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Love Thy Enemy: The Untold Story of Huge Gas Reserves in the East Mediterranean – Part 1

Source: Gulfoilandgas.com - Articles 6/16/2014, Location: Africa

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This is the first part of two-part article. Part 1 talks about the regional and global energy and geopolitics dynamics. Part 2 focuses more on the role Cyprus, Egypt, Lebanon as key countries in the Euro-Med and how this lead integrated regional model that provide sustainable and inclusive solutions to EU and the region energy security; a top priority nowadays. Link to Part 2

IT IS NOW OR NEVER for Cyprus, Lebanon, and Egypt to realize their collective potentials in the energy market and form Twin-Energy Hub and a Pivot (Egypt). This model, in collaboration with other countries in the region such as Algeria and Iraq, will develop the individual as well as the aggregate capacity of the East Med to negotiate better gas development agreements, and maintain balanced regional and inevitably global energy security given the current energy crisis in Europe.

This article examines, using the content analysis and sequence of events, how this model can materialize in a transparent and inclusive way supporting the sovereignty and potential regional role of the once considered erroneously small economies such as Cyprus. In fact, due to social, economic and cultural ties in the region and the presence of a good number of Russian investors, its role exceeds and surpasses those of big economies. In addition, linkages will be drawn from and to the current energy turmoil, triggered by the Russian-Ukraine confrontation, documenting the higher-than-announced likelihood for huge natural gas reserves in the East Med Corridor especially with Egypt and Cyprus. This well-kept story has never been shared nor made available by Oil and Gas tycoons operating in the region. But with the current energy crunch in Europe the ball game of politics force lots of changes to take place soon. And utilizing the well-kept gas reserves will be sooner than expected. Furthermore, analyses show that the Russian-Ukraine confrontation is not the root cause of the current energy destabilization but merely the triggering agent and catalyst of far more deep issues of:
  1. The ill-advised US-backed EU global energy security policy, adopted right after 1973 oil crisis, failed to recognize cultural sensitivity of imposed single-crafted world order even if buzz words of mass deception such as democracy and human rights are overly used.
  2. Also, the US, leading the so called liberal world, failed to see the end of what used to be the slow and quite deterrence strategies and gaming between Russia and the US especially after the cold warwar; and still not comprehending why.
  3. US and EU, in spreading the word of democracy, human rights, capitalism, and secure Europe energy access, in the Middle East and Eastern countries, continue to use some out-dated local mix of business groups, leaders, and intellects who are utterly disconnected from the rest of their populations.

From Giuoco Piano to the Snapping Bear

For many years during and after the Cold War the gaming taking place between the Western and Eastern Blocs has been the manifestation of the old 16th and 17th Century Italian Chess game known as Giuoco Piano (pronounced as djuko piano) the “Quiet Game.” For many years, grand chess masters from the Soviet Union and the US followed and endorsed this chess opening script as did their grand politicians in confrontation. As well as during the meddling in Moldova, Abkhazia and Georgia the plan is to intervene and support silently and with caution. The expansion plans of NATO and the Ukraine’s westward inclination triggered surprisingly strong and abrupt snapping of Crimea. As Jeffrey Mankoff stated in the article “Russia Latest Land Grab..” in Foreign Affairs Journal May/June 2014: “With the annexation, however, Russia departed from these old tactics and significantly raised the stakes.”The question worth asking is why at this particular time Russia decided to depart old script and tactics? The typically perceived answers are the strategic importance of Ukraine to Russia and the urge of President Putin to escalate his confrontation with the west. This is an old answer for a new challenge and situation and oversimplification of the role and quest for energy security.

