Opinion

Geopolitical Eruptions in the Eastern Mediterranean


In the ancient world, the Fertile Crescent was a semicircle in the easternmost part of the Mediterranean that gave rise to some of the world's greatest civilisations, including the Egyptian, Mesopotamian, Assyrian, Babylonians and Anatolian empires. In modern times, this stretch of water has been the site of some of the greatest hydrocarbon discoveries in the past decade, transforming the likes of Israel and Egypt from energy importers to energy exporters.

With great potential also comes problems. The major finds – almost all of which are natural gas fields – are clustered some 150km from the land boundaries of Egypt, Israel and Cyprus. Maritime dispute are common in the upstream industry, and are generally solved amicably – either through joint development areas like Malaysia-Thailand or demarcating sea borders, which Cyprus did with Egypt, Lebanon and Israel. However, this region is also home to simmering political tensions, which could cloud future development.

Lebanon last month completed its first offshore oil and gas block tender, awarding two blocks to a consortium of Total, Novatek and Eni. One of those blocks – Block 9 – borders Israeli waters, one of two blocks that overlap a triangular 860 sq.km area that both Lebanon and Israel claim. Crucially, Block 9 is just some 20km from the Karish-Tanin gas field in Israel (with its 2.4 tcf of gas) and 60km from the Tamar field. This hints at good gas potential, but Israel has a long history of conflict with Lebanon. Israel's described the block sale as ‘blatant provocation', part of a cadre of recent sabre-rattling statements. This might be defused – like back in 2010 when both countries agreed to a maritime border – but if major oil or gas reserves are found in Block 9, things could get complicated.

Over in Cyprus, Turkey has long protested Cypriot maritime border agreements, seeing them as invalid over the issue of breakaway state Turkish Republic of Northern Cyprus, which only Turkey recognises. Thus far, Cypriot E&P activity has been concentrated in the south, far away from waters around the island's north that are a political quagmire. Discoveries have been encouraging – the Aphrodite field was discovered in 2011 – but have been dwarfed by giant finds in Egypt and Israel. That changed earlier this month, with Eni and Total announcing a promising new find in the south, just 30km away from Zohr. Estimates on Calypso reserves are still ongoing, but its potential has been described as ‘Zohr-like'. Turkey immediately responded with a statement that it considers Calypso within its boundaries, triggering a rebuke from Cyprus and even Egypt. 

In response, Turkish warships repeatedly blocked Eni's ships from reaching offshore drilling sites. This didn't happen in 2011 when Aphrodite was being developed, but given the blockbuster size potential of Calypso, things could heat up. Turkey has gone as far as to suggest it will begin offshore surveys in Northern Cyprus in response, another act of provocation that could be worrying given the combative approach of Turkey's current government.



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