This second part highlights 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. Part 1
of this article focused on the regional and global energy and geopolitics dynamics.
Energy Security in Euro-Med: The Trio Sonata v.s. Cyprus, and Egypt
The rise of Russian energy geopolitics, the active cooperation with China and the expected role of Iran in this formation, made the political quests, that were either ignored or overlooked by Europeans, of the Euro-Med countries especially Cyprus, Egypt and others to be appealing to US and EU policy makers. It seems important enough, today, to appease those countries to overcome the interrupted energy life line to Europe. The role of Cyprus became more eminent to the West, as stated by Vice-President Biden, than prior to Putin’s annexation of Crimea and domination over the natural gas line to Europe. The period between October 2013 and mid May 2014 witnessed the promotion of one model and solution to Cyprus financial crunch which plays as follows: Cyprus compelled to seek settlement with Turkey (especially on issues of politics and natural gas) and Israel with the security protection of the gas operations under the US umbrella. It has been announced on several oil and gas events and occasions as well as by the US Ambassador in Cyprus. The enchanted message came from the three countries US, Israel and Turkey deserved the description of "Trio Sonata". In their justification, the trio sonata emphasised that Cyprus is very small country surrounded by terrorists and extremists referring to the Middle East region; ignoring the fact that Egypt is the only country in the Arab world that outreached Israel with enduring Peace Treaty. Also, indication had been made that without this very model security of US and EU investments would be in question. Oil and gas companies will refrain from the upstream operations.
With the current energy crisis and the visit of Vice-President Biden, the language of the newly refined proposed model/solution shifted from compelling to Cyprus being strong partner and allay to the US. This very new model underscores the following points of interest in a clear way:
- US and EU Oil and Gas companies, once reluctant to invest in the gas operation for the alleged security situation, show interest to expand their operations knowing the Russians and Chinese might be the willing investors to take over. Russian investors in Cyprus will be supported by China in case investment in the gas sector was used as a pressing factor by the Western politicians.
- The meeting of the G7 and EU Energy Ministers in Rome on May 2014.
- Biden indicating, for the first time, three key emerging roles for Cyprus: leadership in the whole region, important to Europe energy security, and key partner in marine search and rescue. In the terminology of strategy indicate a prelude to military action in the region with the US. Weeks later this confirmed with President Obama requesting the Congress for $1 Billion to deploy military in Europe.
This model still run short of the true assets of culture, and trust that Cyprus enjoys in the regions and run short of realizing the magnitude and quality of support and cooperation with the big pivotal country in the region such as Egypt. The special invitation extended to the Cypriot President Nicos Anastisiadis to Egypt to participate in celebrating the newly elected President Al-Sisi goes beyond reciprocating the unique support Cyprus lent to Egypt but also to celebrate and commence strong regional teaming on economic, cultural, and environmental activities, where energy is only one aspect of. Attendance of the President of Cyprus, as the only EU participating president, is well appreciated and observed by Egyptians. Cyprus Financial Mirror of June 6, 2014 is commended for the article reflecting the deep understanding of the importance of Cyprus and Egypt in resolving many of the Euro-Med energy and diplomatic issues. Also, in pin pointing Cyprus role to be in the Ukraine crisis.
The EU energy crisis as well as “Egypt Gas Puzzle”, as named and well documented articles of Gulf Oil and Gas, are two faces for the same coin (wrong means to seize energy resources in the Euro Med Corridor can be solved with the creation of energy dual support between Egypt and Cyprus). This energy cooperation should allow Egypt to use the idle capacity of the two LNG plants and infrastructure, estimated at $16 billion, in Damietta and Port Said and convince EU and US Oil and Gas companies once suppressing Egypt gas potentials to cooperate. This should help deterring Egypt’s internal business lobby cooperating the so called “Ministers of Coal” who staged energy crisis to side and cover the wrong estimates in domestic demand for natural gas with the gas actions, favouring exports, initiated in 2005. Instead of following ulterior motives and irresponsible zeal to introduce coal, the filthiest fossil fuel, into Egypt. Ministers of coal can carefully read the regional and global map of energy in which EU and the US and China are all heading for Green energy and the expansion on the use of natural gas. Egypt ‘s role should be regained within 8 month of serious use of energy efficiency program at supply side of power plants and the initiation of gas exploration and development. Investors will be keen to get in the gas activities given EU current huge demand which cannot be quenched by Cyprus or even Egypt alone. Russian and Chinese investors are also expressing growing appetite for Natural Gas. The untold story of and under estimation of true gas reserves, once used to marginalize Egypt, can play in favour of both Egypt (as a pivot of capacity) and Cyprus as potential energy hub for the Euro-Med Corridor.
Running short on the foundation of sound and naturally endowed factors of the new geopolitics of energy, security, culture and trust, the Trio Sonata especially Israel should seek acceptable win-win position rather than being perceived as protector of the region. On a much realistic ground, Israel has nothing to lose but its own chains! i.e. a better chance of being included in the region by detaching from broadcasting the image of strong lobbyists affecting and protected by the US foreign policy and military arm. The questions always asked is whether Israel the puppet or the puppeteer in the game?! Large number of analysts is inclined to believe that despite common belief Israel is moved by the US policy makers who consciously accept manipulation and lobbying in favour of attaining higher stakes for the US National Security in the region, primarily energy security. These stakes, though wrapped with buzz words of engagement, human rights, gender equality, and freedom of expression, are not appealing to countries of the region. With the double collusion of Russia and China, Israel has better chance in the region by not playing at the tune of the US building a more accepted identity and get included rather than alienated. This should positively affect its inclusion in the regional energy formula.
