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OilPrice.com: The Battle For Energy Dominance In The Mediterranean

Posted by: Berhane.Habtemariam59@web.de

Date: Monday, 28 May 2018

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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.

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