REPORT : The war in Syria – Energy – Geopolitics

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The same issues which drove war and terrorism in the Middle East in the 1930s and 1940s are still driving it today.

The war in Syria is also largely about oil and gas.

Syria controls one of the largest conventional hydrocarbon resources in the eastern Mediterranean.

Syria possessed 2.5 billion barrels of crude oil as of January 2013, which makes it the largest proved reserve of crude oil in the eastern Mediterranean according to the Oil & Gas Journal estimate.

Syria also has oil shale resources with estimated reserves that range as high as 50 billion tons, according to a Syrian government source in 2010.

In 2000, Vladimir Putin became president of Russia and Bashar al-Assad became president of Syria.

They did not have a close relationship, but in the mid-2000s, Putin began to expand the Russian military.

“Putin began to think about developing Russia as a great power again,” says Richard Reeve, director of the Sustainable Security Programme at the Oxford Research Group, a security think-tank.

For Russia, keeping Assad in power protects Russia’s naval base leases in Tartus, its only Mediterranean port.

It also underlines the point that Russia remains a powerful military force, and that any road to reconciliation in Syria must run through Moscow.

In the long term, Moscow wants a reliable client state in the Middle East.

Within three years, the Russian navy approached Israeli natural gas facilities, which could turn into a real threat.

Russian naval control in the Eastern Mediterranean basin could threaten not only the production of natural gas, but also its commercialization:

The project for the construction of a gas pipeline that brings gas from the Israeli coast, through Cyprus, to Greece and Italy could become Putin’s hostage.

The Russian-Iranian axis, whose existence is officially denied, is also moving eastwards.

The Russians and the Iranians today have control of most of the route of the old T pipeline, which was laid in the 30s along hundreds of kilometers, from Kirkuk in Iraq to the port of Tripoli, in Lebanon, with a second branch, the H oil pipeline, which also reached Haifa.

The T pipeline from Kirkuk to Tripoli of Lebanon, and the H branch to Haifa (then the British Mandate on Palestine), in a 1937 map – The pipeline has stopped operating for decades, but the road that was then paved is now used by the Iranians to carry weapons and fighters in Syria and Lebanon.

Moreover, Syria is a key chess piece in the pipeline wars:

Syria is an integral part of the proposed 1,200km Arab Gas Pipeline:

The Arab Gas Pipeline currently has four sections.

Arish–Aqaba section

The first section of pipeline runs from Arish in Egypt to Aqaba in Jordan. It has three segments. The first 250 kilometres (160 mi) long overland segment links Al-Arish to Taba on the Red Sea.

It also consists of a compressor station in Arish and a metering station in Taba. T

he second segment is a 15 kilometres (9.3 mi) long subsea segment from Taba to Aqaba.

The third segment, which also includes a metering station, is a 1 kilometre (0.62 mi) long onshore connection to the Aqaba Thermal Power Station.

The $220 million Arish–Aqaba section was completed in July 2003.

The diameter of the pipeline is 36 inches (910 mm) and has a capacity of 10.3 billion cubic metres (360 billion cubic feet) of natural gas per year.

The Egyptian consortium that developed this section included EGAS, ENPPI, PETROGET and the Egyptian Natural Gas Company (GASCO).

Aqaba–El Rehab section

The second section extended the pipeline in Jordan from Aqaba through Amman to El Rehab, (24 kilometres (15 mi) from the Syrian border).

The length of this section is 390 kilometres (240 mi) and it cost $300 million. The second section was commissioned in 2005

El Rehab–Homs section

The third section has a total length of 319 kilometres (198 mi) from Jordan to Syria.

A 90 kilometres (56 mi) stretch runs from the Jordan–Syrian border to the Deir Ali power station. From there the pipeline runs through Damascus to the Al Rayan gas compressor station near Homs. This sections includes four launching/receiving stations, 12 valve stations and a fiscal metering station with a capacity of 1.1 billion cubic metres (39 billion cubic feet), and it supplies Tishreen and Deir Ali power stations. The section was completed in February 2008, and it was built by the Syrian Petroleum Company and Stroytransgaz, a subsidiary of Gazprom.

Israel–Jordan connection

As of 2018, a 65 km, 36″ pipeline is under construction from the Jordan River near kibbutz Neve Ur on the Israel-Jordan border that will connect to the Arab Gas Pipeline near Mafraq in northern Jordan.

Inside Israel the pipeline extends from the border with Jordan to near kibbutz Dovrat in the Jezreel Valley where it connects to the existing Israeli domestic natural gas distribution network.

This pipeline is expected to supply Jordan with 3 BCM of natural gas per year starting in 2020.

A 12″ gas pipeline from Israel also supplies the Jordanian Arab Potash factories near the Dead Sea, however it is located far from the Arab Gas Pipeline and is not connected to it.

 

Homs–Tripoli connection

The Homs–Tripoli connection runs from the Al Rayan compressor station to Baniyas in Syria and then via 32-kilometre (20 mi) long stretch to Tripoli, Lebanon.

The agreement to start supplies was signed on 2 September 2009 and test run started on 8 September 2009.

Regular gas supplies started on 19 October 2009 and gas is delivered to the Deir Ammar power station.

Syria–Turkey connection

In 2006 Egypt, Syria, Jordan, Turkey, Lebanon, and Romania reached an agreement to build the pipeline’s extension through Syria to the Turkish border.

From there, the pipeline would have been connected to the proposed Nabucco Pipeline for the delivery of gas to Europe.

Turkey forecasted buying up to 4 billion cubic metres per annum (140 billion cubic feet per annum) of natural gas from the Arab Gas Pipeline.

