Tension flares over Cyprus gasfields
▶ Egyptian, Greek and Cypriot leaders stand by shared goal despite opposition from Ankara over energy finds
YOUSSEF HAMZA
The leaders of Egypt, Greece and Cyprus met last week for their sixth summit since 2014, underlining a shared goal of becoming major natural-gas suppliers at home and in Europe.
Standing in their way is Nato member Turkey, which has repeatedly threatened to block Cyprus’s exploration of gas reserves off the coast.
Ankara says Nicosia infringed on its continental shelf and ignored the rights of Turkish Cypriots to the divided island’s natural resources.
Turkey’s relations with Egypt and Greece are not much better. Cairo accuses Ankara of supporting militant groups in the region, while Athens and its neighbour have their own tensions, mostly over Cyprus and maritime boundaries in the Aegean Sea.
By repeating their commitment to developing Cypriot gas reserves, President Abdel Fattah El Sisi of Egypt, Prime Minister Alexis Tsipras of Greece and President Nicos Anastasiades of Cyprus are directly challenging Ankara.
At their summit on the Greek island of Crete on October 10, Mr El Sisi and Mr Tsipras promised to support Cyprus in its effort to exploit its offshore energy deposits.
In February, Egypt told Turkey not to infringe on its rights in the eastern Mediterranean, citing a 2013 maritime border agreement with Cyprus, which allows for gas exploration. Cypriot officials said the island would not give in to Turkey’s threats.
Adding to this battle of wills is Israel, which also has tense relations with Turkey but has mended ties with Greece and Cyprus.
Egypt, meanwhile, is bound to Israel by a 1979 peace treaty that ended decades of conflict between the neighbours.
In February, Egypt and Israel signed a $15 billion (Dh55bn) deal to send Israeli natural gas for processing at Egypt’s plants, boosting Cairo’s ambitions of becoming a regional energy centre.
Three months later, Cyprus, Israel and Greece agreed to build a pipeline to supply east Mediterranean gas to Europe.
Egypt has had rocky relations with Turkey since Mr El Sisi, as defence minister, led the military’s 2013 removal of Mohammed Morsi, a president from the Muslim Brotherhood who was supported by the Turkish government and its president, Recep Tayyip Erdogan.
Egypt’s multibillion-dollar arms build-up in recent years appears to be, at least in part, designed to protect its offshore energy sources.
Among Cairo’s purchases were two French naval troop carriers with Russian assault helicopters, German submarines, French frigates and French-made Rafale fighter jets.
These and other purchases were in addition to weapons acquired under a US military aid programme that began in the 1970s and now runs at $1.3bn a year.
Egypt’s hopes of recovery from its economic woes ride on its natural gas reserves. Its Zohr field in the Mediterranean was discovered in 2015 and is thought to hold 30 trillion cubic feet of gas. ENI, the Italian energy giant that made the find, began production in December last year. Production has reached two billion cubic feet a day and is expected to hit 2.7 billion cfd next year.
The Egyptian military said in February that naval forces were stationed around the field to “counter any potential threats”.
But Zohr, at least for now, may not provide the cash bonanza that Egyptians hoped for, thanks to a rapidly rising oil import bill that reflects higher international market prices.
That could force the government to bring forward another reduction of state subsidies for domestic fuel, which at present cost the treasury 115bn Egyptian pounds (Dh23.51bn) a year.
“As long as we are saddled by state subsidies for anything, the country will not rise,” Mr El Sisi warned in a televised address on Thursday. But the Egyptian leader ruled out raising fuel prices, at least for the time being.
His government has already increased them three times since 2015, when it signed an agreement with the International Monetary Fund to overhaul finances in return for a $12bn loan over three years.
Under the agreement, Egypt floated its currency, introduced a wide range of new taxes and increased charges for utilities. These were politically sensitive moves that Mr El Sisi’s predecessors did not have the courage to make.