Petros Makris-Kourkoulos
(RIEAS Research Associate and Energy Security Analyst)
Copyright: www.rieas.gr
In the mid-60s, John F. Kennedy stated the famous geography has made us neighbors, history has made us friends, economics has made us partners and necessity has made us allies having the flourishing US-Canadian alliance on his mind. Fifty years later, those words have a deep meaning for a newborn block in the East Mediterranean Sea. The potential “third energy corridor” is the most prominent ace up Europe’s sleeve to reshuffle and win the energy game, as for the Greece-Cyprus-Israel triangle to lead the sequence of the raising pots and eventually, to win a hard pot of poker.
On 28th and 29th of March, a significant Investment Energy Summit was held in Athens regarding prospective energy projects which can upgrade the geo-political role of the East Mediterranean Basin. The “East Mediterranean Gas Politics” is a concept which was born after the discovery of vast gas fields in the eastern side of the Mediterranean Sea. The Israeli “Tamar” and “Leviathan” gas fields as well as the “Aphrodite” offshore gas field off the southern coast of Cyprus located at country's maritime Exclusive Economic Zone, created new attractive potentials for a third energy corridor to Europe in parallel with the existing Nordic and the upcoming Southern. Numerous officials from Greece, Israel and Cyprus, involved with the energy sector, participated at the conference making substance to a rising dynamic triangle in the chessboard of energy game while, the special envoy appointed by Hillary Clinton for Eurasian energy Mr. Richard Morningstar and industry participants from Noble Energy and Gazprom as well gave an extra significance. The creation of LNG stations in Cyprus and Israel and the creation of a pipeline connecting the fields with Greece and from there on to the EU via Italy are some of the most crucial issues were discussed. But what is the meaning and the geostrategic reality of such a conference?
The triangle’s geo-political role in South Eastern Europe
Speaking about international politics, it is quite clear to understand a necessity for a geo-political block among Greece-Cyprus-Israel which is going to play a key role in the energy transportation to Europe. Having the Russian Nord corridor which is used to monopolize the gas streaming to Europe and to exercise political pressure on ex-Soviet states, the planned rival Southern corridor is backed fully by the EU and generally by the West for energy security reasons. However, the existence of a third alternative would add more options towards this goal as it could strengthen Europe’s negotiating tools in the market. Of course, it is noteworthy to mention that this third corridor has more stable and reliable potentials on the grounds that Greece and Cyprus are direct parts of Europe, and Israel is an honest and trustworthy ally where bilateral relations have to be enhanced more by such economic and strategic agreements. Moreover, Ambassador Morningstar’s presence, as that of Noble energy as well, gave a plus prestige to the highest importance of this triangle for the US’s interest in the area. The Tamar gas field is the largest organic find ever discovered in the under-explored area of the Mediterranean Sea and Noble Energy is the basic operator with a 36% working interest on it. Additionally, Noble started drilling the offshore prospect south of Cyprus, which lies close to large discoveries off Israel, at the end of September 2011.
In one other point of view, a dynamic triangle between Greece-Cyprus-Israel could be treated as an efficient geo-political counterweight to Turkey. In a same sense, Abraham Lincoln aptly expressed his view on friendship and rivalry in politics stating that a friend is one who has the same enemies as you have; and it is quite obvious that there is a crying need for balance of power in the region. Turkey, has already disputed energy explorations in the Cypriot exclusive economic zone reacting aggressively because it considers that its regional energy primacy could be threated. Indeed, regarding energy domain, I would dare to say that Turkey is one of the fastest growing energy markets in the world having introduced the “East-West Energy corridor Concept” many years before. Its geographical proximity to energy producer (Azerbaijan-Turkmenistan-Iraq-Russia) and consumer (Europe) has highlighted its geopolitical significance as energy intermediate. Turkey has deployed outstanding oil and gas pipeline system which has its roots in the mid-70’s while now, it negotiates the significant Russian South Stream gas pipeline via Black Sea and the Western backed pipelines such as the imposing almost 4000km Nabucco with 31 bcm/a capacity, the 520km Trans Adriatic Pipeline (TAP) with 10 bcm/a and the 807km Interconnector Turkey-Greece-Italy (ITGI) with 10 bcm/a. By the end of this year, one of these pipelines will be chosen to transport gas to Europe bypassing Turkey. Therefore, Turkey will assume full authority to preside over the route enhancing its geo-political role in the Mediterranean Sea.
Suggestions for a feasible Greek strategy
Greece is given outstanding multiple chances in the middle of an economic storm. What Greece must do and what could be gained by this alliance is simple. Initially, Greece must walk the tightrope and balance between tough domestic reforms and an unstable external environment. Thus, the most important Ministries of Foreign Affairs and Energy ought to be secured. The Ministry of Energy must give an extra focus on the proved offshore natural resources underneath the Ionian Sea and Crete in order to be capable of join the triangle more active. It is inconceivable to think the reason of past years’ torpidity in the field of energy exploration and production if we think that countries like Norway cover close to 20 per cent of European gas consumption. More recently, the Cypriot celerity to exploit its energy potentials has shown how a small state can make energy jumps towards energy emancipation and exports. Additionally, the Greek benefits from a direct pipeline from Israel and Cyprus to European markets could be highly effective as intermediate while the support on the southern corridor which probably is going to be TAP is strictly necessary. TAP pipeline will eventually bypass Turkey, Greece and Albania in order to transport the Azeri gas to Europe through Italy.
Lastly, Greece must ameliorate the domestic regulatory system in order to create the breeding ground for foreign investments. Competitiveness is a key word towards this way. Unfortunately, Greece is at the bottom of the European competitiveness rankings lying in the last position (27th). Specifically, according to Formula Europa Institute analysis, Greece is among the less competitive countries in Europe in terms of political stability (25th), government effectiveness (24th), regulatory quality (26th), control of corruption (25th); these are factors that without any doubt drive back foreign capital and potential investments at flourishing sectors like energy. Last Friday, the open call for competition on the state-own oil company DEPA ended presenting a number of candidates who are ready to take on the management of the company. However, the question is how effective can be a privatization of DEPA with a possible Gazprom’s participation which obviously reveal Russian intentions in strengthening its influence over southeastern Europe.