Dispute with Turkey threatens Cypress and Israel gas prospects

Geopolitical Information Service

While the discovery of huge natural gas and oil assets in Israel’s and Cyprus’ adjoining Exclusive Economic Zones (EEZs) laid the foundations for wide-ranging cooperation between the two countries in the areas of economy, energy, and defense, it unveiled big challenges and prospects at the same time, says political scientist and Geopolitical Information Service (GIS) author Dr. Andreas Stergiou.
In order to monetize both the natural reserves in Cyprus’ EEZ and a part of the Israeli fields, the same parties signed a statement of intent in June 2013 for the development of an onshore natural gas liquefaction terminal at Vasilikos in Cyprus, aiming to store the fuel for further transport to Europe. However, this enterprise faces some very serious challenge, says Dr. Stergiou.
“First, the combined cost for the liquefaction plant and the offshore pipeline varies between US$8 and US$10 billion, of which Cyprus may decide to finance 51%. In this case, it is very unlikely that the nearly bankrupt island-state will be able to find the money,” he notes.
Another very attractive option could be the construction of a pipeline connecting Greece, Cyprus, and Israel. This choice would be, from a geopolitical point of view, the most important factor in the process of consolidating a true axis between the three non-Muslim democracies of the eastern Mediterranean.
“However, apart from the immense costs and technical difficulties associated with this project, the geostrategic preconditions for implementing it do not currently exist, as an agreement between Greece and Egypt on the delimitation of their respective EEZs has not yet been achieved,” he says.
Meanwhile, the private companies involved in the exploitation of Cypriot gas are pushing for another unlikely option: constructing a pipeline to Turkey with the permission of the Nicosia government – which would be much cheaper – and using some of the pipeline’s early revenue to finance the Cypriot terminal.
“No serious politician in Cyprus would consider that, because it would mean indirectly recognizing the northern portion of the island, occupied by Turkey, without any guarantee that the profits would actually go toward building a liquefaction plant,” comments Dr. Stergiou.
Tensions over Cyprus pose the main obstacle to improving diplomatic ties between Ankara and Israel, as well as energy cooperation between the Jewish state and Cyprus.
He adds, “Although a reconciliation agreement between Turkey and Israel must be taken for granted in the near future, it is very unlikely that the resumed negotiations over Cyprus will lead to a solution and to the trilateral cooperation on energy which so many international powers would like.”


Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


Logistics Risk Management in the Transformer Industry

Transformers often are shipped thousands of miles, involving multiple handoffs,and more than a do...

Secrets of Barco UniSee Mount Revealed

Last year Barco introduced UniSee, a revolutionary large-scale visualization platform designed to...

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...