Oil, gas and diplomacy
Egypt and Israel sent two new diplomats to Cyprus on Friday, just as the three neighbours are upping the ante in their energy, trade and security relations.
Cairo’s Ambassador Hussein Abdelkarim Tantawy Mubarak presented his credentials, a day after President Anastasiades and Abdel Fattah El Sisi had a telephone conversation to discuss energy cooperation, despite the recent discovery of an enormous offshore gasfield in Egyptian waters, the biggest in the eastern Mediterranean.
Some had feared that Italian ENI’s discovery of 30 trillion cubic feet (tcf) at the Zohr field, which is in close proximity to the border of Cyprus’ offshore Block 11, currently licensed to French oil giant Total, would upset negotiations to sell Cyprus gas to Europe via BG’s plant in Egypt.
Egyptian officials were quick to reiterate their good relations with Cyprus and that the two countries would maintain negotiations for future gas sales, not expected before 2018 or 2020.
The discovery within the Egyptian Exclusive Economic Zone (EEZ) also sent shivers down the backs of the Israelis, that had so far maintained the lead for the biggest discovery at the Leviathan gasfield, as the new supply could make future Israeli gas exports redundant as well.
But Egypt does not want to burn its bridges with its neighbours, at least not within the political turmoil and Islamic extremism that has swept across the Middle East. On the other hand, no matter the magnitude of the discoveries, Egypt’s growing population and economy will continue to make it a mainly net buyer of natural gas for domestic use.
Cyprus Government Spokesman Nicos Christodoulides said that the Anastasiades-El Sisi conversation focused on the fact that the Zohr discovery wil probably raise the importance of the region’s gasfields.
“It is our determination that we cooperation at all levels.”
Presenting his credentials, Egypt’s Ambassador Mubarak said that Cyprus can be a bridge between the peoples on the north and the south of the Mediterranean and praised the support the island expressed after the 2013 revolution.
President Anastasiades said “we are witnesses to a robust bilateral relationship without precedent, which can be enhanced even further. You arrive in Cyprus at an interesting time.
“The realisation of the second Cyprus-Egypt-Greece Tripartite Summit Meeting, in Nicosia and the Declaration adopted at the level of the Heads of States, puts in practice the cooperation between our countries to achieve stability and prosperity in the region to the common benefit of our peoples.”
“Shortly, we expect that the expansion of this cooperation will be achieved,” he said, adding his congratulations for the hugely important discovery of a gas field offshore Egypt which will certainly transform the energy sector and have a decisive impact on the economy for the benefit of the Egyptian people.
“Undoubtedly, the said gas field is yet another proof of the
develop richness of the Mediterranean Sea in natural resources and has the potential of not only enhancing the existing cooperation between neighbouring countries in the hydrocarbon sector but also of creating new synergies between them for the benefit of their peoples and of the region as a whole.”
Presenting her credentials, Israel’s Ambassador RaviaZadok, a long-term director of the Middle East Desk at the Ministry of Foreign Affairs in Jerusalem said Cyprus’ unique location in the eastern Mediterranean, as well as its respected political leadership, may serve as a fertile ground to establishing a network of regional cooperation, in which Israel and Cyprus may play a leading role.
“Under the Cypriot leadership, we can create an enhanced regional cooperation on security, energy security, tourism and economic development, serving as an accelerator for stability in our region. Challenges of terror and Islamic extremism make this regional cooperation more relevant than ever before.”
In his response, President Anastasiades said that his visit to Israel and the follow-up visit of Prime Minister Netanyahu here in Nicosia, later in July, “reflect the special bond between our two countries. There are, of course, numerous other exchanges at different levels across the board and our officials consult frequently on a variety of issues.”
“The discovery of vast reserves of hydrocarbons in the eastern Mediterranean has the potential to transform our region, unleashing economic development and prosperity, and promoting peace and stability. Cyprus stands ready to fully cooperate with its neighbours to promote these goals.
Spokesman Christodoulides said that Anastasiades also had a meeting with Yitzhak Tshuva, the Director of Delek Drilling, a joint venture partner in the Cyprus Aphrodite gasfield and Israel’s Leviathan, and submitted the company’s development plan regarding the gasfields, exports and sales.
He said that Energy Minister Yiorgos Lakkotrypis will now respond to the Delek plans so that substantial talks can now begin for the future utilisation of Cyprus natural gas exports.
Delek’s Yossi Abu told reporters that “we are committed to develop the Aphrodite Block with the same strategy that we have already submitted, basically to supply the Cyprus and Egyptian markets (with natural gas) in a quick an effective manner. We have already started the upstream process to these markets and we are in talks with potential buyuers of exported gas.”
Regarding noises from the opposition political parties, doubting the prospects from the gas fields in Cyprus waters and in the region, Christodoulides “the subject of energy if very important and calls for patience.”
Earlier in the week he and Lakkotrypis had talked about “significant news” in the energy sector, at a time when French Total had failed to find satisfactory gas reserves within its Cyprus EEZ license, while ENI had delayed future prospecting.
On Thursday, Lakkotrypis met with representatives of British Gas (BG), reportedly interested in obtaining gas from the Aphrodite prospect in Block 12, processing it at their LNG plant in Egypt and then re-exporting it to Europe.
The minister also said that BG is in contact with the Block 12 partners (Noble Energy, Delek and Avner) as well as with the state-owned Cyprus Hydrocarbons Company (CHC).
According to the Cyprus News Agency, the Block 12 consortium and CHC are in consultations with ten other organisations interested in the gas, including Union Fenosa, operators of the other LNG terminal in Egypt at Damietta.
Over the last few days, since the announcement of the Zohr find, the minister has been in frequent communication with his Egyptian counterpart, Sherif Ismail.
Both countries’ officials have stressed that the recent discovery does not negate Egyptian interest in Cypriot gas imports, although Ismail did indicate that the final decision rests with the oil and gas companies.