EMGC ’15: Policy experts warn of complications in local gas collaborations

By ADRIENNE BLUME

NICOSIA, Cyprus -- EMGC 2015 continued on Wednesday afternoon with Dr. Ayla Gürel, Senior Research Consultant at PRIO Cyprus Centre, examining the possibility of gas as a catalyst for peace in the Eastern Med.

Gas collaboration could be tricky. "In my view, the question can be approached in two ways," Dr. Gürel asserted. "Can cooperation on regional energy projects facilitate peace? Also, would there be benefits to regional cooperation that could lead the parties involved to achieve peace?"

"The second question, which I'll focus on here, brings up yet another question," she said. "To what extent is peace needed for the development of Eastern Mediterranean gas?"

Dr. Gürel noted that the long-standing conflict between Cyprus and Turkey could complicate the development of the gas resources. Conversely, offshore drilling success since 2011 has unsettled relations between Greek Cypriots and Turkish Cypriots, and overlapping and disputed areas of drilling in Turkish and Cypriot waters have complicated negotiations.

Both sides seek equal shares of revenues from the reserves, and Dr. Gürel believes that both groups should be considered equal holders of Cyprus' gas reserves as long as the Greek and Turkish sides of the island do not split into separate nations, and as long as Turkey does not recognize Greek Cyprus as an independent state.

"Gas has actually acted as an anti-catalyst" for peace thus far, Dr. Gürel stated. This has led to a hardening of stances and the intensification of Exclusive Economic Zone (EEZ) border disputes.

"So, can gas be used as a catalyst for peace? The answer, under current circumstances, is unfortunately not likely," she said. Given the parties' stances, the promised economic benefits are far outweighed by political differences and the modest amount of gas discovered offshore Cyprus thus far, Dr. Gürel said.

Opportunities for regional collaboration. The last session of EMGC 2015 finished with a panel discussion on the Levant basin trading corridor. Panelists included moderator Dr. Zenonas Tziarras, Foreign Policy and Middle East Expert at Institute Strategy International; Mohammad Mourad, Commercial Manager for BG Egypt; Gary Lakes, Director of EPRIC's Energy Program; and Dr. Gürel.

The Levant basin is the Eastern Med's largest gas reserves area discovered to date. According to the US Energy Information Administration (EIA), fields discovered in Cyprus and Israel since 1999 contain the majority of the recoverable gas reserves, which are collectively estimated at more than 40 Tcf.

Turkey could attempt to control further drilling in waters around Cyprus, or it could seek to work its way into the Eastern Med hydrocarbon developments via less aggressive measures, Lakes said. By 2030, Turkey will need 70 Bcmy of gas to meet its demand, and it does not currently have a source of gas to fill that need.

If Turkey could claim or obtain gas from the Cyprus EEZ, then the country would be able to ensure supply security. However, such a move could be a "great risk" for Turkey in a political sense, Lakes said.

Dr. Gürel countered Lakes' statement, saying that the reason why Turkey has not claimed its own EEZ in the Eastern Med is related to its problems with Greece, and that the issue is not as simple as the possibility of Turkey pursuing gas in another country's EEZ. "Turkey's policy has more to do with political claims, for itself and for Turkish Cyprus, than with claims about gas," Dr. Gürel said.

Mourad, meanwhile, advised against actions that would make the development of the Eastern Med gas resources more difficult and costly. However, international oil companies can help bridge political problems and historical issues and act as mediators between governments with regard to resource development, Mourad said.

He also noted that Egypt offers a huge export opportunity for regional gas reserves, with demand growth of 5%//yr or more.