The Med: Hub or Flashpoint?

Enduring conflicts and unresolved disputes in the Eastern Mediterranean promise to shape – and constrain – the development of offshore energy in the near future. Shaky relations throughout the region hinder a growing roster of global stakeholders, forcing geopolitical and commercial interests to maintain a fine balance. Still, barring dramatic new strategic risks, development of the region’s offshore energy resources is bound to continue.

Under ideal conditions, the natural gas resources of the Eastern Mediterranean could be a force for regional stability and make a meaningful contribution to European energy security. But conditions are far from ideal. Politics clearly trumps commercial logic in much of the region, and where there is conflict and strife, there is fear and uncertainty.

AN AGE OF DISCOVERY. Since the discovery of the Tamar gas field offshore Israel in 2009, swiftly followed by Leviathan in 2010 and by the Aphrodite field offshore Cyprus in 2011, as well as by various smaller finds, Eastern Mediterranean energy has become a fashionable theme in geopolitical debates. With continued discoveries – most notably eni’s substantial 2015 find in the Zohr field (estimated at 850 billion cubic meters) – the region has acquired increased weight in energy commerce. From the perspective of regional exporters and consumers, the new discoveries, together with older proven reserves, are meaningful. This is especially true for economies that have faced financial crises, such as Cyprus. Egypt continues to experience even more serious economic stress, coupled with growing domestic demand for gas. Israel has its own approach, with a strong interest in energy independence alongside the potential longer-term revenue from gas exports. Turkey, Lebanon, Syria and Gaza are also potential stakeholders in the development of offshore resources in the Eastern Mediterranean.