Gas in Eastern Mediterranean: Will It Be the Game Changer

Gas in Eastern Mediterranean: Will It Be the Game Changer

The Eastern Mediterranean Sea is witnessing an era of revolution in term of gas discoveries backed by the recent technological advancements in offshore and deepwater drilling.

A recent U.S. Geological Survey estimated that the basin holds close to 3,450 billion cubic meters (Bcm) of natural gas and 1.7 billion barrels of oil. The Nile Delta Basin, in the south-east Mediterranean, situated in Egypt’s and Cyprus’s EEZ, is estimated to hold even more natural gas (6,315 Bcm) and oil (1.8 billion barrels).

Together with the Aegean Basin offshore Greece, it appears that the Eastern Mediterranean has huge oil and gas potential, and it is clear why there is worldwide interest in exploration of the region.

Israel is taking the lead in developing its natural gas discoveries. Tamar and Leviathan, fields where large deposits of natural gas have been found, will, it is sometimes claimed, supply Israel with all the energy it needs for decades to come. A claim frequently cited in the media, for example, predicts that the fields have “enough gas to supply the country for 150 years.”

The Tamar field in the eastern Mediterranean Sea, estimated to hold 9 trillion cubic feet of natural gas; Israel started gas production from the field in March 2013, in an effort to put the country on the road to energy independence and save a projected 1 billion shekels ($274 million) a month, according to the government. The field is being developed by a group that includes Noble Energy Inc., Delek Drilling-LP, Avner Oil Exploration LLP and Isramco Negev 2 LP.

Meanwhile, the Leviathan Field, discovered in 2010 with an estimated 19 trillion cubic feet (Tcf) of natural gas, was the world's largest offshore discovery of the past decade.

"Leviathan is actually the reservoir that can potentially bring Israel to be totally independent from an energy perspective and also position Israel as an exporter of natural gas rather than importer," said Yossi Abu, chief executive of leading Israeli natural gas company, Delek Drilling.

Delek Drilling and Avner Oil Exploration, also owned by Delek Group, own 31% of Tamar and 45% of Leviathan. Its U.S. partner is Noble Energy Inc.

According to Noble Energy, which has been operating in the Mediterranean Sea, offshore Israel, since 1998, the Tamar and Dalit fields could supply Israel with gas for two decades. The larger Leviathan field is estimated to hold 18 trillion cubic feet of gas.

Lebanon and Syria have also announced timetables for offshore licensing rounds. Syria has delayed the process due to the political situation, whereas in Lebanon the first licensing round is possible as early as 2013. According to a recent estimate initiated by the Lebanese government, 708 Bcm of natural gas may be available offshore south-west Lebanon. The country has significant gas and perhaps oil potential and is currently in the process of legislation to regularize gas exploration.

In Lebanon, the potential benefits of a domestic supply of gas are immediately clear. In December, a seismological survey in Lebanese waters indicated vast natural gas deposits beneath the seabed, potentially as much as 25 Tcf.

Lebanon has just named the international companies that can bid for gas and oil exploration licenses. They include giants such as Exxon Mobil Corp., Royal Dutch Shell plc, Chevron Corp. and Total S.A. It is estimated that drilling will begin in 2015 or 2016. Yet that timeline still leaves the country lagging behind its neighbors.

Cyprus has also revealed its ambitions to develop its gas reserves. In late 2011, Noble Energy announced a discovery offshore Cyprus with estimated gross mean resources of 7 Tcf. Noble Energy has now discovered approximately 38 Tcf gross of new gas resources from this region.

In early June, Noblel said that said it had begun drilling to determine the size of a gas field off Cyprus’ southern coast.

The Houston-based company said that it would take three months to drill to a depth of 5,600 meters (18,372 feet) below sea level and another 2-3 months to assess the data which will help map out the next stages of the field’s development.

Bailed-out Cyprus is looking to its offshore gas reserves to help it pull out of its worst economic crisis in decades.

Cypriot authorities say confirmation of the field’s size will help attract investors for a planned gas processing plant that will meet domestic energy needs and export excess supply.

For Palestine, the Gaza Marine field, 30 kilometers (18.6 miles) off the coast of the Palestinian territory, has long been known about. In 1999, the Palestinian Authority awarded the exploration license to British Gas.

However the conflict between Israel and the Palestinians has prevented further development of the field. The situation became more complicated when the Islamist group, Hamas, took over by force in 2007, ousting its rivals from the Fatah faction. Israel then tightened its border and naval blockade of Gaza.

Casus Belli

The increasingly significant natural gas discoveries along in the East of Mediterranean are fueling tensions between countries in the region.

Cyprus’ shores have thereby added fuel to a long-burning fire, as Turkey claims that a share of these resources belong to North Cyprus. Known commonly as “North Cyprus,” this section of the island is recognized only by Turkey as the Turkish Republic of Northern Cyprus. Greek Cypriots, on the other hand, would like to see a unification of the entire island under the Cypriot government.

Turkey objects to Cypriot exploration on its western shores due to the fact that Turkey deems a portion of these areas to be in its own continental shelf and another section to belong to Egypt.

In a recent interview with the Turkish English-language newspaper Hürriyet Daily News, Turkish Energy Minister Taner Yildiz declared that the best solution for the region would be for both Cyprus and Israel to export their gas through a pipeline passing through Turkey.

In addition to the Cyprus and Turkey issue, another problem appeared between Lebanon and Israel as the gas reserves deposits fall within the territorial waters of Lebanon and Israel, possibly stretching across a maritime boundary that does not yet exist, celebrations are tempered by the realities of economic rivalry and the threat of renewed conflict.

The quarrel over the path of the maritime boundary between Lebanon and Israel has intensified with the latter’s submission of its proposed sea border in 2011. The Israeli line runs north of Lebanon’s proposed line which was submitted in 2010, leaving an expanse of sea under dispute.

Amid all these disputes and conflicts, the recent discoveries of gas in the region is set to keep the East of the Mediterranean under the loop given the nature of the relation between the different countries involved, which are considered in most cases as “enemies”, but, can the “Gas Revolution” change this relation into “friendship”, as the old saying goes: There are no permanent enemies, and no permanent friends, only permanent interests.



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