The Future of Eastern Mediterranean Energy and Climate Collaboration.

• Author: Elgendy, Karim
• Position: COMMENTARY

Introducing the Eastern Mediterranean Energy Landscape

The Eastern Mediterranean region is a fragmented and heterogeneous collection of countries shaped by central geography, a shared history conflicts, and overlapping geopolitical ambitions. The region (which comprises Greece, Turkiye, Syria, Lebanon, Cyprus, Israel, Palestine, Jordan, and Egypt) is both separated and connected by the Mediterranean Sea, around which civilizations emerged and across which they traded. The region largely shares a common climate and faces similar climate change challenges.

In the last two decades, the discovery of offshore natural gas deposits meant that the Eastern Mediterranean was brought together further by the prospect of becoming an energy powerhouse. Such transformation in the region's energy landscape from an importer to an exporter also has the potential to disrupt its geopolitical landscape.

The shift started with the discovery of natural gas deposits in the Israeli Exclusive Economic Zone (EEZ). The Tamar gas field was first discovered in 2009, with estimated reserves of 307 billion cubic meters (bcm),(1) followed a year later by the discovery of the larger Leviathan gas field with estimated reserves of 620 bcm.(2) The combined reserves far exceed domestic demand--representing 82 years of Israeli current(3) natural gas consumption.(4)

In 2011, the Aphrodite gas field was discovered by the Republic of Cyprus, with estimated reserves of 200 bcm.(5) However, Aphrodite has been mired in a dispute between the Republic of Cyprus and Israel since its discovery due to the fact that seven to nine percent of the gas field lies within Israel's EEZ. In recent years Calypso and Glaucus--two gas fields of equal size to Aphrodite--have also been discovered to the Southwest of Cyprus. Yet the real shift in the regional energy landscape happened in 2015 when Egypt announced the discovery of the Zohr gas field with estimated reserves of 850 bcm(6)--a volume approximately equal to 15 years of Egyptian consumption at their rate in 2020.(7)

The Egyptian discovery was a game-changer not only because it was the largest in the region, but the Egyptian gas infrastructure--such as the Liquified Natural Gas (LNG) liquefaction facilities in Damietta and Idku on the Mediterranean coast and the pipeline to Israel--gave Egypt a natural advantage as a potential hub for exporting the offshore natural gas from other regional exporters like Israel and Cyprus.

Egypt became a net exporter in 2018, and Egyptian exports steadily increased over the last three years. In addition, it agreed with Israel to import 85 bcm of natural gas over 15 years. This excess supply allowed Egypt to increase its LNG exports further. In 2020 Israel started delivering the natural gas using an existing pipeline connecting both countries,(8) and in 2021 Egyptian LNG exports reached a ten-year high.(9) But Israel, Greece, and Cyprus had other plans for exporting their energy resources to Europe without dependence on the relatively expensive LNG process. In 2016, the three countries proposed a subsea pipeline connecting Israeli and Cypriot gas fields with the Greek mainland, via Cyprus and the Greek island of Crete, and from there onto the European markets via a new subsea pipeline between Greece and Italy. The EastMed pipeline project promised to deliver 9-12 bcm to Europe annually.(10) The proposal's timing coincided with heightened concerns within the European Union (EU) over the continent's dependence on Russian natural gas--which represented almost 40 percent of its natural gas imports at the time.(11) The pipeline was presented as an opportunity for the EU to diversify its supply.

Yet the project faced a number of technical and financial challenges that prevented it from moving forward. As one of the world's longest and deepest underwater pipelines, the primary technical challenge it faced was the depth at which some of the subsea pipes will need to be laid, which exceeds three kilometers between Cyprus and Crete.

Securing investment is also another challenge. The EU had agreed to fund a feasibility study as a Project of Common Interest (PCI), an infrastructure project deemed to have an essential impact on the pan-European internal energy market. However, updates of the regulations issued by the Trans-European Network for Energy (TEN-E)--an EU agency supporting the development of cross-border energy infrastructure in Europe--explicitly ended support for new natural gas and oil projects and introduced mandatory sustainability criteria for all projects.(12) Additionally, no private sector investors have come forward to fund this complex and expensive project.

The cost of financing the project also remains uncertain, given that fossil fuel funding is dwindling worldwide as lenders shift their attention to renewable energy projects and try to reduce their exposure to fossil fuel projects that risk becoming stranded assets. Major European banks such as the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) have both announced that they will no longer finance fossil fuel projects.

Yet technical and financial challenges have not stopped the project's political momentum, with informal government cooperation between the original tripartite of Israel, Cyprus, and Greece, together with Egypt. In September 2020, this cooperation gained an institutional form with the creation of the East Mediterranean Gas Forum (EMGF), which also included Jordan, Palestine, France, and Italy, as well as the EU and the U.S. as observers. The new intergovernmental body aimed to create a regional gas market, cut infrastructure costs, and offer competitive prices.(13)

But the EMGF was not an inclusive regional organization as it did not include Turkiye, Syria, or Lebanon. Of the regional countries not invited to the EMGF, Turkiye stood out as the most remarkable absence, given its geography and its existing natural gas pipeline infrastructure to Europe. The exclusion of Turkiye was also remarkable, given that one of the most cost-effective ways of transferring Israeli and Cypriot gas to Europe is by connecting it to the Trans Anatolian Pipeline (TANAP) in Turkiye, which already transfers natural gas from Azerbaijan to Europe via the Trans Adriatic Pipeline (TAP).

Turkiye--which over the past three decades has encouraged various pipelines to cross its territory--unsurprisingly felt that the project had an underlying political agenda related to the strained relations between Turkiye and some regional countries at the time.(14) It also felt that the project sidesteps the unresolved Cyprus issue and does not consider the rights of the Turkish Cypriots.(15)

Rising Tensions

The exclusion of Turkiye and its response by commencing exploration for offshore gas in areas also claimed as EEZ by Greece and the Republic of Cyprus raised tensions in the region. It also overlapped with a 12-year rift between Turkiye and Israel and the conflict in Libya, where the side supported by Turkiye was at war with that supported by Egypt, United Arab Emirates, and France.

The result was heightened regional tensions that exacerbated existing regional disagreements and bringing to the fore the dispute between Turkiye, Greece, and Cyprus on the extent of their respective EEZs, the dispute between Turkiye and Greece over the ownership and the territorial waters of certain islands in the Aegean Sea, and the unresolved dispute over the island of Cyprus.

Early steps taken by Lebanon to start explorations off its coast have also revived the decade-long dispute between Israel and Lebanon regarding the demarcation of their respective EEZ. Syria's initiation of explorations for natural gas off its coast also created a new dispute between Lebanon and Syria, while Palestinians complained that Israel hadprevented them from using the gas field off the coast of the Gaza strip, known as Gaza Marine.(16)

Inevitably, these tensions and disputes intersected in a way that converged energy policy and geopolitics. To support their EEZ claims in areas where the East Med pipeline route is planned, different...