The Coming Mediterranean Energy War

Israel wants to drill for gas in Greek Cyprus. But Turkey may try to stop the new alliance.

A significant gas find offshore has propelled hopes for brighter future in the Mediterranean. For the Republic of Cyprus, it came as a blessing amid the deteriorating Eurozone crisis. The rating agencies had downgraded the Greek-populated southern part of the island four times in 2011 to its current Standard & Poor's rating of BB- because of unhealthy links with the defaulting Greek financial system.

In December 2011, the U.S. company Nobel Energy discovered some seven trillion cubic feet of natural gas off the southern Cypriot coast. This “marks the beginning of a new era of prospects that open up for [this] country, the area and Europe” said Greek Cypriot energy minister Praxoula Antoniadou, who claims her country will have electricity for about two hundred years. The EU would also benefit from a new source of energy that might help wean it from its dependency on Russian gas.

The Greek Cypriots' new partner in the gas endeavor, Israel, adds pressure to the island's already complex relations with Turkey. And Israeli prime minister Benjamin Netanyahu's visit to Nicosia this week will do nothing to reduce tensions.

Jealous Neighbors

Experts warn against the possibility of a deteriorating security situation brought about by these new discoveries in the eastern Mediterranean. Turkey is vehemently opposed to the Greek Cypriot plans for unilateral gas drills that do not include the island’s North. The discovery of natural gas has “brought new dimension to the political tension in the region,” says Gary Lakes, analyst with the Nicosia-based Middle East Economic Survey.

For four decades Cyprus has been ethnically divided into the Greek-populated Republic of Cyprus in the South of the island, which is a member of the European Union, and the breakaway Turkish Cypriot state in the North. So far, only Turkey has recognized the latter and has stationed between thirty thousand and forty thousand of its troops on its territory.

Ankara does not accept the existence of an exclusive economic zone (EEZ) in the waters around Cyprus, precisely the spot where Nobel made its gas discovery. Last year Turkey even sent a warship to cruise around the company's exploration team. This move could not stop the quest for offshore gas reserves in the area. But Turkey's threatening stance has since increased talks between Israel and the Republic of Cyprus, which along with Greece has traditionally sided with Palestine. Although Greek Cypriot officials insist that nothing has changed in their relations with “our Arab friends,” the new energy sources in the area have already reshuffled traditional allegiances in the eastern Mediterranean against the backdrop of damaged Turkish-Israeli ties.

Diplomatic Costs

If Israel wants access to these new wells, it must fill the void of insufficient Greek Cypriot military capability to protect future drilling operations off the Cypriot coast. Shortly after the confirmation of gas deposits there, this January Israel and Greece signed agreements on defense cooperation and exchange of classified information. This is perhaps unsurprising: the Israeli companies Delek Group and Avner Oil and Gas are the U.S. firm Nobel's partners in the Greek Cypriot offshore oil field also known as Block 12. The two are said to have an interest in exploration licenses and also in the remaining twelve blocks in the Greek Cypriot EEZ that would go to tender this year. Local media report that cooperation in the joint marketing of Israeli and Cypriot gas is among the top issues that Benjamin Netanyahu will bring to the negotiating table during the first-ever visit of an Israeli prime minister to Cyprus on February 16.

Ankara has so far remained unimpressed by the diminishing distance between Nicosia and Tel Aviv. Turkey continues on a collision course and has announced plans by the state-run Turkish Petroleum Corporation to proceed with exploratory oil drills in the northern parts of Cyprus as soon as the end of February. The Greek Cypriot government is vocal about its opposition but Brussels has so far remained relatively calm, although it did reprimand Turkey for sending a warship too close to Nobel's exploratory drill operation last year. But it remains to be seen what Europe's reaction would be to an actual drilling effort by the Turks. Although the whole of Cyprus is officially part of the European Union, EU law does not currently apply to the occupied North.

The quantities of gas in Block 12 that have now been confirmed are not yet enough to justify excitement over the idea of pan-European energy security. But they offer potential for more. Hopes are waning that Europe will be able to lessen its dependence on Russian energy through the proposed Nabucco pipeline project to the Caspian region. And Germany needs to look for alternative energy sources after its post-Fukushima decision to phase out nuclear plants by 2022. Thus Europe may start taking a closer look at the Greek Cypriot resources and preparing for the coming dispute with Turkey. Analyst Gary Lakes summed up both the promise and peril of the new Cypriot energy sources: “2012 will be an interesting year, provided nobody loses their head.”

Julia Damianova has worked in international media for 16 years, covering issues from NATO expansion and EU affairs to European energy security. For six years, she has been a special correspondent for The Los Angeles Times, based in Austria and Turkey and focusing on the Iranian nuclear program. She currently lives and works in Washington, DC.