Politics may hamper economy in Med, international energy body says

Merve ERDİL ISTANBUL - Hürriyet

Israel, Greek Cyprus and Lebanon have begun seeking ways to access markets, thus introducing new dynamics to regional relationships. DHA photo

Natural gas basins could turn the Mediterranean into a “sea of prosperity,” but there is a risk that politics may hamper economic progress, the head of the International Energy Agency (IEA) has warned.

“The biggest problem in the eastern Mediterranean is not the existence of reserves, it is the potential that politics may supersede the economy,” Fatih Birol, the IEA’s chief economist, told daily Hürriyet.

“If this settles down, I believe eastern Mediterranean gas will raise the prosperity of regional countries and could become an important alternative to Russian gas,” he said.

There is now considerable evidence showing that more than 3 trillion cubic meters of gas is present in the eastern Mediterranean.

The rich natural gas fields discovered in the eastern Mediterranean have been engendering excitement in all countries of the region.

Greek Cyprus discovered an average of 7 trillion cubic feet of natural gas in December 2011 in one field offshore, close to where Israel reported major finds within its own maritime boundaries.

Encouraged by Cyprus’ and Israel’s impressive oil and gas reserve findings, Lebanon has decided to get its share from Mediterranean sources and kicked off the bidding process for offshore oil and gas licenses.

Turkey also wants to take its share and play a role in the trade of these resources.

However, the region has already been the stage for several political conflicts of interests between Israel, Turkey, Lebanon, Greece and Greek Cyprus, and the gas race seems unlikely to settle down anytime soon.

LNG vs pipeline

A heated debate has already emerged over how to transport and commercialize the resources, with some favoring pipelines and others pushing for liquefied natural gas (LNG).

Birol says either LNG option or carrying the gas to markets via Turkey, Jordan or Egypt would be meaningful choices.

The real issue here is which one would be less costly, he said, as the gas’ value for Europe, which has been seeking to diversify its energy sources to diminish its dependence on Russian gas, is connected to financial benefits.

A group of Israeli energy companies are reportedly already in talks to export the gas to Europe via a pipeline to Turkey.

Birol said Turkey should enhance its LNG infrastructure and ensure the necessary conditions for the private sector. “This would give a chance to Turkey to benefit from global market operations more and increase its energy supply safety,” he said.

“Many European and Asian countries have been taking serious steps regarding LNG terminals. Between 2015 and 2020, a substantial amount of LNG will enter the market, and the competition will push the gas prices downwards. Countries should have LNG infrastructure to take advantage of that.”