In 2008 Turkey and Syria signed an agreement to construct a 63 kilometres (39 mi) pipeline between Aleppo and Kilis as a first segment of the Syria-Turkey connection of the Arab Gas Pipeline and Stroytransgaz signed a US$71 million contract for the construction of this section.

However, this contract was annulled at the beginning of 2009 and re-tendered.

This section was awarded to PLYNOSTAV Pardubice Holding, a Czech Contracting Company, who finished the project on May 2011. From Kilis, a 15-kilometre (9.3 mi) long pipeline with a diameter of 12 inches (300 mm) would connect the pipeline with the Turkish grid thus allowing the Turkish grid to be supplied via the Syrian grid even before completing the Homs–Aleppo segment.

Connection with Iraq

In September 2004, Egypt, Jordan, Syria and Lebanon agreed to connect the Arab Gas Pipeline with Iraq’s gas grid to allow Iraq to export gas to Europe.

There is a proposal to extend the branch from Banias to Cyprus.

Arish–Ashkelon pipeline

The Arish–Ashkelon pipeline is a 90-kilometre (56 mi) long submarine gas pipeline with a diameter of 26 inches (660 mm), connecting the Arab Gas Pipeline with Israel.

The physical capacity of the pipeline is 7 billion cubic metres (250 billion cubic feet) of gas per year, although technical upgrades can increase its capacity to a total of 9 billion cubic metres (320 billion cubic feet) per year. While it is not officially a part of the Arab Gas Pipeline project, it branches off from the same pipeline in Egypt.

The pipeline is built and operated by the East Mediterranean Gas Company (EMG), a joint company of Mediterranean Gas Pipeline Ltd (28%), the Israeli company Merhav (25%), PTT (25%), EMI-EGI LP (12%), and Egyptian General Petroleum Corporation (10%).

The pipeline became operational in February 2008, at a cost of $180–$550 million (the exact figure is disputed).

It has since ceased operation due to sabotage of its feeder pipeline in Sinai and gas shortages in Egypt. However, although originally intended for transporting gas from Egypt to Israel, the gas shortages in Egypt have raised the possibility of operating the pipeline in the opposite direction, i.e., from Israel to Egypt beginning in 2019.

News 2018 – Delek Drilling, Noble Energy acquire 40% of Egypt-Israel gas pipeline

The parties, Delek, Noble Energy, and the Egyptian East Gas will pay $518 million for the Egyptian gas pipeline and the right to operate it; the deal will enable Israeli companies to pump gas to Egypt as early as 2018, assuming it will be in demand.

East Gas Co., the Egyptian gas company partnering with the Israeli drilling companies, is an Egyptian government company involved in gas transportation.

The Leviathan gas field (Photo: Albatros)

The deal will enable the supply of 64 billion cubic meters of gas over 15 years from Israel’s offshore Tamar and Leviathan fields to Egyptian company Dolphinus Holdings as part of the export deal signed in February.

Starting next decade, the parties will sign a contract for a fixed quantity of gas to be exported each year.

The deal was made against the backdrop of Egypt’s efforts to liberalize its gas market and open it up to trading by private companies.

“The ministry welcomes this new step by the private companies responsible for the commercial project’s implementation,” the spokesman of Egypt’s Ministry of Petroleum, Hamdi Abdelaziz, said in a statement.

 Yitzhak Tshuva, owner of Delek Group (Photo: Gil Yohanan)

the ministry is ready to consider permit requests from the private sector to help Egypt become a regional hub for gas trading.

To buy into EMG, which owns a 90 km subsea pipeline between Ashkelon in Israel and El-Arish in Egypt, the three partners formed a joint company called EMED.

Egyptian East Gas also owns a pipeline between El-Arish and Aqaba in Jordan, which the EMED companies said could be used to transport additional gas supplies in the future.

The use of Jordanian pipes is free of charge, so that in terms of Delek and Noble Energy, the deal “kills two birds with one stone.”

The transaction depends on regulatory approval with a June 2019 deadline.

Mediterranean’s gas resources can promote cooperation, resolve conflicts and deliver financial benefits contributing to the economic development of Israel, Greece and Cyprus, advance the energy security of Jordan and Turkey, and present new prospects for Lebanon, Syria and the Palestinians.

The main gas fields in the eastern Mediterranean sea

ISRAEL: Untying the Gordian Knot of Natural Gas

The approval of a revised framework for gas regulation by the Israeli government eight years after the discovery of offshore gas in Israel resolved the antitrust stalemate but has done little to address other challenges that delay the development of Israeli gas fields such as high risks for potential buyers and uncertainly over export markets.

Despite the approval by the Israeli government of natural gas exports to Egypt, the deal signed between  Israeli Tamar gas field’s partners and the Egyptian Dolphinus Holdings for the latter to purchase $1.2 billion of gas for a minimum of 5 billion cubic meters (cbm) in the first three years , has not yet materialized.

Israel is deprived of an outlet for its gas through the Egyptian under-used LNG export facilities in Idku operated by BG Group and Damietta by Union Fenosa Gas to process Israeli gas to Europe and other lucrative markets in Asia.

The only secured export agreement is the Gas Sales and Purchase Agreement (GSPA) signed between Noble Energy Inc and Jordan’s National Electric Power Corporation (NEPCO) for the supply from the Leviathan gas field of approximately 1.6 trillion cubic feet (tcf) over a 15-year period for electricity production .

Out of all export options, the construction of a pipeline that connects Israeli Leviathan gas field to the Turkish coast remains financially attractive despite Israeli reservations over the likelihood of tying its gas into a single market where there is considerable competition.