Confrontation for the sake of ideology and show off of territoriality is somehow does not justify the sharp and swift shift to snapping actions. Energy squeeze, a life line to Europe survival, where 60% of gas supply comes from Russia surely qualifies as a main reason. In other words, confrontation is not the root cause of energy market destabilization. It’s the opposite, EU energy security quest and expansion in the Euro-Med and gas line next to Crimea with little sensitivity regarding inclusion to the countries of the Med and Russia. It has been argued by group of audience and analysts on “Intellegence2” a BBC program aired on June 14, 2014 that lots of engagement efforts were done to bring Russia closer to the West yet the result was disappointing. Careful analysis would reveal that all the engagement efforts were more or less imposing New World Orders that is single-crafted by the US and adopted by the EU. This is far away from the efforts of inclusion which entails local participation from countries of the regions that US and EU are operating. The messengers used to convey the messages of transparency, human rights, that looks very humane and appealing fail to be empathetic to the cultural sensitivities in dealing with complexity of issues the Middle East. Cyprus, on the other hand, represents and demonstrates a well-balanced capacity to be an informed ambassador of goodwill to the Euro-Med as well as to Russia and China; yet its efforts remained marginalized and underestimated by the EU members and the US. With the Ukraine crisis EU energy rush became top on the agenda and Cyprus role the optimal hub for energy and diplomacy is much recognized and needed. With its daring stand, as the only country in the EU, in support of Egypt at the early stage of people revolution and bilateral visits and missions, Cyprus proved to be visionary and trustworthy neighbour. Thanks to the commendable and much appreciated efforts of its president. Cyprus is the only acceptable state to the Euro-Med Region as well as to the Gulf and Russia. The well versed regional role carefully designed and played by President Nicos Anastisiadis, and his team of Foreign Minister Kasulidis and Permanent Secretary Alexandros Zenon, qualify Cyprus to be not only an energy hub but also diplomatic and economic hub for the region. This role for Cyprus in the region should be complemented and accentuated with Egypt reciprocating and resonating to the tune. Much needed efforts on Cyprus and Egypt mutual domestic energy demands becomes priority with the expected regional energy implications resulting from the rapport and close cooperation between Russia and China on natural gas issues and soon with Iran. Many old school geo-politicians undermine Cyprus position among giant EU countries, measured by size and military power. Today’s sequence of events reveals clearly the opposite: the emergence of two key, yet overlooked, elements of energy and trust in geo-politics.

The Kiss of the Dragon and the Hug of the Mullah

The visit of US Vice President Joe Biden to Cyprus on May 21st, in less 48 hours of the announcement of Russian-Chinese largest gas supply contract of $400 billion, is evidence of the now-recognized significance of Cyprus as potential gas supply hub to Europe, diplomatic centre of excellence and strategic geo-political centre, as he announced. This visit was a build-up on an earlier trend at the G7 and the EU energy meeting in Rome on, in which the EU recognized and perceived the once marginalised role of Cyprus in the region. Still this recently perceived and announced role for Cyprus, which we claim to be different from what has been promoted as a limited positioning before the Ukraine-Russian confrontation and the pressing need for natural gas in Europe, run short of three key elements that make Cyprus of far reaching social and economic impact on the Euro-Med region and Russia:

1. Cyprus is not and should not be only a route for or source of energy to serve EU energy hunger. But an energy hub where value addition operation in the form of processing clean and environmental industries can take place benefiting Cypriot people. In this aspect, Egypt is encouraged to play role the technical and human capacity investments building on the long oil and gas knowledge that Egypt enjoys. President Anastasiades well-put thoughts that his government wants to build an onshore terminal for liquefaction of gas (LNG) so that Cyprus can “realise the significant potential of becoming the eastern Mediterranean’s energy hub” (as stated in the Guardian on May 22nd by Helena Smith). This envisioned hub is a multi-faced that will proof valuable top the EU during the up-coming energy crunch. Accordingly, EU countries and the G7 should seek grant support for the over $10 billion construction of the onshore facility known as Vassilikos LNG.

2. Middle East and the recent Russian bear snapping is a clear build-up of Lack of trust and transparency by Russia and the Middle East countries in the EU and the US, with exception of the limited number of backed-up business and official people and Israel. Cyprus stands tall as a country close to the people of the region and with credible and consistent balance to the issues and challenges of the region. While political actions may be used to explain this statement a better elaboration goes on the lack of transparency by US and major EU companies in the region regarding the true story of natural gas reserves in the region. Strong and credible industry leaks as well as documented observations by analysts in the region indicate that Seismic data have been systematically collected by US and EU energy tycoons where the true gas reserves of Cyprus exceeds 180 Trillion Cubic Feet (Tcf) and of Egypt is 250 Tcf unlike what has been promoted and documented by the US Energy Information Administration (EIA) of only 70 Trillion Cubic feet. This is supported by two main observations: first, the rush of highest US official in 50 years, Mr. Biden, to Cyprus right after the Russian-Chinese gas contract, securing the ground for energy routes as he spelled out. Second, EU private sector such as BP and BG advised Egypt (as indicated by Minister of Petroleum early 2014 during the Business meeting of the Canadian Chamber of Commerce in Cairo), Not to extract its gas to solve its recent energy crunch at a time of Egypt had more than 11 major gas discoveries, as indicated by US EIA and the websites of Oil and Gas tycoon. BP has the lion share of one of the largest 10 Global gas discoveries in Egypt named “Salamat” While Egypt should bounce of its own commitments of the past concessions it should draw a line with future concessions. These are two practical examples why the US-Backed EU energy policy in the so called New World Order fuelled lack of trust.

