ECONOMY

Natural gas finds redraw energy map

The large hydrocarbon deposits recently discovered in the Eastern Mediterranean are leading to a redrawing of the global energy map and developing into an apple of discord. Results of the research to date confirm natural gas deposits totaling more than 35 billion cubic meters in the Levantine basin, which stretches all the way to Crete.

Furthermore, there is growing interest on the part of the world oil industry in drilling in the Cypriot exclusive economic zone (EEZ) and conducting seismic research south of Crete and in the Ionian Sea west of the Greek mainland, as witnessed after the government?s recent issuing of invitations for expressions of interest. Israel and Cyprus are already discussing plans for exporting gas to Europe, anticipating Greece will soon join them in forming a new geopolitical axis.

The prospects of such an axis were openly discussed by ministers of the three countries at a conference organized by The Economist in Athens last week. It is a development that is certain to have an effect on the geopolitical and geoeconomic realities in the region. For a start, Europe will be able to lessen its dependence on Russia as supply sources will no longer be restricted to the Azeri Shah Deniz 2 field and the pipelines of the Southern Gas Corridor.

The tentative plans now being drawn up provide for a new undersea pipeline which will reach Greece from Israel via Cyprus, and then continue on to Western Europe. This plan enjoys the full support of the US, as it lessens European dependence on Russia.

Speaking at the Economist conference, the US State Department?s special envoy for Eurasian energy, Richard Morningstar, urged Israel, Greece and Cyprus to ?avoid involvement in the particular plans of Russian interests, as this would annul basic principles of the European policy for differentiation of sources which the US also backs.?

His admonition was, at this stage, directed mainly at Cyprus, which has close relations with Russia. But the US is also concerned about a possible strengthening of ties between Athens and Moscow, following recent overtures by Antonis Samaras, leader of the conservative New Democracy party, which is leading in the polls ahead of national elections due in early May.

Russia, on the other hand, is seeking to maintain its role and influence as a supplier to Europe by strengthening its traditional ties with Cyprus and by improving relations with Israel. Gazprom has already proposed to its participation in the construction of a natural gas storage and liquefaction facility on Cyprus to Nicosia, and plans to take part in the second round of licensing for exploration drilling in the remaining 12 undersea fields within the Cyprus EEZ. Indeed, some observers view that the 2.5-billion-euro loan granted to Cyprus by Russian bank BTB a few months ago is not unrelated to Moscow?s aspirations in the area.

The ties between Nicosia and Moscow are thought to be the reason why a memorandum of cooperation between Israel, Greece and Cyprus was not signed in Athens on Wednesday, as had been expected. There is speculation that Cypriot President Dimitris Christofias has reached a deal with the Russians for drilling concessions. Recently appointed Trade and Tourism Minister Neoklis Sylikiotis said there is also interest by Chinese companies. The deadline for expressions of interest in the new drilling licensing is May 11 and, according to reports, 78 suitors have already signaled their interest.