Huge gas finds can keep Europe warm if owners stop arguing
AS THE helicopter roars its way west from the Tel Aviv coast, two dots emerge from the featureless blue. Closer up, they begin to take shape: Giant platforms for extracting gas from under the Mediterranean Sea.
“A few years ago, there was nothing to see around here,” Yossi Abu yells from the front seats. And soon, according to the Delek Drilling CEO, there’ll be more. He points northwards. “Over there, we’ll build a new platform,” he says. “To export gas to Egypt and Turkey.”
Abu makes it sound easy. It won’t be. Hundreds of miles of undersea pipelines will cost billions of dollars and pose a technical challenge for their designers. And even that task is dwarfed by the political engineering required to build stable energy routes through a conflict-ridden region.
That’s true across the Eastern Mediterranean, where nations have watched enviously over the decades as energy finds a bit further east made their Gulf peers rich. Now it’s got riches of its own, as it becomes clear that Delek’s discoveries were just a start.
The whole area from Cyprus to Lebanon and Egypt may be sitting on even bigger gas fields. The United States Geological Survey estimates they could hold more than 340 trillion cubic feet, an amount that would surpass US proven reserves, though many in the industry think the actual volume may be lower.
There’s an ideal market nearby in Europe – rich, mostly lacking its own fuels, and desperate to wean itself off energy dependence on Russia. It’s just that getting the gas there will require collaboration between countries with a history of feuding or fighting.
“This is the kind of opportunity where either everybody rises or everybody falls,” said Amos Hochstein, who served as former secretary of state John Kerry’s energy envoy. Hochstein acknowledges the “complicated relationships” involved, but says they can be overcome. “We’ve been preaching this gospel in the wilderness for a while,” he said. “But enough people now see the potential fruits.”
They do in Egypt, where the Zohr field discovered by Eni is the region’s largest to date, and a tipping-point that persuaded other majors to take the East Med seriously. BP, which has a 50-year history of exploring and producing gas in Egypt, bought a 10 per cent stake from Eni in November.
For Egypt’s economy, hamstrung since the 2011 revolution by a lack of foreign currency, gas could prove a saviour. The country used to be an exporter, but had to sacrifice those sales to meet domestic shortages. Thanks to Zohr, it’s aiming to reduce imports next year and start exporting again in 2019.
Then there’s Turkish President Recep Tayyip Erdogan and Israeli premier Benjamin Netanyahu, who spent years at loggerheads before reaching a reconciliation in 2016 that was partly driven by potential energy ties. Turkey gets
A few years ago, there was nothing to see around here. Over there, we’ll build a new platform. To export gas to Egypt and Turkey. Yossi Abu, Delek Drilling CEO
gas from Russia and Iran, but has had a volatile relationship with both neighbours lately. And being on the receiving end of eastern Mediterranean pipelines would help Erdogan promote his country as a hub for the region.
Erdogan appointed his son-inlaw Berat Albayrak as energy minister, and a senior Israeli official said he speaks to Albayrak daily on WhatsApp. Former US diplomat Matthew Bryza is now a director of the Turkish company Turcas Petrol, which has held talks on buying Israeli gas. Bryza says that discoveries in the Mediterranean could also help end a much longer-running dispute: the division of Cyprus.
Since 1974, northern Cyprus has been controlled by a selfdeclared state supported by Turkey. Several attempts to reunify the island have failed, but this year’s talks in Switzerland have rekindled hope, and gas could be one reason.
Eni, ExxonMobil and Total are among companies keen to explore off Cyprus, which will be much easier if the political obstacle is removed. Turkey insists that the Greek- Cypriot government has no right to dispose of energy resources on its own. It even sent warships toward the island to make the point.
While there are bigger issues to resolve, “if there’s a deal on the horizon, then I think the potential for energy benefits could well pull the sides over the end-line,” Bryza said.
Many analysts see an IsraelTurkey pipeline via Cyprus as the best way to transmit gas to Europe. It could also be piped to LNG plants in Egypt and shipped from there. Israeli and European Union officials have even held talks on an ambitious pipeline route all the way to Greece.