Turkey drillship Fatih
Next month's possible resumption of peace talks in Cyprus could prove to be an important step towards resolution of the dispute over development of the island's offshore gas reserves and lead to a pause in Turkish drilling in the Cyprus Exclusive Economic Zone (EEZ).
Last week, the UN Secretary-General Antonio Guterres invited Cypriot President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci to informal discussions in Berlin next month “in order to discuss the next steps in the Cyprus issue.”
Reports say that the Berlin meeting will pave the way to a potential five-party conference in December.
In an interview with New Europe, Cyprus Natural Hydrocarbons Company CEO Charles Ellinas said: “There is a strong push and more readiness to resume negotiations next month, starting with Greek and Turkish Cypriots. But even then, there is still uncertainty how they will progress. I am not that confident though that Turkish drilling will stop altogether, but once current commitments are completed, it may pause for a while until we see how negotiations progress,” Ellinas said.
He added that drilling by the international oil companies in the EEZ in areas not claimed by Turkey, will likely begin in the first half of 2020.
There has also been a renewed US interest in the East Mediterranean with a host of summits and well publicised deals highlighting cooperation between Cyprus, Greece and Israel and Cyprus, Greece and Egypt.
In May, an agreement was signed between Cyprus and Egypt in Cairo to commission and construct the EuroAfrica Interconnector, which will connect the two countries' electricity networks.
Earlier this month, the Cypriot Ministry of Defence purchased four Israeli-made surveillance drones for €12-million in order to monitor the activities of Turkish drillships operating in the EEZ.
Mr Ellinas said he believed that Washington's heightened interest is limit to consolidating the Cyprus, Greece, Israel alliance and continued cooperation with Egypt as US proxies in the region.
“The pull-out from Syria has sent shivers to the spines of these friendly nations and I am sure they will be rethinking how best to safeguard their interests – hence the increased readiness to resume negotiations for the Cyprus problem,” he said, before saying that the incoming European Commission President Ursula von der Leyen may be more interested in negotiations to resolve regional problems in the Eastern Mediterranean.
Both the US and the EU see exports from new drills in the region as another way of reducing reliance on imports of Russian gas as the first leg of Gazprom's TurkStream nears completion and the Russian state-owned gas giant considers building a second leg into Europe. The ongoing construction of Nord Stream 2 in the Baltic Sea is also inching closer towards completion, despite continued legal issues.
However, Ellinas also conceded that the likelihood of gas exports from the Eastern Mediterranean to Europe has decreased. He said: “Low gas prices in Europe, which are likely to persist to the end of the next decade, and the drive for reduction in carbon emissions – which will increase under the new European Commission – are putting pay to this. Putting it simply, East Med gas is too expensive to produce and export to make any inroads into Europe. That’s why Russia is not showing any interest in Cyprus EEZ.”
Sources in Moscow have been reported as saying that Russia is more interested in much bigger projects in Turkey and China than working in Cyprus.
On top of that, Ellinas said that gas reserves in the Cyprus EEZ are fairly limited, and that Russia is already a player in the region via partnerships between Rosneft and Novatek and international oil companies such as BP, Total and ENI.
“Gazprom’s interests right now are in Turkey, with TurkStream 1 and 2 and exports through there to Europe taking priority,” he said.
Ellinas also said that factors like the rise in renewables, climate change activism and awareness and the increasing impact of the energy transition, as well as increased international competition and entrenched low oil and gas prices have forced oil companies to become more selective about where to invest.
“They give priority to easy to get, cheap and low risk to develop oil and gas fields, with direct access to global markets,” he said, adding that the Eastern Mediterranean does not fulfil these conditions with the potential exception of Egypt, which has a large internal energy market, existing infrastructure and relative political stability.
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