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Noble Energy : Concerns over impact of Turkish-Israeli deal on Cyprus

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06/28/2016 | 06:43am CEST

The normalisation of Turkish-Israeli political and diplomatic ties, possibly paving the way for lucrative Mediterranean gas deals, could impact Cyprus, although in what way is not yet clear, an energy analyst has told the Cyprus Mail.

In one way it could prompt Turkey to aid a settlement to the Cyprus issue. On the other hand, both countries could sideline Cyprus altogether.

Although Israeli Prime Minister Benjamin Netanyahu talked up the deal with Turkey, saying it would have "immense implications for the Israeli economy," Turkey's PM Binali Yildirim seemed more guarded, saying it was too early to talk about gas deals with Israel.


Foreign Minister Ioannis Kasoulides, said on Monday that Netanyahu reassured President Nicos Anastasiades in a telephone conversation a few weeks ago that the agreement with Ankara would not affect in any way Israel's relations with Cyprus.

He added that Netanyahu called the president himself to give his reassurances, and that Nicosia was told to expect another call from the Israeli premier after the agreement with Ankara was signed.

Just because a country improved relations with Turkey, Kassoulides said, did not mean that it was necessarily a negative thing for Cyprus.

However, the agreement between the two neighbouring nations does give Nicosia something to think about.

It is no secret that energy companies in Turkey and Israel continued talking throughout the six-year rift between the two nations.

Now, says Charles Ellinas, the proposed sale of Israeli gas to Turkey might pick up where it left off.

In 2014, Noble Energy, operators of Israel's massive Leviathan gas field, invited tenders to sell 8 to 10 bcm (billion cubic metres) a year to Turkey. A number of Turkish companies were interested, but the project was put on the backburner in the wake of the Mavi Marmara incident.

But with political ties now normalised between the two nations, Noble could rekindle that same tender, said Ellinas.

The tender involved building a pipeline from Leviathan to the Turkish shoreline. Such a pipeline must necessarily pass through Cyprus' Exclusive Economic Zone (EEZ).

Cyprus has repeatedly stated it is opposed to an Israel-Turkey pipeline running through its EEZ until a comprehensive settlement of the Cyprus problem.

But as Ellinas points out, whereas Cyprus' ally Israel would prefer to have Nicosia's consent for the pipeline, it does not need it.

Cyprus and Turkey are members of the Energy Charter Treaty, an international agreement which establishes a multilateral framework for cross-border cooperation in the  energy industry.

Under the treaty, EEZs are not considered sovereign territory, therefore the owner of an EEZ cannot stop a project from going ahead. Cyprus might for instance raise environmental objections to the pipeline, but Israel and Turkey could easily circumnavigate that objection by coming up with an alternative pipeline route.

And hypothetically, Ankara and Tel Aviv can sidestep the pipeline issue altogether by opting to use Compressed Natural Gas which makes use of carriers.

Ultimately it is a political decision, with Israel weighing whether it would want to jeopardise its relationship with Cyprus.

Alternatively, these issues are more or less rendered moot in the event the Cyprus problem is solved, in which case Cyprus can opt to join the Israel-Turkey pipeline with its own gas reserves.

That said, Israel does not have many alternatives.

"Effectively Turkey is the most viable option at the moment," Ellinas says.

Israeli gas sales to Egypt can almost certainly be ruled out, particularly in light of the fact that Egypt has recently made a number of its own gas discoveries and no longer needs imports.

Also, Israeli exports to Jordan – another potential market – would involve relatively small amounts; and in any case Jordan has temporarily solved its energy problem by importing cheap LNG.

That leaves Turkey, and beyond that, Ellinas observes, Turkish energy companies are now offering Israel an additional incentive – that they build the pipeline themselves. Noble Energy would therefore only have to construct a Floating Storage and Offloading vessel (FSO).

From Ankara's perspective, the gas deal with Russia expires early next decade and Turkey is aware of the need to diversify its gas sources.


The post Concerns over impact of Turkish-Israeli deal on Cyprus appeared first on Cyprus Mail.

(c) 2016 Cyprus Mail Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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