The Eastern Mediterranean Gas Forum: A Lebanese perspective


Energy Ministers from Egypt, Cyprus, Greece, Israel, Italy, Jordan and the Palestinian Authority took an important step in Cairo toward establishing an Eastern Mediterranean Gas Forum (EMGF) on January 14. According to the declaration that followed the meeting, the EMGF will, among other things, assist in the creation of a regional gas market, ensure security of supply and demand, optimize resource development, facilitate the use of existing infrastructure and build new ones if necessary, etc. Intra-regional cooperation in this part of the world was at best marginal before the discovery of major hydrocarbon resources. Since 2009, shared interests and a series of gas discoveries have encouraged dialogue. The EMGF appears to be the first tangible result of these new regional dynamics.

The Forum’s raison d’être is regional energy cooperation. Almost ten years to the day after the announcement of the discovery of Tamar (January 17, 2009) – the first major gas discovery in the Levant Basin – it has become increasingly clear that regional cooperation is needed to make the most out of the region’s resources. The Eastern Mediterranean’s gas potential is promising. But, beside Egypt, the countries in the region have to deal with a number of challenges to exploit their resources. First, these resources are mostly offshore, in deep and ultra-deep waters, which makes drilling a complex and costly operation. When found in commercial quantities, their extraction is expensive. Second, the relevant infrastructure to monetize these resources is quasi-inexistent (outside Egypt). And if this was not enough, the geopolitical risk is high (conflict in Syria, terrorism, the Cyprus problem and sour relations between the Republic of Cyprus and Turkey, a constant state of tension between Lebanon and Israel, deteriorating relations between Turkey and Egypt, and between Turkey and Israel etc.). In 2018, we saw that heightened political tension in this part of the world could quickly evolve into a confrontation when Turkish warships prevented a drillship from reaching its drilling target in Block 3 of Cyprus’ Exclusive Economic Zone. These challenges largely explain why a number of gas fields in the region have not been developed yet. Regional cooperation could help create synergies among the various actors that could facilitate the development of these resources, and this is why the announcement of an East Mediterranean Gas Forum is an important development.

The EMGF will be based in Cairo and will be open for other Eastern Mediterranean countries provided they share the Forum’s interests and objectives, and their membership is accepted by the founders of the forum.

Besides Syria, which is still struggling with its many wars, there are two notable absences: Turkey and Lebanon.

In addition to energy cooperation, there is another rationale for this forum: Poor relations between some of the EMGF founding members and Turkey. From their perspective, each of these countries has reasons to complain about Turkish behavior recently:

Cyprus

In addition to the Cyprus dispute, Turkey and Cyprus have been at loggerheads over exploration for hydrocarbons resources in the Cypriot EEZ. Since 2003, Turkey has denounced all the maritime border agreements signed by Cyprus with its neighbors and lobbied these countries to reject them on the grounds that: (1) the current Republic of Cyprus is not competent to represent Cyprus as a whole, and thus cannot sign international agreements on its behalf; and that (2) islands’ capacity to generate maritime zones should be limited. Turkey therefore claims that certain parts of the Cypriot EEZ fall within its continental shelf or under the jurisdiction of the Turkish Republic of Northern Cyprus.

All this explains why Ankara rejects exploratory activity in the Cypriot EEZ. Since 2008, it has made a point to monitor, and sometimes harass, surveyors and drillships conducting operations in Cypriot waters. On at least two occasions, it went as far as blocking their work. Turkey is also threatening to conduct exploratory activity off Cypriot coasts. In addition, there are renewed calls in Turkey for the establishment of a Turkish naval base in the northern part of Cyprus to protect Turkey’s rights and interests in the Eastern Mediterranean.

Greece

Turkey’s relationship with Greece is similarly tense. Ankara has always pursued a policy of provocation in the Aegean, but President Recep Tayyip Erdogan has taken it to another level, with frequent confrontations at sea, repeated violations of Greek airspace (an incident in April 2018 claimed the life of a Greek pilot), renewed claims to Greek isles etc. In his first visit to Greece as Turkish President in 2017, Erdogan claimed that the Treaty of Lausanne must be reconsidered, in effect calling to redraw the borders with Greece, and raised concerns about the Turkish minority in Greece.

Turkey also objects Greece’s rights to exploit energy resources in certain parts of its waters far from the Greek mainland. Once again using the argument that islands’ capacity to generate maritime zones should be limited, Ankara reportedly tried to undermine Greece’s relations with Libya by claiming that Athens was encroaching on Libya’s continental shelf. According to Turkish media reports, the Turkish Defense Minister Hulusi Akar presented maps supposedly demonstrating this point to the Libyan government, which ignored the influence of islands such as Crete (or Cyprus) on marine territory.

Egypt

The ousting of President Mohammad Morsi in 2013 severely strained relations between Egypt and Turkey. Erdogan in effect denied the legitimacy of the current Egyptian regime, arguing that it was established after a coup against the democratically elected Morsi. In august 2013, Turkey called on the UN Security Council to impose sanctions on Egypt. Erdogan continues to express support for the Muslim Brotherhood, sometimes by making the Rabiaa sign with his hand, and never misses an occasion to call for the release of Morsi and all political prisoners in Egypt. Cairo views such statements and positions as a provocation.