For the gas pipeline project to proceed, it has to overcome the longstanding Cyprus conflict as the pipeline requires crossing Cyprus’s Exclusive Economic Zone (EEZ).

The Leviathan gas field’s development whose 9 bcm gas surplus is destined for export is to be carried out in two stages: the first lies in four development wells and an annual capacity production of 12 billion cubic meters (Bcm), and the second stage lies in four additional wells and an increase of the capacity production by another 9 bcm.

Nevertheless, uncertainly prevails over progress on the basis that even secured GSPAs to supply gas from the Leviathan field to domestic buyers such as IPM Beer Tuvia Ltd are subject to regulatory approval .

Israel’s energy policies should focus on the strengthening of relations between Tel Aviv and Nicosia in parallel to any Israeli collaboration with Ankaraso that an agreement on joint monetization of export-oriented gas resources is favored; regional energy cooperation through increased energy security, and incentivizing American oil and gas companies to proceed with investment in exploration activities and production commitments in Israel; and, look into multiple gas export options so that Israeli gas is not tied to a single market where changing bilateral relations or geopolitical conditions can affect the sustainability of exports and thus impact negatively the country’s energy wealth..

SYRIA: Redefining The Regional Energy Map’s Centre of Gravity

Geopolitics of energy dominate the crisis in Syria.

Foreign powers battle control of natural gas resources and the trade routes that bring energy to consumers.

Russia seeks to maintain investments in the energy sector in so-called “Safe Syria,” which is a promising zone of natural gas reserves in the territorial waters off Syria’s Mediterranean coast.

The significance that Russia attributes to joining the Eastern Mediterranean energy game is underlined by the fact that energy giant Gazprom has reportedly taken over the gas exploration and drilling rights off the Syrian coast from Russian state-controlled Soyuzneftegaz, which in 2014 signed a 25-year agreement with the Syrian government that concedes exclusive exploration rights in Syria’s EEZ .

Transition route

Qatar’s energy agenda in Syria needs to be highlighted as it includes a pipeline that would connect Qatar and Turkey through Syria, in order to join the Nabucco pipeline and ultimately reach Europe.

For its part, Iran’s energy strategy in Syria centers on the Iran-Iraq-Syria Islamic pipeline project, originally signed in 2011.

The project is intended to transport Iranian gas through the Gulf to Iraq, then to Syrian and Lebanese ports, with Europe as the final destination.

Notably, Russia’s decision to enter the Syrian conflict has an aspect linked to the control of the country’s energy supply routes.

It is acknowledged by regional energy experts that the eight Russian military bases which have been developed over the last year across Syria are along the oil and gas routes with most prominent the base of Tartus where Syria’s prime export terminal is located.

Equally important, Russia favors the Shia pipeline that would carry oil from Iran through Iraq into Syria over the Sunni pipeline that would carry oil from Qatar to Turkey via Syria.

The international community’s policies should focus on the resolution of the Syrian conflict as a prerequisite for the development of the country’s untapped offshore gas resources and for attracting foreign investment in the context of a regional energy cooperation setting.

2108 ….. It finally happened…

In accordance with an energy cooperation framework agreement signed in late January 2018 , Russia will have exclusive rights to produce oil and gas in Syria.

The agreement goes significantly beyond that, stipulating the modalities of the rehabilitation of damaged rigs and infrastructure, energy advisory support, and training a new generation of Syrian oilmen.

Still, the main international aspect and the key piece of this move is the final and unconditional consolidation of Russian interests in the Middle East.

Before the onset of the blood-drenched Civil War, Syrian oil production wavered around 380,000 barrels per day.

It has declined for some time then, since its all-time peak production rate of 677,000 barrels per day in 2002. Although the Islamic State was allegedly driven underground, the current output still stands at a devastating 14–15,000 barrels per day.

As for gas, the production decline proved to be lower (it fell from 8 BCm/year to 3.5 BCm/year) due to its greater significance within the domestic economy.

90 percent of the produced gas in Syria was used for electricity production (as opposed to oil, which was either refined domestically or exported), and in view of this, the government took extra care to retake gas fields first as the prospects of reconquest became viable enough.

It’s an understatement to say that whoever takes over Syria’s energy sector will receive a desolate ruin.

The country’s refineries need thorough reconstruction after their throughput capacity has halved from the pre-war level of 250,000 barrels per day.

This task will most likely be carried out by Iranian companies, in accordance with agreements signed in September last year, which also involved the reconstruction of Syria’s damaged power grid.

However, it remains unclear whether this project will go through, as Tehran counted upon an Iran-Venezuela-Syria consortium, which is all but feasible now against the background of Venezuela disintegrating, a new solution ought to be found.

In any case, Tehran already got what it wanted in Syria as Iran’s Revolutionary Guard already secured the telecommunications sector.

Russia isn’t the only country that could have helped Syria to rebuild its oil and gas sector — as stated above, Iran could also lend a hand.

However, Iran lacks the funds to invest heavily in Syria’s infrastructure — it needs foreign assistance to kickstart new projects at home aggravated by aging infrastructure and rapidly increasing demand.

European companies are unlikely to get interested in Syria unless the EU embargo is lifted (in effect until June 1, 2018).

Since the end of largescale military operations in Syria did not bring about a change of regime and Bashar al-Assad remains president of Syria, it would be surprising for Brussels not to prolong the sanctions regime (the U.S. will do it without a moment’s hesitation).

Sanctions-wise, Moscow is unafraid of any consequences for it is already under European and U.S. sanctions.

With a long-range goal in mind, it could even assent to the significant cost of rebuilding Syria’s oil and gas sector — IMF put the expenses at $27 billion in 2015 but the current estimate lies most likely between $35–40 billion.

