Energy matters in international affairs and this is not the first circumstance where we have the chance to provide evidences in support of this axiom[1]. Furthermore, we hypothesized that in Syria, for example, disputes over energy resources and especially disputes over energy routes and pipelines are fostering (better, fueling) the war more than traditional religious clashes. If we accept this thesis, we have to conclude that in Syria opposite strategies are conflicting and that the Syrian civil war is just part of a broader framework. It means that international players are trying to reshape the face of a wide area extending from Turkey to the Persian Gulf in order to better position themselves in this energy game.

If we look at the parts involved in the war in Syria (the foreign ones) we see they are gas-exporting countries. A lot of what happened in Damascus is related to the two pipelines proposed and not realized with Syria as a crossroads for both projects. When in 2009 Qatar proposed to build a pipeline to Turkey through Saudi Arabia, Jordan, and Syria, it mainly aimed at providing market in Europe for its own gas resources[2]. The North Dome gas field, in fact, is part of what is estimated to be the largest gas field in the world and Qatar is the world’s main liquefied natural gas (LNG) exporter. However, access to the European market was difficult because of Russia, able to drive towards the West cheaper gas thanks to its pipelines. But Assad rejected the proposal for what it was considered to be a choice taken under Moscow’s pressure. Two years later, in 2011, Iran, Iraq, and Syria signed an agreement to bring gas from the South Pars gas field, the Iranian part of the field from which the gas was supposed to come from Qatar according to the proposal rejected by Assad in 2009.

Iran had a similar challenge to face, i.e. looking for a way to put its own gas reserves into the market. These two projects could have boosted spillover effects for two other energy players. One is Russia, still strongly interested in keeping its influence as main Europe’s supplier and that could have been negatively affected especially by the Qatari proposal. It seems, in fact, that the United States too supported that project as a way to mitigate Iranian influence in the area and to reduce Russian leverage in Europe helping it to diversify its sources of supply. The other player eventually affected by the two pipelines was Turkey. According to Erdogan’s energy strategy, Turkey has to make every necessary effort in order to act as an energy hub between Asia and Europe[3]. This is the reason why Turkey opposed the pipeline proposed by Iran, Iraq, and Syria (the so-called Friendship pipeline). Turkey would have been bypassed by the pipeline with no chance to reduce reliance on Russian gas, since Turkey itself has the necessity to diversify its sources of supply. So, on the contrary, Russia wants to dominate the East Mediterranean gas market to safeguard its position in Europe while thwarting Turkey’s ambitions to play a regional gas exporter.

What’s new

In recent years new regional and international players have emerged thanks to the discovery of new fields (gas fields), further contributing to complicate the geopolitical puzzle of the area. In 2009 and 2010 the US company Noble Energy discovered two gas fields off the shore of Israel. They are the Tamar and Leviathan gas fields, respectively provided with 280 and 620 billion cubic meters. Then, in 2011 and 2015 it was Cyprus and Egypt’s turn, which discovered within their territorial waters respectively the Aphrodite and Zohr gas fields, provided with 140 and 850 bcm[4].

It is not clear yet what the possible practical implications of these discoveries are but it is quite sure that they will depend on several causes. Of course the current complicated political situation of the area does not allow to let these laces untied. However, some first steps have been taken[5]. To exploit this potential, a number of export options where progressively discussed, from pipelines (to Turkey or Greece) to LNG plants in Cyprus, Israel, and Egypt (already provided with these plants in Idku and Damietta). The decision on whether invest on a specific project or on another can be taken considering both internal and international reasons. In Israel, for example, where at the moment only the Tamar gas field is working, pumping gas to Israel’s shores, the political debate has been really intense, especially because of the anti-trust legislation which prevents the companies (Noble Energy and the Israeli Delek Group) now involved in Tamar and Leviathan gas production to operate with the same vertically integrated structure. These discussions are the main reason why the practicality of the Leviathan gas field, the bigger one, has been delayed. In the meanwhile, about 100 kilometers away, within Egyptian territorial waters the Zohr gas field has just been discovered by the Italian company ENI. Bigger than the two Israeli fields, it could allow Egypt to get out from a critical situation in terms of energy balance and to modify the energy puzzle of the whole Eastern Mediterranean by converting this country in a fundamental hub. In fact, during the last years Egypt became a net gas importer (thanks to its LNG plants) but within few years, if the Zohr gas field became fully operative and functioning, it could become a gas exporter.

