On March 27th and 28th, an important international energy conference was held in Athens involving top officials from the United States, Greece, Israel, Cyprus and other countries. Attendees also included delegations from industry participants, including Noble Energy, which has recently achieved significant gas discoveries in the Eastern Mediterrean. The Investment Energy Summit centered around the prospects for the creation of a “Third Energy Corridor” into the EU, a development of certainly wider geoeconomic proportions.
Conference participants pointed out that any transfer of gas to Europe from developments in the eastern Mediterranean would take upwards of a decade to commence, once investment decisions were taken.
The Israeli energy minister Uzi Landau announced that his country has established a high level commission that actively examines the prospects for transfer of gas. To date, the following options have been proposed:
- Transfer gas to Israel for the purposes of electricity production
- Creation of LNG stations in Cyprus and Israel in order to supply the world market
- Creation of a floating LNG station close to the gas fields
- Creation of a pipeline connecting the fields with Greece and from there on to the EU via Italy.
- Use the whole gas production for electricity generation and creation of a high voltage cable to connect Israel-Cyprus-Greece who will consume the electricity.
Neoclis Sylikiotis, the Cypriot energy minister added that, in this respect, his country is opting for the construction of LNG terminal along with gas depots on the Island. He also emphasized that Cyprus is mostly interested for energy collaboration with several countries based on joint venture schemes in which the Cypriot state will have a considerable stake. Moreover, Cyprus will try to attract not only independent companies but also state ones. Lastly Sylikiotis assured the audience that there was significant international interest for energy research offshore Cyprus and for the next round of exploration licenses, with 78 companies having already expressed their interest.
Greek energy minister Giorgios Papakonstantinou expressed his full support in the plan to transfer gas via a pipeline and named Greece as a regional hub for Southeastern European energy security, bearing in mind that ITGI partners and most notably DEPA wants to connect that plan with the East Med. reserves and are actively seeking to activate the alternative route to either Russian or Azeri gas.
Lastly, Richard Morningstar, the US Secretary of State Special Envoy for Eurasian Energy, laid out the strategy of the American side concerning all the above by mentioning that regarding gas exploration in the region there are several legal and political issues that have to be addressed for an indirect signal that Washington pays close attention to Turkish objections.
Moreover, Mornningstar added that all neighboring countries near the fields should be able to benefit from the exploitation of these energy resources. The Ambassador expressed his country’s support for the “Southern Corridor” route by objecting to the inclusion of any Russian involvement either as an investor or as a producer source, which extends to the Eastern Mediterranean as well. In parallel, the American side welcomes the potential cooperation between TAP and ITGI, so as to be able to supply the markets of Southeastern Europe.
In general, the conference pointed to the emergence of a third corridor, but it will face a number of difficulties before it is able to materialize.
It is of interest to note that despite prior assurances, Greece, Israel and Cyprus did not sign a trilateral energy agreement on the issue of mutual cooperation for natural gas reserves in the East Mediterranean.
A key part of American interest and initiative in the region is to convince Greece, Cyprus and Israel to include Turkey in any agreement, even if that ultimately delays the whole process. This is something that will not suit the “triad,” due to wide ranging political and diplomatic issues. This alone hinders the prospects of the project.
Secondly the Russian side headed by Gazprom has made certain inroads to Cyprus and Israel lately and is bidding also for the privatization of DEPA in Greece. It is of interest to note that well-placed sources in Israel indicate that the newly elected Russian President Putin is due to visit Tel Aviv at the end of May, his first visit abroad after being re-elected to office. With Russia keen to invest in the East Med. and with having clout on European energy politics, the objections by the American side further casts a shadow in the overall viability of the project.
Last but not least, Turkey itself is involved in bringing Azeri gas into the EU, thus for the time being it has more at stake in delaying the opening up of the third corridor, rather than participating in it.
The coming period will certainly shed some more light in this interesting twist of developments that has heated up the political climate in the East Med, well before the upcoming summer season.