diversification, Israel, Cyprus, Egypt, and Turkey must all act quickly if there is to be a mutually beneficial conclusion.

By Alex Damianou 

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage

Leave a comment

Leave a comment

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