Egypt, Greece, Cyprus, Israel Team up for Mediterranean Gas

Egypt, Greece, Cyprus, Israel Team up for Mediterranean Gas
Kostis Geropoulos / New Europe
Τετ, 12 Νοεμβρίου 2014 - 14:22
Greece, Cyprus and Israel might also hold a trilateral summit soon, following the talks between the Greek, Cypriot and Egyptian leaders in Cairo on November 8
Greece, Cyprus and Israel might also hold a trilateral summit soon, following the talks between the Greek, Cypriot and Egyptian leaders in Cairo on November 8.

Greece’s Prime Minister Antonis Samaras, Cyprus’ President Nicos Anastasiades and Egyptian President Abdel Fattah el-Sisi signed the Cairo Declaration during their meeting, agreeing to cooperate in several areas such as combating terrorism and making use of hydrocarbons in the Eastern Mediterranean.

Anastasiades said in Cairo that the three countries discussed increasing cooperation in the field of energy, with the belief that the discovery of hydrocarbons in the eastern Mediterranean can contribute to supporting regional cooperation for stability and prosperity.

It is thought Greece and Cyprus may hold a similar meeting with Israel in January. Anastasiades is due to visit Jerusalem on December 2.

Leo Drollas, a London-based oil and gas consultant, told New Europe in Athens on November 11 on the sidelines of a conference on Energy and Development 2014 organised by the Institute of Energy for South-East Europe (IENE) that a tripartite summit between Greece, Israel and Cyprus is a good idea. The three countries could in theory boost EU energy security by supplying gas to Europe, he added.

“Greece should get closer to Israel because on many levels it shares common interests and now this new dimension of gas adds to the pressures to get closer. Greece and Israel are both small countries that don’t have huge natural resources, especially in energy and the new discoveries that Israel has made and Greece might make or is likely to make, make them much more similar to stand alone against a quite hostile world in this area,” Drollas said. He noted that the situation is more complicated with Cyprus because the island is divided and Turkey is the protecting power of the north.

Regarding the Cairo declaration signed by Samaras, Anastasiades and el-Sisi, Drollas said it has a deeper significance than just the hydrocarbons. “It’s a realignment of countries in this region. Greece has a great interest in hydrocarbons, of course, both via Cyprus and its discoveries and the potential discoveries in Greece itself. So Greece needs allies, so to speak, to further these developments and it’s always good to have friends in the region who have friends who have common interests,” he said.

The three countries are challenging Turkey’s efforts to chart gas deposits in areas of the east Mediterranean claimed by Cyprus. Samaras is expected to meet Turkish Prime Minister Ahmet Davutoglu in Athens on December 5-6.

Egypt’s relations with Turkeyquickly soured last year after el-Sisi toppled President Mohamed Mursi of the Muslim Brotherhood, an Islamist movement supported by Turkey's government.

Drollas told New Europe that Turkey feels under stress because of what’s happening on its own borders and it’s being quite provocative in certain maneuvers in the Eastern Mediterranean and the Aegean. “I don’t believe Turkey is more belligerent than before, but it’s coming under stress and it’s trying to find some way of showing its importance and power,” he said.

Meanwhile, energy-starved Egyptbadly needsnatural gasimports. It has been unable to clinch attractive import deals with allies likeRussiaand Algeria at least partly because it lacks re-gasification technology needed to import liquefied natural gas (LNG).

At the same time, Egypt has excess capacity in its LNG facilities because it is using so much of its own gas internally and could export Cypriot or Israeli gas to the world markets. “It makes perhaps sense instead of building a new LNG facility on Cyprus to run a pipeline from the fields which are not that far from the Egyptian facilities, instead of building a $5-billion or more facility on Cyprus,” Drollas said.

“On the other hand, for political reasons it might be best for Cyprus to have an LNG facility of its own because it can then sell to the world market and especially the European market which is, of course, its main area of activity,” he said.

Drollas also said that Israel is unlikely to use Egypt’s LNG facilities to export gas. “I personally don’t think that Israel will go down that route with Egypt although they are closer now with the change of government in Egypt. The situation there is always very unstable underneath and the enemies of the current government might use that as a stick to beat the government in Egypt and the Egyptian current government has many enemies in the region,” Drollas said.

“For its own strategic future Israel might be better off if it has an LNG facility of its own or to share one with Cyprus. After all the discoveries are close to both countries - I would have thought rather than get too involved with Egypt,” he said.

He said that for Israel, Cyprus and Greece building an LNG facility could facilitate exports to Europe. “They could end up through pipelines but an LNG facility opens the country to the world market and it might be better in the very long run to have that kind of facility rather than have pipelines because the pipelines have to traverse quite deep water to get to the Greek side. It’s unlikely that a pipeline would go onto Turkey given current condition or any foreseeable conditions so I’m not so sure that might be the right way,” Drollas said.

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