This includes the totality of rigs, pipelines, pumping stations etc. to be repaired and put back into operation.

In some areas, for instance, in the predominantly Kurdish-populated northern provinces with its heavy oil deposits, it’s unlikely to seize the opportunity.

Moreover, it remains unclear what will happen to the fields (including Syria’s largest oil field, Al Omar) that were retaken by Western-backed militias, not the Syrian army.

Unfortunately for Royal Dutch Shell (NYSE:RDS-A) which was forced to let go of the 100 kbpd Al Omar field because of the stringent sanctions regime, Damascus seems intent on consolidating the energy sector under the guidance of the national oil company, SPC.

By means of political hand-wringing and the extension of Kurdish political rights within a united Syria, this goal can be achieved; however, the issue of selling the oil is just as acute as is its production.

Most of Syrian export-bound oil was destined to Europe, partly because of its geographic vicinity, and partly because European companies Shell and Total (NYSE:TOT) were the largest shareholders in the sector.

This is no longer possible as long as the EU ban on Syrian oil exports stays in place.

Thus, the new owner would have to find new market outlets, either by relying on adjacent countries like Turkey or Lebanon, or by finding buyers in Asia.

Interestingly, there has been little to no discussion so far on which company will have to take up the uneasy job of bringing Syria’s energy sector back to life.

Throughout the war years, only the minuscule Soyuzneftegaz ventured into Syria (eventually relinquishing its prospects in 2015).

Tatneft, a state-owned enterprise that develops Tatarstan’s oil and gas fields, is an obvious candidate since Syria (along with Libya, to their detriment) was their first attempt to internationalize their activities.

Just as it girded itself for the commissioning of the Qishma oil field, full-scale war broke out and the company was forced to abandon it.

Tatneft, Russia’s fifth-largest producer, is interested in returning to Syria once conditions allow for it.

Beyond that, it’s still unclear if state majors (Rosneft, Gazprom Neft) would want to join in.

Taking control of gas fields seems a better (and more profitable) bet for Russia.

If it manages to secure a fixed price, stable demand is guaranteed domestically, as gas will remain the dominant electricity generation input.

Moreover, the continental shelf of the Eastern Mediterranean has yielded the likes of the Zohr, Leviathan and Aphrodite.

Lebanon, whose sweetest spots are in-between Zohr and Leviathan, is also inching closer to tap into its assumed gas bounties.

Syria’s offshore potential is still shrouded in mystery, despite some seismic survey in late 2000s, most of the times one just hears allusions that it is as prolific as that of Israel, Egypt or Cyprus.

An early USGS estimate put Syria’s potential offshore gas reserves at 24 TCf (700 BCm), more than double of its onshore gas, while its oil reserves at a “mere” 50 million tons, a sixth of its onshore oil reserves.

Syria’s proven reserves of 2.5 bln barrels (341 million tons) of oil and 10.1 TCf (285 BCm) of gas might seem meager compared to those of neighboring Iraq or allied Iran.

Taking into consideration that one-third of its reserves are very heavy, viscous crudes, Damascus will have to sweeten the deal to bring in big Russian names — companies that can genuinely make an impact and not just take a chance.

But geopolitically, it might be a wise move.

Russia has been keen on increasing its foothold in Iraqi Kurdistan (Rosneft, Gazprom Neft), tapping into Lebanon’s offshore gas (NOVATEK), and having a bigger say in Eastern Mediterranean affairs in general.

For that, taking over Syria’s oil and gas sector might be a very powerful, non-military, tool.

Syria contains a number of gas fields that have been periodically seized since 2014 by the Islamic State, principally in Palmyra, a city that serves as transit for pipelines carrying gas from fields in Hasakah and Deir Ezzor provinces in northeastern and eastern Syria respectively .

ISIS focus around the area of Palmyra is attributed to the fact that the city is the hub between the transfer of the entire Syrian gas production and the power plants that supply electricity and gas to most parts of Syria.

The regime’s control of Shaer field (the largest field northwest of Palmyra that feeds the national grid) is considered significant because it impedes the Islamic State from amassing further disproportionate rewards compared to its limited investment of combat manpower.

But as ISIS territory shrinks it seeks to substitute traditional sources of revenue like transit tolls and wage taxes with financial profits deriving from the sale of oil and gas. Upon this strategy, the terrorist organization allegedly sells energy to the Syrian government to power the capital of Damascus and other parts of the country.

Cyprus in Need Not to Mistake Energy Activity with Achievement

Provided the existence of commercially viable hydrocarbon resources, Cyprus is assessed to get significant economic benefits in the form of job creation, foreign direct investment as well as royalties and taxes paid to the state treasury by energy suppliers.

The island’s recent third licensing round for the blocks 6, 8 and 10 within its Exclusive Economic Zone (EEZ) has attracted international energy majors such as ENI, Total, Exxon Mobil and Qatar Petroleum on the basis of closeness to the Egyptian Zohr and the Israeli Leviathan gas fields .

The rationale is to connect gas discoveries in Cyprus with Egypt’s by pipeline and re-export reserves as liquefied natural gas by utilizing the Egyptian Idku and Damietta LNG facilities.

Evidently, the development of Cypriot gas fields necessitates synergies among local and international players, users and producers, eager to export gas to a broader market.

The criteria for the evaluation of the third licensing round’s applications have lied in the technical and financial ability of the energy companies; the financial proposal of the applicant to obtain a license; applicant’s commitment to training of personnel; political considerations in having energy majors involved in the Cypriot blocks; and, any irregularities and lack of responsibility that the applicant may have demonstrated under a previous license in Cyprus or in any other country.

