Director of the Middle East and Persian Gulf Unit at the Institute for Security and Defense Analyses based in Athens, Greece, and non-resident fellow at Center for Middle East Development, University of California Los Angeles
EFFECTS OF THE CORONAVIRUS PANDEMIC ON EAST MEDITERRANEAN GAS PROSPECTS
The coronavirus pandemic adversely affected the energy sector as the decrease of global oil consumption due to lockdowns led to low oil prices. Τhe decline in commodity prices prompted a negative effect on upstream activities including exploration, drilling, and extraction as well as on new project development and operations of facilities in the East Mediterranean. Regional countries are currently fraught by political risks, policy dilemmas and challenges accelerated by the pandemic in a way that is likely to delay the unlocking of their energy potential.
This is particularly evidenced in Cyprus where energy majors seem to adopt an inward-looking policy due to the pandemic and the collapse of oil prices having announced delays on the course of energy exploration and development programs. American Noble Energy, the operator of the Aphrodite gas field, decided to reconfigure plans to develop and monetize the reservoir and seeks to negotiate with the government of Cyprus a new development timetable that is expected to be dependent on global market conditions, gas demand and prices.
Likewise, the French-Italian consortium of Total and ENI reportedly decided to delay drilling operations on three wells planned for 2020 and six wells planned for the next two years within Cyprus Exclusive Economic Zone (EEZ). Concurrently, American Exxon Mobil and Qatar Petroleum publicly confirmed the delay of the verification drilling in Block 10 until September 2021 despite that initial estimates showed that Glaucus target in Block 10 could contain between 5 to 10 trillion cubic feet of gas. The gas potential of the Glaukus target along with promising quantities in Aphrodite gas field and other blocks within Cyprus EEZ have reactivated over the last year discussions on the prospect of an LNG plant in Cyprus.
The postponement however of gas fields’ development plans into the depths of time due to the pandemic not only freezes the prospect of a Cypriot liquefaction facility but also locks the island into imports of LNG that are paid through increased electricity prices.
Reacting to the new state of energy play and taking into consideration the cease of liquefaction in the facilities of Damietta and Idku, neighboring Egypt took the strategic decision to expand its gas production in the East Mediterranean in expectation of that the pandemic will pose only short-term economic problems. Production of gas has started from a well in the super-giant Zohr gas field’s Shorouk concession block with a production capacity of around 390 million cubic feet (mcf) of gas per day and from another well in the Baltim South West concession area in the Nile Delta with a production capacity of 140 mcf of gas per day. With the expansion of production in exploration areas during the pandemic, Cairo has managed to avoid economic losses related to wages and maintenance of equipment.
The Egyptian decision to proceed with gas production has also a security dimension. Production in the Shorouk concession block that lies on the common Egyptian-Cypriot maritime border that was delimitated in 2003 sends strong signals to regional countries like Turkey, protects Egyptian energy exploration and development rights and enhances Egyptian influence in the East Mediterranean.
The Egyptian strategy to cement its regional energy interests coincides at a time that Turkey intends to proceed with oil and gas drilling activities in areas specified in the Memorandum of Understanding (MoU) on the delimitation of maritime boundaries that was signed in November 2019 between Turkey and the Tripoli-based Government of National Accord in Libya. The Turkey-Libya MoU ignores the sovereign rights of Egypt, Greece and Cyprus in the East Mediterranean and the geographical fact that Turkey and Libya have neither overlapping maritime zones nor common boundaries.
The motives behind Turkey’s signing of the MoU with Libya lie in breaking its regional energy isolation and in gaining legal claims over maritime areas that the East Mediterranean’s energy infrastructure, like the Eastern Mediterranean Gas Pipeline, will have to cross. Turkey’s oil and gas exploration quest expands from west of Cyprus to the southeast of the Greek island of Crete and the offshore waters of Libya. During the coronavirus pandemic, Turkish drilling vessels continued to operate illegally within Cyprus EEZ as means of maintaining Turkey’s presence in the regional energy race.
Turkish illegal actions require a collective diplomatic and defense response. It is in this context that the EU Foreign Affairs Council issued a statement on May 15th, 2020 condemning Turkey’s illegal drilling activities with the Yavuz vessel within Cyprus EEZ as well as Turkish violations of Greek airspace and territorial waters. Also, a block of five countries consisted of the UAE, Egypt, Cyprus, Greece, and France condemned Turkey for violating Cypriot waters and Greek airspace. But looking way ahead, an EU naval presence in the Eastern Mediterranean could be a step towards the direction of countering Turkish aggression, serve as a stabilizing force and enhance European operational involvement in view of the European Common Defense and Security Policy. An EU naval presence to protect European energy interests in the East Mediterranean is of high importance given that Turkey refrains from dialogue based on international law.
In fact, Ankara has repeatedly rejected the adoption of international law’s provisions to settle its maritime differences with regional countries like Greece on the basis of the equidistance/medium line principle and pursues a self-contradictory strategy that is translated into selective enforcement of the United Nations Convention on the Law of the Sea (UNCLOS). Practically, on the one side Turkey rejects the provisions of international law for the delimitation of maritime areas with Greece. But on the other side, Ankara has concluded EEZ delimitation agreements with its neighbors in the Black Sea on the basis of the equidistance/medium line principle as stipulated by international law. The self-contradictory strategy of Turkey is also evidenced in the MoU with Libya for the delimitation of maritime boundaries. Despite the declared Turkish position that islands in the Eastern Mediterranean have no weight for the determination of maritime boundaries, the Turkey-Libya MoU cites Turkish islands and rocks as base points for the delimitation of maritime areas.
In this regional setting and as the pandemic is expected to diminish over time, like-minded regional countries need to proceed with active diplomacy and coalition building to counter Turkish illegal actions and design a grand energy strategy that will transform the economies of the region for the benefit of current and future generations.