3. Cyprus more than any EU country comes in with wealth of strong cultural ties with Egypt since King Farouk and President Gamal Abdel Naser as well as the rest of the region. This adds the dimension of cultural diplomacy a much needed in dealing with today’s regional diplomacy. The growing and commended outreach of Mr. Jobran Bassil, as Lebanese Minister of Energy and currently as Minister of Foreign Affairs, to Cyprus indicate the natural flow and acceptance of Cyprus role in the region.

In his article entitled "The Illusion of Geopolitics: the enduring power of the liberal world" Foreign Affairs journal May/June 2014 G. John Ikenberry reiterated what US strategists wrongly believed as the "logic and character of the existing world order which is stable and expansive". Ikenberry misunderstands the current world configuration which leads to underestimating the role to be played by Russia, China and Iran. Surprisingly, in his zeal to defend the new world order championed by the US he failed to realistically observe the illogic of global conflicts in the African Continent (DRC is just an example), Arab Spring in North Africa, Syria, conflicts in Asia and in the American continent. Among all these major conflicts China leapfrogged in a very subtle way to secure natural gas in Algeria and renewable energy industrial entities in Europe. While seemingly objecting the Russian move in Crimea at the UN, Chinese Prime Minister made a quick visit to Germany commencing mutual trust and Chinese extensive investments in high tech solar and wind companies in Germany. On a parallel line the deal for the Russian supply of gas commenced two weeks later. This enables China to be better positioned for what is known in martial arts as the Kiss of the Dragon where it is able to choke the opponent moves completely. Having resolved its gas hunger for the coming 30 years with the reunion with Russian in a gas deal and securing future green energy technology, China moved forward early June to stipulate its high benchmarks for adopting green economy using EU technology and need for financial investments. China will then rise suddenly as a Green economy rather than the bleak image of being the largest world polluter. Walter Russell Mead article “the Return of Geopolitics: the revenge of the revisionist powers” Foreign Affairs Journal May/June 2014, unlike Ikenberry, depicts the most accurate picture of today’s world and the geopolitical moves. The only addition and qualifier needed are the following key types of: Geopolitics of Green technology, Trust and Transparency, and Geopolitics of emotions (a term tossed by) showing how the west perceive the Middle East region only as competition among “Sheikh, Priest, and Rabbi”

Western policy makers such as British former Prime Minister Tony Blair were trapped into thinking that years of engaging Russia and China into the so called New World Order worked; to the extent of calling upon the West teaming with Russia and China to fight radical Islam, as stated on April 2014 by the Guardian. Contrary to his belief, China joined Russia on the energy policy level and expected to accommodate Iran soon enough. The expected social, economic and political ramification of the Russian-Chinese coordinated move is yet to manifest on the Euro-Med region right after Iran unifies with both. Iran commenced its first move in this direction this week of June 2014 by requesting direct nuclear talks with the US. There is high likelihood that some agreements will eventual shape up in the near future first then followed by Iran-Russia-China teaming up. Iran is a key supplier in the oil market and key player in the agro-food supply chain in Africa especially in grains. This will induce grounds for the so called “Hug of the Mullah” where full engagement at the global markets and neighbouring countries especially in energy and food (which has been done for almost 10 years in Africa) plays for the side of the three countries vis-à-vis the West.

In Part 2, I will focus on the gaming both Cyprus and Egypt are subject to by international energy players and how feasible it is to create an inclusive energy model that takes care of the domestic needs of producing countries of the region while assisting the EU in a responsible way.

Go to Part 2

Contributed to Gulfoilandgas.com by
Tarek El-Baz
Independent Energy and Development Advisor

The author is a Gulfoilandgas.com contributor. The opinions expressed are those of the writer.

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