No doubt that a comprehensive settlement of the Cyprus problem should be fortified by the implementation of concrete confidence building measures (CBMs) such as Track-II diplomacy between Greek Cypriots and Turkish Cypriots on the future use of the East Mediterranean natural gas resources.

All this despite the conventional practice which says that the connection between politics and the development of hydrocarbons should be limited.

Policies should focus on the resolution of the Cyprus conflict as prerequisite for cooperation over East Mediterranean gas production; the creation of an East Mediterranean Energy Cooperation Council (EMECC) that will support the regional energy industry.

Members should include governments, energy companies and service providers.

The council will serve as a clearinghouse for ideas and plans for mutually beneficial energy developments in the region; and, support of the joint monetization of Cypriot and Egyptian gas resources on the basis that economies of scale reinforce profitability and produce higher government revenues.

Offshore Exploration Licenses Republic of Cyprus

GREECE: Pivotal to Regional Gas Development

Greece has been pivotal to the development of Israel’s natural gas with the acquisition of the Tanin and Karish fields by facilitating competition in the Israeli market in accordance with the revised Israeli regulatory framework.

Greek private E&P company Energean Oil and Gas currently owns 100% and is the Operator of the two Israeli gas fields  considered as a world class asset with 2,4 trillion cubic feet (tcf) of natural gas, contingent reserves, and more than 20 million barrels of light oil, contingent and perspective reserves.

Israel has facilitated Greek energy interests, which can help Europe diversify supply of energy resources.

Energean’s ability to present a reliable Field Development Plan (FDP) for both fields so that first gas is produced in 2020 looks promising.

The company has emerged as a smart investor given it managed to acquire two new licenses in Israel and another two in Western Greece during the low part of the cycle of the upstream industry; it also has a powerful shareholder basis such as ship owners, petroleum engineers, former officials from the financial sector, and the US based fund Third Point; a long term off take agreement with BP; and, the company is backed by financial institutions like the European Bank of Reconstruction and Development.

Pursuant to the overall strategy of Greece in not only penetrating the East Mediterranean energy landscape but also in exploiting and developing its own gas fields in the Ionian Sea and South of Crete, the Greek Ministry of Energy is ready to sign a contract with French Total’s JV with Edison and Hellenic Petroleum for offshore Block 2 located west of the island of Corfu as outcome of the 2014 International Licensing Round .

It may nevertheless be risky for Greece to re-launch a new Licensing tender at the current low price levels considering increased exploration costs in deep and ultra-deep waters as well as the fact that Athens political instability dissuaded interest of international energy companies as already evidenced in the 2014 International Licensing Round where no bid occurred for the seventeen out of the twenty offered fields.

PALESTINE: Seeking a Way Out of The Energy Deadlock

The Palestinian Gaza Marine gas field, one of the first regional discoveries back in 2000 remains untapped despite its location close to the shore.

The field’s new operator, the Royal Dutch Shell that owns 60%, estimates that its development is impeded by low oil and gas prices .

For a breakthrough in the field’s $500 million development, the project’s financial support either by the World Bank’s Partnership for Infrastructure Development Multi-Donor Trust Fund or by American financial institutions like the Overseas Private Investment Corporation (OPIC) can prove vital.

The value of American financial support in the field’s development is two-fold as it can help address Palestinian development challenges and advance U.S. foreign policy priorities.

The exploitation of the Gaza marine gas field would help generate revenues, offer a domestic source for electricity generation and for water desalination, and prioritize export to neighboring counties like Jordan.

Already, in implementation of its strategy to diversify energy sources of supply, Jordan has signed a Letter of Intent (LOI) to import 1.5-1.8 bcm per year from the Palestinian field.

Noteworthy, a pessimistic outlook seems to prevail for the development of the Rantis oil project in the West Bank due to high political risks .

Only one offer was received that did not even meet the technical or financial conditions of the tender issued in 2014. To ensure the development of the oil project, the Palestinian Authority considers the establishment of a Palestine Investment Fund-led national consortium to attract international operators.

Areas of Operation

LEBANON: Two Steps Forward, One Step Back On Natural Gas

Lebanon’s decision to open a new pre-qualification round for oil and gas companies interested in participating in the first International Round for five offshore blocks marks a breakthrough after three years of political impasse.

The Lebanese government’s approval of a decree stipulating Exploration and Production Agreements (EPA)and another decree on the delimitation of Lebanon’s territorial sea and Exclusive Economic Zone (EEZ) have aimed to pave the way for tendering Lebanon’s offshore area.

According to energy experts, both decrees create more problems rather than provide solutions due to lack of transparency that favors avidity and rent-seeking behavior among the various sectarian groups that dominate the political decision-making process.

 Overlap of Israeli and Lebanese claims

Despite persistent American diplomatic efforts discouraging Lebanon and Israel from energy exploration in contested waters, Beirut decided to initiate a tender process to award licenses, which Israel considers its own.

A bilateral crisis could erupt with Israel if Lebanon proceeds with non-consensual economic activity in the disputed area; thus openness to dialogue between Lebanon and Israel is critical when it comes to the northern limit of Israel’s Territorial Sea and EEZ in accordance with the International Maritime Law.

Challenges that could undermine the development of Lebanon’s gas potential lie in the lack of strong governance.

The country’s domestic politics is overwhelmed by constant conflicts over the distribution of political power; the absence of an anti-corruption framework, and lack of free, non-discriminatory competition.

Often, weak institutional and administrative frameworks in Lebanon guarantee a gap between declared government plans and ultimate delivery.

No doubt that the development of potential discoveries could help Lebanon reduce its domestic energy-deficiency and dependence on oil imports if an exploration, production and monetization model based on best-practice standards and technical expertise materializes.

