The Ukraine Crisis and Eastern Mediterranean Gas
The Ukraine crisis has focused attention on Europe’s long-standing need to diversify its energy sources away from excessive dependence on gas and oil imports from Russia. This means diversifying both the geographical sources of Europe’s energy imports and its fuel mix. Commentators frequently refer to the prospect of gas imports from the eastern Mediterranean in this context. The availability of a new source of natural gas off the shore of an EU member state, the Republic of Cyprus, and of Israel, which has an association agreement with the EU, attracts considerable interest especially in countries like Bulgaria and Slovakia, which are virtually 100 percent dependent on Russia for gas imports.
While Eastern Mediterranean gas is a game changer for the countries directly involved it will have a rather modest impact on the EU’s overall energy security. Even if all the gas available in the Levant Basin were exported to the EU, it would amount to no more than one year’s overall EU consumption. In fact, it will take many years to produce enough gas to permit exports, to attract investors, and to build the necessary export infrastructure: pipelines or liquefied natural gas plants and terminals. The exploration and production companies might well prefer to export gas to more lucrative markets in Asia rather than send it to Europe. There is nothing in EU law which compels a member state, like Cyprus, to give preference to exports to Europe. As with other apparent “quick fixes” to Europe’s energy security, prudence is necessary in advancing the Eastern Mediterranean option. If the current Cyprus settlement talks are successful and a pipeline connection from the Eastern Mediterranean to Turkey becomes both politically and commercially viable then, indeed, gas from this region might eventually make its way to the EU through the Southern Corridor. LNG is generally considered better adapted economically to more distant markets, where pipelines are not feasible. In any event it will be the best part of a decade before Eastern Mediterranean gas could reach EU markets either as LNG or through pipelines.
Given the parlous state of relations with Russia, the EU needs to look to other sources of energy that are available at affordable prices. It should step up imports from existing suppliers in Europe, the Gulf and North Africa, explore potential new sources of supply, including the United States, co-finance the construction of LNG terminals in member states that are particularly dependent on Russian gas, improve interconnectors between national energy networks, make sure that sufficient strategic natural gas reserves are in place, push for greater energy efficiency and think again about unconventional sources of energy. The new EU leaders to be nominated after the European Parliament elections in May should be pressed to give their vision of how best the EU can strengthen its energy security.
Michael Leigh is a GMF senior advisor and leads the Eastern Mediterranean Energy Project at GMF.
The views expressed in GMF publications and commentary are the views of the author alone.