The battle for energy control in the Eastern Mediterranean
The history of oil and natural gas is marked by instability and conflict. The rise of the Eastern Mediterranean as a prolific energy region has increased the existing tensions between some riparian states while strengthening cooperation among others. The ratification of the charter concerning the Eastern Mediterranean Gas Forum (FEMG) further reinforces the importance of gas exporting countries in general and Egypt in particular.
From a political and economic point of view, Cairo has succeeded in strengthening the country’s position as a major producer and exporter of gas while emphasizing its role as an energy hub. Egypt’s large domestic market, large production capacity and strategic location make it an ideal candidate to host EMGF headquarters in Cairo.
In addition to economic logic, Egypt’s growing population requires ever greater volumes of raw materials to meet demand. Therefore, liquidity and access to additional sources are important to improve energy security. Cairo learned a lesson from the developments of 2014/2015 when natural gas produced in the country for export was diverted to meet the explosion in Egyptian demand. After becoming a net importer in 2015, the country’s two liquefaction facilities at Idku en Damiette were reconfigured for the LNG regasification process.
The EMGF seeks to bring together the energy-rich countries of the Eastern Mediterranean through dialogue, planning policies, ensuring security and reliability to increase investments and support growth. The charter is signed and ratified by the founding members Egypt, Cyprus, Greece, Israel, Italy, Jordan, Palestine and France. The US and the EU are observers. In particular, Turkey has been sidelined while two European countries which are not geographically part of the region, Italy and France, are members. This shows the harsh geopolitical reality of Ankara’s isolation.
According to Osama Mobarez, Undersecretary at the Ministry of Petroleum in Cairo, “this is a very important step for the countries of the Eastern Mediterranean and a great victory for Egypt in particular. The fact that the charter chose Cairo to host the seat of the forum will make Egypt the region’s hub for natural gas producers and exporters.
Besides the ratification of the EMGF charter, Cypriot President Nicos Anastasiades and President Sisi of Egypt recently took the opportunity to reaffirm their commitment to bilateral cooperation. The two countries expressed their willingness to intensify their collaboration in the political, economic, commercial and agricultural fields. The countries mainly share antagonism towards Turkey whose hostile actions have distanced it from its neighbors.
Most importantly, Cyprus and Egypt reaffirmed their commitment to a shared energy infrastructure that would link their resources. An undersea pipeline from Cypriot offshore fields is expected to carry the gas to Egyptian LNG facilities to re-export the gas to Europe by 2024/2025. The link would further consolidate Egypt’s role. Already Israeli gas is exported to the two LNG facilities in the North African country for the same purpose.
Besides natural gas and EMGF, Egypt is pursuing a trilateral approach with Cyprus and Greece that goes beyond fossil fuels. The three countries are expected to sign a memorandum of understanding in September which should pave the way for EuroAfrica interconnection. With the submarine cable, the EU could use the substantial capacity of Egypt in the field of renewable energies in general and solar in particular.
Nevertheless, the road to Euro-African integration remains long and strewn with pitfalls. Besides the technical challenges and the associated huge costs, Turkey could again act as a spoiler. Ankara has already signed a delimitation agreement with the Libyan government in Tripoli that undermines the trilateral ambitions of Greece, Cyprus and Egypt. While the deal doesn’t stand a chance in an international tribunal, Turkey could use it to sow uncertainty and instability.
If there’s one thing businesses don’t like, it’s instability and conflict. Therefore, it remains uncertain whether commercial companies will be ready to invest billions in a project that could face delays and even uncertainties over its completion with the Turkish Navy around the corner to slow progress. However, Ankara’s aggressive posture will also have the negative effect of strengthening multilateral cooperation. Expect riparian states to push projects like EMGF and strengthen relations in Turkey’s absence.
By Vanand Meliksetian for Oil Octobers
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