Policies should focus on the establishment of anti-corruption mechanisms for the Lebanese oil and gas industry, such as the creation of sovereign wealth funds that take part of the gas profits and allocate them to the development of infrastructure projects; and, encouragement of sound institution-building to promote transparency by disclosing to the public all information pertaining to the energy sector including licenses, contracts, and production and revenue data.

Egypt and Turkey Share Common Regional Gas Ambitions

Situated right off of the Egyptian coast, Zohr field is possibly the largest gas field in the world, with an estimated 30 trillion cubic feet of natural gas.

The development of the Zohr gas field expected to produce 20-30 bcm annually for 20 years will primarily serve the Egyptian domestic market, making up for a rapid decline in production which has left Cairo increasingly struggling to meet its domestic demand .

Concurrently, it will free up much needed funds for other sectors of the economy, such as health and education.

The impact of the Zohr gas field could well go beyond Egypt’s boundaries, due to its location and infrastructure given that it is close to Cypriot Aphrodite and Israeli Leviathan gas fields, thus allowing the development of the fields to be coordinated, and the economies of scale needed to put in place a competitive regional gas export infrastructure.

Cooperative scenarios foresee gas imports from Cyprus and Israel to Egypt with the aim of being exported as LNG to Europe and Asia; despite domestic controversy, Egyptian companies have conducted talks to import gas from Israel, and the Egyptian government signed a memorandum of understanding (MOU) with Cyprus to import gas from Aphrodite field.

New discoveries guarantee that in the long-term Egypt’s production will reach levels of self-sufficiency; it is in this context that British Petroleum (BP), a heavy foreign investor in Egyptian fields, recently completed a number of transport and processing agreements accelerating the development of the Atoll field which contains an estimated 1.5 trillion cubic feet of gas ; announced the construction of a natural gas processing plant in Rosetta (Rashid) city, with a capacity ranging from 600-700million cubic feet per day; and, publicized the discovery of a new natural gas field in the BaltimSouth Development Lease in the East Nile Delta, 12 kilometres from the shoreline.

Areas of Operation

Additionally, the Suez-Med Pipeline and the Suez Canal’s extension can be viewed as motivators of Egypt’s prioritization of gas production.

These projects provide preferential economic zones; special arbitration and policies, such as restoration of corporate funds spent in Research & Development; and provision of government loans in local currency with low interest rates.

However, regulatory changes in the rest of the country that could turn Egypt’s gas sector into a must-be place for both suppliers and investors are slow, especially when it comes to regulating gas prices and trading services.

Equally interesting are Turkey’s ambitions to become a major Eurasian energy hub.

The concept of creating a regional trading hub in proximity to the East Mediterranean, the Middle East, and Europe with Turkey at the epicentre gains significant ground on the basis of viewing natural gas as a shared economic benefit in the form of transit fees, new refineries and trading facilities.

It is estimated that despite the Turkish-Israeli rapprochement, the East Mediterranean gas is trapped given that global low gas prices make less feasible the development of regional fields and the construction of pipelines.

At the same time, the presence of cheap Russian gas and the discovery of new resources in Africa and the US make the East Mediterranean gas less attractive.

To overcome these hurdles, East Mediterranean gas could be shipped to Turkey viewed by many energy experts as trading hub.

Existing gas pipelines in Turkey guarantee the presence of qualified technical labour force capable to maintain and repair energy infrastructure, while its close vicinity to energy producers and consumers makes the country attractive to East Mediterranean neighbours.

Turkey’s invasion in Cyprus’s EEZ

Sensing the power vacuum in the Eastern Mediterranean Turkey rushed in to fill it by issuing two illegal and void Navtex on 5.2.2018 and on 10.3.2018 in its efforts to disrupt the Republic of Cyprus (RoC) hydrocarbon program.

Ankara met with no resistance and thus managed to prevent the Saipem 12000 drillship of the Italian company ENI from carrying out exploratory drilling for natural gas in offshore Block 3 of the Cyprus Exclusive Economic Zone (EEZ).

Evidently, proactive measures were not taken in time, although Turkey’s attitude towards Hellenism is predictable.

There has long been a repository of hopes in emotional misconceptions, although international relations must be seen and analyzed through the model of absolute realism.

The international community fails to react

Unfortunately Cyprus has found itself alone again.

The European Union (EU), which has legitimate interests in the region, not limited to energy, responded with the expected worthless pious statements..

From Britain, which is the guarantor of the RoC, nothing more could have been expected than the hypocritical keeping of apparently equal distances in breach of its guarantee obligations in the face of Turkey’s aggression and the violation of the sovereign rights of Cyprus.

In fact, British policy remains totally proTurkish within the framework of the ever-applied “divide and rule” doctrine, so that the RoC can never have real independence or adopt policies against British interests.

The United States (US) stressed the right of Cyprus to develop its EEZ resources to be shared “equitably” between both communities.

The term “equitably” is open to interpretation. Putin’s geostrategic objectives go beyond even those of the Soviet Union.

In this case Moscow intends to acquire a sphere of influence in the Middle East and the Mediterranean (Syria, Egypt, Libya), weakening NATO’s southern flank.

In addition Russia wishes to delay as long as possible the alternative “Fifth Corridor” natural gas supplies to Europe from the Eastern Mediterranean, enabling Europe to diversify away from Russia.

The United Nations once again avoided their responsibility, washing their hands like Pontius Pilate, despite their very own Convention on the Law of the Sea (UNCLOS 1982) being trampled upon by Ankara, thus rewarding its violation of international law.

For Turkey, the invasion of Cyprus’s EEZ has remained a small, low-tension crisis without having to escalate it in order to achieve its goals.