Once again, we don’t know yet if the benefits of this discovery will be confined to Egypt. And above all it’s not clear yet if Egypt has the intention to proceed alone in exporting gas or is inclined to build a sort of alliance with Cyprus and Israel, creating a bigger gas hub by developing its existing exporting infrastructures. The main question this outlook generates is about the feasibility of such a delicate cooperation. It seems obvious, looking outside this area, that a cooperation between these countries would represent a great opportunity for European countries. Russian leverage on the European energy policies is still high and pressing. The diversification strategy designed in Brussels needs to be fully implemented and pursued without hesitations (mainly represented by a possible doubling of the Nord Stream pipeline along the Baltic Sea) in order to be effective. In this sense, a joint approach, and possibly a joint solution, is surely more reasonable than a list of national ones especially for the presence of negative spillovers. But it’s also true that a commercial cooperation in this area would be warmly welcomed in Europe especially if able to create a more friendly environment between these countries, playing as a long-term political stabilizer.

If it’s true that the European Union in recent years has sharply diversified its energy supplies, a lot has still to be done. For example Russia, thanks to indecisive European and US policies in the Eastern Mediterranean, is cultivating good relations with Israel, Syria, and Cyprus in order to maintain its dominance on the European market. The implementation of the Southern and Eastern Mediterranean Corridors is a political priority for Brussels. For example some argue that the EU has a short list of policy options to address. On the one hand, a LNG plant in Cyprus in cooperation with Israel would satisfy the needs of Greece and Cyprus, both Member States. At the same time a strategic triangle between Turkey, Cyprus, and Israel[6], as previously said, would open the way for regional peace as well as for the export, in time, of Eastern Mediterranean gas to the EU. Furthermore, the EU should continue to support the integration of the Euro-Arab Mashreq Gas Market Project (EAMGM), a strategy at the moment put aside because of the political unrest that affects this area. This project aims at boosting regional integration of the gas market so to achieve harmonisation of the legislative and regulatory frameworks in Egypt, Iraq, Jordan, Lebanon, Syria, and Turkey with that of the EU.

Appendix. Gas Exporting Countries Forum

The big game on international gas trade takes also place in an international venue that is the Gas Exporting Countries Forum (GECF)[7]. Part of the organization is a long list of countries including Russia, Iran and Qatar which together hold the 57% of global gas reserves, but not Saudi Arabia[8]. The geopolitical impact of this organization reverses the historical role of Saudi Arabia in influencing the global strategies in terms of production and price of oil, blasting the automatic link between oil and gas (the oil-indexed gas pricing is a long-standing criticized practice). Given the oil price trends, original fears about the creation of a gas cartel completely parallel to the OPEC, could seem well-founded. This hypothesis would be intolerable both for Saudi Arabia, which keeps on spilling oil into the market in spite of low prices and low demand, and for the United States if this cartel was able to introduce another currency but the US dollar to pay gas trades.


Notes

[1] Angelone, Francesco. “Syria: in the Middle of an Energy game”, Mediterranean Affairs, Dossier n. 03, December, 2015, p. 19. http://issuu.com/mediterraneanaffairs/docs/dossier_no.3_-_escape_from_syria.

[2] Orenstein, M.A., Romer, G. (2015, October 14). Putin’s Gas Attack. Is Russia Just in Syria for the Pipelines?. Foreign Affairs. Internet: https://www.foreignaffairs.com/articles/syria/2015-10-14/putins-gas-attack.

[3] Winrow, Gareth. “Realization of Turkey’s Energy Aspirations. Pipe Dreams or Real Projects?”, Centre on the United States and Europe at Brookings, Turkey Project Policy Paper, N. 4, April, 2014. http://www.brookings.edu/~/media/research/files/papers/2014/04/realization-turkeys-energy-aspirations-winrow/turkeys-energy-aspirations.pdf.

[4] Tagliapietra, Simone; Zachmann, George. “Egypt. The catalyst for a new Eastern Mediterranean gas hub?”, Bruegel, 30th November, 2015. http://bruegel.org/2015/11/egypt-the-catalyst-for-a-new-eastern-mediterranean-gas-hub/

[5] De Micco, Pasquale. “The prospect of Eastern Mediterranean gas production: An alternative energy supplier for the EU?”, European Parliament – Directorate General for External Policies – Policy Department, April, 2014,  http://www.europarl.europa.eu/RegData/etudes/briefing_note/join/2014/522339/EXPO-AFET_SP(2014)522339_EN.pdf.

[6] Israel recently gave Gazprom exclusive rights for a part of the Tamar gas field.

[7] Goals of the GECF are: to promote the concept of mutuality of interests by favoring dialogue between producers; to promote a more stable and transparent energy market.

[8] The other members are Algeria, Bolivia, Libya, Egypt, Equatorial Guinea, Nigeria, United Arab Emirates, Trinidad and Tobago, Venezuela.