Love Thy Enemy: Restoring the balance and reversing the flow
If the US and the EU policy makers search for energy security and balanced world order is truly sought after then they are asked to resort to reason and profound understanding of realities on ground in the Euro-Med accepting rather than imposing a true inclusive approach (beyond what was previously called engagement approach) in which the cultural, environmental, political and economic aspiration of people of the region are listened to rather than heard of. Despite the pressing energy need, the energy minister agenda in Rome on May 6th as well later on in Brussels with the G7 hosted by the EU on June 3rd of 2014 would never qualify as inclusive i.e. getting local participation from countries of the region in a way that secure their domestic aspiration for green energy and industry as well as Europe demand. It is argued that these points in Rome and Brussels meeting escalate counter measures from countries of the region and push Russia and China to counter measures:
- Provision of capacity building in contract negotiations in extractive sector (which means oil, gas and minerals) for developing countries. This begs the question of how the sellers of the service, EU Companies and governments, can teach and help the buyers, in this case developing countries offering oil and gas concessions, to negotiate contracts between them. Would not this be considered procurement integrity issue? And a huge conflict of interest involved.
- Formation of integrated LNG network across Europe with no mention of Cyprus or North Africa who are key to the success of this plan.
- No inclusive approach to other countries but rather roles divided among G7 countries especially in energy and climate security.
The only inclusive model that will resolve balanced and swift energy solution and defuse elements of mistrust has to come from what should be named as the Quintet of hope; where Cyprus, Egypt, Lebanon, Iraq and Algeria come as collaborative team. In creating such model one and only one approach should be followed “Love Thy Enemy.” Unlike international politics wrong use of the approach as a way to deceive the opponent and create false attitude, the true call by Jesus is meant to humanly rich message of empathy even to those with wrong doing. This should allow for mutual growth for the benefits (economically, environmentally and culturally) of local countries and energy seekers.
The Quintet of Hope model comprises:
- A. Cyprus as the energy hub of East Med Corridor with unique, small and flexible, commercial and energy cross roads from and to Europe. It enjoys trust and cultural ties with Egypt and Middle East countries. It has promising in-land LNG facilities and processing capacity that can be easily developed in 12 month.
- B. Egypt enjoys the pivot of huge human resources with expertise in the Oil and Gas Operations. Two LNGs and infrastructure of pipelines connecting Jordan and Israel. These can be used to complement Cyprus LNG infrastructure to be built.
- C. The role of these two countries will not be complete without the rising and promising role of Lebanon, as crafted by the competent Minister Jobran Bassil of Energy and later Foreign Affairs, forming energy hub that support the Eastern countries of Saudi Arabia and Iraq. This gives hope to Iraq suppressed and un-utilized shallow oil.
With Cyprus and Lebanon forming a Twin-hub for the whole Euro-Med and Eastern Middle East. Egypt should come as the pivot to the regional activities with ample opportunities to engage in capacity building with Cyprus Oil and Gas human resources and on Engineering, Procurement and Construction contracts (EPC). The availability of gas from any country to operate the two existing LNGs will never affect the economic viability of the Vassilikos LNG to be built in Cyprus. In fact, the total natural gas demand in Europe is much higher than Cyprus and Egypt LNG facilities combined. Also, it will never affect the investment opportunities in Vassilikos LNG which must get priority support by the countries of the region and the EU is they are really concerned after their energy security in a sustainable way while securing the blessing of local people of the region.
Connecting Iraq and Algeria (both with huge oil and gas capacities) will complete the Model and benefit all countries in the region with investment and business opportunities coming from relevant projects.
In his commendable article entitled "Reversing the Flow
" Dr. Maged Amin proposed the Engineering and economic link between Cyprus and Egypt. This to be the Hope Pipeline; to resolve Egypt deficit in Natural Gas he suggested connecting both countries with a marine Pipeline heading from Cypriot selected offshore block/s to LNG facilities in Egypt. This solution is financially affordable with a distance of 150-175 Km with approximate cost of $650-800 Million (in 2013 prices). The expected time frame for the project is 8-9 month from date of commencing. In developing the outreach of the pipeline it can be integrated with networks from the Cypriot side and the network from the Egyptian side. This two-way approach will enable the use of the pipeline to balance in unexpected future deficiencies in Cyprus or Egypt.
The positive ramifications of securing energy to Europe while opening investment and job opportunities in the region are huge allowing self-governance of the supply chains to Countries of the Med. Inclusive as it should be, issues of local content will be responsibly revisited by oil and gas tycoons. It is highly called upon responsible countries to create Investment and Equity Fund managed by the Quintet (its location can be determined later) in order to finance the above activities for Cyprus as a start, then Egypt and Lebanon.
If we do not seize the regional opportunities ahead of us then I should ask myself: Do You Think God will Forgive Me!!
Contributed to Gulfoilandgas.com by
Independent Energy and Development Advisor
The author is a Gulfoilandgas.com contributor. The opinions expressed are those of the writer.