Once again it is confirmed that diplomacy without force has zero value or expected benefit.

Notwithstanding, Ankara is not expected to dare harass Exxon-Mobil exploratory drilling in offshore block 10 in the second half of 2018.

Turkish Objectives

Ankara’s warship/gunboat piratical act of obstructing the RoC exploration for natural gas has the following strategic objectives:

  1. To stop the hydrocarbons exploration program of the RoC and further to prevent hydrocarbon exploitation.
  2. To claim a significant part of the EEZ of the RoC in violation of the UNCLOS.
  3. To become a co-owner of the energy wealth of Cyprus under the pretext of the Turkish Cypriots and blackmail the RoC to change its energy policy in a direction serving Turkey’s goal of becoming an energy hub itself.
  4. To grab the energy wealth of the RoC and to channel it through a pipeline to Turkey, imposing its own conditions and terms on prices and making Cyprus hostage, although Cyprus has much better export options.
  5. To effectively compel the international oil companies involved in the RoC hydrocarbon exploration and production program to negotiate with Turkey through a so-called hydrocarbons co-management committee with the Turkish Cypriots, utilizing the 1960 Constitution on an à la carte basis.
  6. To humiliate and draw at the negotiating table a fully-weakened President of the RoC in order to impose upon him the terms for the solution of the Cyprus problem on the basis of essentially a condominium with Turkey via the Turkish Cypriots in a confederation wherein Ankara would monopolize Cyprus’s hydrocarbons. Ankara’s current intimidation is an omen of how much “freedom” the Cypriots people will have in the proposed confederation under Turkish suzerainty.
  7. To abolish the RoC with the proposed solution and transform it not just into a satellite within its own sphere of influence but into a colony. Already in the northern part of Cyprus, occupied since July 1974, Turkey has installed hundreds of thousands of settlers as part of its progressive ethnic cleansing and eventually complete occupation of Cyprus, based on the Ismail Nihat Erim Report of 1956.
  8. To turn the Levantine Basin into a Turkish lake, using coercion tactics and to demonstrate at international level that it is the regional hegemon in the Eastern Mediterranean and the Middle East. 9. To prevent other great and regional powers from gaining access or a decisive role in the region’s energy resources except under its own terms and time framework.

Conclusions for Cyprus and Greece from Turkey’s revisionist neoottoman imperialism .

The East Med gas constitutes a viable, secure and independent alternative corridor for European demand and diversification needs.

It can be a «game changer» for Europe at least to the extent that the stronger countries of the European Union decide that they will not allow Turkey to monopolize the situation.

Cyprus primarily and Greece have entered the global energy map.

Evidently, proactive measures were not taken in time, although Turkey’s attitude towards Hellenism is predictable.

There has long been a repository of hopes in emotional misconceptions, although international relations must be seen and analyzed through the model of absolute realism.

The international community fails to react

Unfortunately Cyprus has found itself alone again.

The European Union (EU), which has legitimate interests in the region, not limited to energy, responded with the expected worthless pious statements..

From Britain, which is the guarantor of the RoC, nothing more could have been expected than the hypocritical keeping of apparently equal distances in breach of its guarantee obligations in the face of Turkey’s aggression and the violation of the sovereign rights of Cyprus.

In fact, British policy remains totally proTurkish within the framework of the ever-applied “divide and rule” doctrine, so that the RoC can never have real independence or adopt policies against British interests.

The United States (US) stressed the right of Cyprus to develop its EEZ resources to be shared “equitably” between both communities.

The term “equitably” is open to interpretation. Putin’s geostrategic objectives go beyond even those of the Soviet Union.

In this case Moscow intends to acquire a sphere of influence in the Middle East and the Mediterranean (Syria, Egypt, Libya), weakening NATO’s southern flank.

In addition Russia wishes to delay as long as possible the alternative “Fifth Corridor” natural gas supplies to Europe from the Eastern Mediterranean, enabling Europe to diversify away from Russia.

The United Nations once again avoided their responsibility, washing their hands like Pontius Pilate, despite their very own Convention on the Law of the Sea (UNCLOS 1982) being trampled upon by Ankara, thus rewarding its violation of international law.

For Turkey, the invasion of Cyprus’s EEZ has remained a small, low-tension crisis without having to escalate it in order to achieve its goals.

Once again it is confirmed that diplomacy without force has zero value or expected benefit.

Notwithstanding, Ankara is not expected to dare harass Exxon-Mobil exploratory drilling in offshore block 10 in the second half of 2018.

Turkish Objectives

Ankara’s warship/gunboat piratical act of obstructing the RoC exploration for natural gas has the following strategic objectives:

  1. To stop the hydrocarbons exploration program of the RoC and further to prevent hydrocarbon exploitation.
  2. To claim a significant part of the EEZ of the RoC in violation of the UNCLOS.
  3. To become a co-owner of the energy wealth of Cyprus under the pretext of the Turkish Cypriots and blackmail the RoC to change its energy policy in a direction serving Turkey’s goal of becoming an energy hub itself.
  4. To grab the energy wealth of the RoC and to channel it through a pipeline to Turkey, imposing its own conditions and terms on prices and making Cyprus hostage, although Cyprus has much better export options.
  5. To effectively compel the international oil companies involved in the RoC hydrocarbon exploration and production program to negotiate with Turkey through a so-called hydrocarbons co-management committee with the Turkish Cypriots, utilizing the 1960 Constitution on an à la carte basis.
  6. To humiliate and draw at the negotiating table a fully-weakened President of the RoC in order to impose upon him the terms for the solution of the Cyprus problem on the basis of essentially a condominium with Turkey via the Turkish Cypriots in a confederation wherein Ankara would monopolize Cyprus’s hydrocarbons. Ankara’s current intimidation is an omen of how much “freedom” the Cypriots people will have in the proposed confederation under Turkish suzerainty.
  7. To abolish the RoC with the proposed solution and transform it not just into a satellite within its own sphere of influence but into a colony. Already in the northern part of Cyprus, occupied since July 1974, Turkey has installed hundreds of thousands of settlers as part of its progressive ethnic cleansing and eventually complete occupation of Cyprus, based on the Ismail Nihat Erim Report of 1956.
  8. To turn the Levantine Basin into a Turkish lake, using coercion tactics and to demonstrate at international level that it is the regional hegemon in the Eastern Mediterranean and the Middle East. 9. To prevent other great and regional powers from gaining access or a decisive role in the region’s energy resources except under its own terms and time framework.

