Energy Developments and Security in the East Mediterranean

Wednesday, 02 May 2012

Background

Traditionally a transit route, recent energy developments in the eastern Mediterranean suggest the region will increasingly yield greater returns and further energy prospects. Offshore basins adjacent to Cyprus, Egypt, Turkey and Israel, have the potential to significantly alter regional dynamics. Political and security considerations, however, may prevent large-scale development. Most recently, in late-April, this was highlighted by increased tensions in northern Cyprus, between Cyprus and Turkey; a long dormant, although potentially volatile regional flashpoint. Elsewhere, tension between Israel and Lebanon, particularly due to unresolved territorial boundaries, provides additional cause for concern.

Comment

Over the last decade, exploration in the Mediterranean has provided a number of untapped oil and gas fields. While the reserves are unlikely to alter the global hydrocarbon mix, projections suggest the fields have the potential to transform the littoral states from energy importers to exporters. Realisation of this energy potential will bring not only economic benefits for the region, but will also strengthen the geopolitical position of its states, particularly Israel.  Noble Energy, an American oil company, suggests that the Leviathan and Tamar fields, in Israeli waters, may contain about 30 trillion cubic feet of gas. In today’s terms, this represents reserves worth in excess of $670 billion, or three times the United Kingdom’s remaining reserves. Similarly, in the wider Levant Basin, the US Geological Survey estimates there could be an estimated 122 trillion cubic feet of natural gas, and an additional 1.7 billion barrels of oil. 

Importantly, however, for the region’s hydrocarbon sector to remain viable, significant issues must be resolved, particularly border delineation, provision of critical infrastructure and regional security architecture.

The confirmation of energy resources in the eastern Mediterranean, has accentuated ongoing maritime disputes in the region. The land border between Israel and Lebanon was demarcated by the UN in 2000, after the withdrawal of Israeli troops from southern Lebanon. Although not officially endorsed by the UN, Israel has extended this demarcation into the sea and has deployed a series of buoys in the Mediterranean. Beirut strongly rejects this extension. It has appealed to the UN to resolve the issue. Iran has also provided support to the Lebanese objections, with its usual rhetoric. Correspondingly, in the north-eastern Mediterranean, attempts by Cyprus to define its boundaries have been thwarted by Turkey, which, in April, took a unilateral decision to explore the territory it claims. Further concerns linger over potential claims by Egypt, particularly in relation to an already approved Israeli-Cypriot deal. The current military council have not made their foreign policy intentions clear, and in an effort to foster support for the flagging transition government, may tackle emotive issues, such as Israel. 

Developments in the energy sector are not without risk, which will make transporting hydrocarbons a capital intensive process. Long pipelines will be required to transport oil and gas to potential destinations in the European Union. Yet this raises significant dilemmas, particularly for Israel. Israel has no official diplomatic ties with Lebanon and its relations with Egypt have become tense; a development expected to continue, particularly if the Muslim Brotherhood continues to gain strength. In recent years, Jerusalem’s traditional ally in the region, Turkey, has shifted from support of Israel, towards Lebanon and, a matter of particular concern, Iran. Perhaps unlikely, but never to be discounted in the Middle East, energy terrorism will also feature highly in the concerns of energy companies. In response to these developments, reports in the media suggest that the Israeli Navy is preparing an expansion programme, to permit increased security patrols, with a particular focus beyond its immediate littoral. Monitoring equipment and increased security patrols to ensure security of rigs, terminals and underwater facilities, is projected to cost at least $55 million in the initial stages, rising considerably at production. The upper echelons of the military command have gone on record describing the Levant Basin as ’another front’.

The eastern Mediterranean has a number of historic flashpoints. The Arab Spring and changes to political dynamics have dramatically increased regional tension. Since 2000, Lebanon has suffered from endemic state fragility. Hezbollah continues to cause political instability and targeting Israeli developments would be in line with its previous actions. Further, reports suggest the organisation’s capability has dramatically improved since the 2006 Israel border incursion, through increased Iranian support. Flagging support and pressure from more radical elements within Egypt may also prompt a more hostile policy from Cairo towards Israel. Conflict remains a remote outcome, yet opportunities for co-operation are also doubtful. Again, conflict in Cyprus is unlikely, although the tension may be enough to dissuade oil major’s from the large-scale investment required to support development.

Finally, the rising geopolitical importance of the eastern Mediterranean may prompt extra-regional players to enter the theatre. Reinforcing this, in 2011, Iran sent two naval vessels through the Suez Canal, through the Mediterranean to dock in Syria. Preoccupied presently with well-documented social unrest, the Syrian navy also has the potential to project power into the Sea. Unrest elsewhere, particularly in Libya, has brought European Union naval vessels into the fray. While not necessarily aggressive in themselves, long-term naval deployments may increase tension, and certainly could add another dimension to developments in the Mediterranean.

Given Israel’s considerable regional power and projection capability, conflict and significant security challenges remain only a moderate concern; yet, that may be enough to dissuade large-scale investment. Consequently, dialogue between all stakeholders is imperative.  

Liam McHugh

Manager

Northern Australia & Energy Security Research Programmes

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