Israel

The once strategic relationship between Israel and Turkey has gradually deteriorated over time, particularly after Israel launched operation Cast Lead against Hamas in Gaza in 2008-2009, and the Mavi Marmara incident in 2010. Relations between the two countries never fully recovered, even after the US-brokered Israeli apology to Turkey in 2013 and the normalization of relations in 2016 (partly motivated by energy cooperation).

The situation deteriorated again in 2018. Last May, the Israeli army used live fire and killed over 50 Palestinians in Gaza protesting the US decision to move the American embassy to Jerusalem. Erdogan accused Israel of carrying out a genocide and expelled the Israeli ambassador from Turkey and withdrew the Turkish ambassador from Tel Aviv. He later accused Israel of apartheid. This series of statements and actions were viewed as deeply hostile by the Israelis.

 

It is in this regional context that the East Mediterranean Gas Forum was established. On one hand, there are offshore resources that – until now at least – require cooperation to facilitate their exploitation, and on the other, we see renewed geopolitical rivalries in the Eastern Mediterranean.

If we take the second of these considerations – the geopolitical context – it is clear that this alignment is primarily in reaction to what many of the founding members perceive as aggressive Turkish behavior over the last few years. Many Lebanese are ignoring this dimension and feel that this forum, and this alignment, are directed against them.

This misreading of the situation would not have been an issue if it did not threaten to influence policy making. The first reaction, expressed by certain media and public officials was a quasi-instinctive reaction, dismissing the forum and its member States and suggesting we pursue a parallel track with those countries that were left out – Turkey and Syria – in addition to other countries in the region such as Iraq. For some, this was an impulsive reaction to being left out. But for some others, this was an opportunity to push forward an “isolationist” tendency that considers that Lebanon should reexamine its perspectives and look east for friends and partners. The announcement of the EMGF provided them with additional arguments to support their case.

A more thought out approach would be to strengthen relations even further with each and every country in the region, whether in or outside the EMGF (with the exception of Israel, for obvious reasons). A small country like Lebanon, in a turbulent region, does not have the luxury of picking and choosing its friends, with a country with which it is in a state of war to the south, and a Syria mired in conflict along the rest of its borders. Membership of the EMGF and good relationships with those outside the forum are not mutually exclusive. Member states can still have excellent relations with countries outside the EMGF. Cyprus, Egypt, Turkey are all very relevant to our future gas ambitions, if commercial quantities are found.

For those tempted by an isolationist approach, it is also good to keep in mind that the EMGF is not a closed club either. It is open for other countries in the region to join. It is conceivable that a country that is not a member today, like Turkey, could join it in the future, particularly if a solution is found for the Cyprus dispute (negotiations are expected to resume this year) or if it adopts a less antagonistic approach toward other member States. In this case, wouldn’t the “non-EMGF club” that some are calling for here look too feeble? In 2013, then-Energy Minister Gebran Bassil told MESP: “Unlike Israel for example, Lebanon does not face a regional boycott, and we’re not isolated from supply routes to Europe”. Six years later, Israel appears to be less isolated than the Minister thought it was in 2013. The challenge is not to find ourselves as isolated as Israel once was; Keeping our options open is our best option.

Another reaction to the EMGF announcement, expressed by Caretaker Energy Minister Cesar Abi Khalil, was to brush off the forum, which has the potential to facilitate the development and monetization of the region’s resources. “Lebanon is not worried about exporting its gas (…) We have many options to monetize our resources”, he said in an interview on January 15, citing the local market, the State’s share of produced hydrocarbon and possible export routes. Lebanon, he said, could be linked from the north to Turkey and on to Europe through the Arab Gas Pipeline (though the pipeline extension to Turkey through Syria is yet to be built), and from the south to Egypt and its LNG plants, via the Arab Gas Pipeline as well. He also cited a third option, involving a possible offshore pipeline to Turkey. First, it is not certain at all that the local market alone would justify developing future resources. This means that exports are likely needed to develop any gas we might find, and without exports we might not be able to use the gas for the Lebanese market alone. Second, the export options he listed are just that at this point, options. And they all come with a host of challenges: from prices and commercial viability of some of the projects he mentioned, to political and security risks which might hamper the development of some other projects, and – if we are able to overcome that – there may be issues with the capacity available in the infrastructure we are eyeing. These are, in fact, the same challenges almost every country in the Eastern Mediterranean beside Egypt is facing, and which largely motivated the institutionalization of regional cooperation, under the EMGF, to try to overcome these difficulties.

 

Clearly, the announcement of the Eastern Mediterranean Gas Forum has caused some confusion in Lebanon as to how to deal with this new regional configuration that left the country out. It is important to keep in mind that, if there is an alignment, it is not directed against Lebanon. More than any other member State, Egypt has the possibility to reach out to Lebanon. Egypt is the key player in this new configuration, and, as an Arab country that maintains close and brotherly ties with Lebanon, it can play an important role in reassuring the Lebanese about the project while also seeking to strengthen prospects for energy cooperation between the two countries.

This article was written for the February 2019 edition of Executive Magazine.