Conclusions for Cyprus and Greece from Turkey’s revisionist neoottoman imperialism

The  East Med gas constitutes a viable, secure and independent alternative corridor for European demand and diversification needs.

It can be a «game changer» for Europe at least to the extent that the stronger countries of the European Union decide that they will not allow Turkey to monopolize the situation.

Cyprus primarily and Greece have entered the global energy map.

The East Med gas pipeline is not the best export option for Cypriot natural gas reserves.

The optimal economic and geopolitical choice is the Natural Gas Liquefaction Terminal, which is now possible with the recent discovery of the Calypso reservoir (Block 6), including the existing Aphrodite (Block 12) reserves, but also certain future discoveries (Block 10 etc.).

The energy reserves of Cyprus and the Eastern Mediterranean are the most important, if not the only, trump card available to the RoC to help play an important role in the EU and find a fairer solution to the Cyprus problem.

If Greece really wants to have a role in the Eastern Mediterranean and the new energy game by constructing the East Med gas pipeline then it should dynamically assert its claims as Turkey does.

International law is not a guarantee of protection for the weak. Only the country capable of taking the initiative and projects hard power will be effective in the control over energy corridors and export options.

Under no circumstances should the Turkish extortion be conceded to either co-manage or freeze the energy program of the RoC until the Cyprus problem is resolved.

It is right to take steps and initiatives within the European Union and the United Nations without expecting however that such actions will expel the Turks from the Cypriot EEZ unless hard power is projected.

The current huge strategic deficits of Greece, its turcophobia and defeatism bring it only insults and repeated defeats across the board and not just in the Aegean Sea.

The persistent policy of supposedly securing “peace” by retreating before all Turkish provocations and accepting from a position of military weakness unacceptable national compromises, like the 1996 Imia Agreement, simply turns Greece into a satellite through the process of finlandisation.

Hellenism and Greece now face a stark choice before the Turkish neoottoman threat: either pursue a realist militarized strategy geared towards reestablishing the balance of power the soonest possible and altering the just-defensive doctrine of deployment of forces; or follow the already-failed alternative liberal logic (fallacy in this case) that seeks to promote longterm peace through closer economic, social and political ties and involves relinquishing all national assets and capitulating to Turkey.

With its constant inaction, Greece has been caught in the Thucydidean trap of a rising Turkey.

The continuous erosion of the balance of power has reached a point that will eventually make war inevitable. War does not necessarily mean catastrophe provided there is preparation and determination.

It has not yet been comprehended that in the ambiguous but realistic Orwellian world of the political and international chessboard peace can mean war and war peace.

The East Med gas pipeline is not the best export option for Cypriot natural gas reserves.

The optimal economic and geopolitical choice is the Natural Gas Liquefaction Terminal, which is now possible with the recent discovery of the Calypso reservoir (Block 6), including the existing Aphrodite (Block 12) reserves, but also certain future discoveries (Block 10 etc.).

The energy reserves of Cyprus and the Eastern Mediterranean are the most important, if not the only, trump card available to the RoC to help play an important role in the EU and find a fairer solution to the Cyprus problem.

If Greece really wants to have a role in the Eastern Mediterranean and the new energy game by constructing the East Med gas pipeline then it should dynamically assert its claims as Turkey does.

International law is not a guarantee of protection for the weak.

Only the country capable of taking the initiative and projects hard power will be effective in the control over energy corridors and export options.

Under no circumstances should the Turkish extortion be conceded to either co-manage or freeze the energy program of the RoC until the Cyprus problem is resolved.

It is right to take steps and initiatives within the European Union and the United Nations without expecting however that such actions will expel the Turks from the Cypriot EEZ unless hard power is projected.

The current huge strategic deficits of Greece, its turcophobia and defeatism bring it only insults and repeated defeats across the board and not just in the Aegean Sea.

The persistent policy of supposedly securing “peace” by retreating before all Turkish provocations and accepting from a position of military weakness unacceptable national compromises, like the 1996 Imia Agreement, simply turns Greece into a satellite through the process of finlandisation.

Hellenism and Greece now face a stark choice before the Turkish neoottoman threat: either pursue a realist militarized strategy geared towards reestablishing the balance of power the soonest possible and altering the just-defensive doctrine of deployment of forces; or follow the already-failed alternative liberal logic (fallacy in this case) that seeks to promote longterm peace through closer economic, social and political ties and involves relinquishing all national assets and capitulating to Turkey.

 

With its constant inaction, Greece has been caught in the Thucydidean trap of a rising Turkey.

The continuous erosion of the balance of power has reached a point that will eventually make war inevitable. War does not necessarily mean catastrophe provided there is preparation and determination. It has not yet been comprehended that in the ambiguous but realistic Orwellian world of the political and international chessboard peace can mean war and war peace.

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