IAI Working Papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI European Union European South-Eastern Mediterranean |Natural gas|Turkey |Israel |Cyprus | the parties involved. and, ifso,what arethealternative routes that would benefit all resources canberegardedasaconsiderable supply for Europe tries toanswerwhether theSouth-Eastern Mediterranean become a potential source for the European Union. to monetise theresources, EasternMediterranean gascould of supplies, and with gas field owners and developers eager and UkrainedeepeningEurope’s interest indiversification development stifled. However, with thecrisisbetweenR appear to be problematic either politically or financially, leaving markets remainsunanswered. Thevarious possible routes which route or routes such gaswould take into theglobal exploration anddevelopment. Meanwhile, thequestion of South-Eastern Mediterranean gasfields arestill under Abstract by ElifBurcu Günaydın be aSupply for the EU? Can South-Eastern Mediterranean Gas This paper ussia keywords IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 2 Caspian resources asanofficial EUenergysecurity policy. for thecreation of asouthern gascorridor inorder toreachtheMiddle Easternand was reflected inthe European Commission Communication in2008, which called desire todecreaseits dependencyon R agenda sincethesecond half of the2000sanddeteriorated over time,theEU’s 16, 17,16, http://eur-lex.europa.eu/legal-content/en/ * 2 1 gas. Thiswould meetits aspirations tobecome anenergyhub for theregion and, customer for thegas,but it would also like to become atransport route for theSEM such developments from anumber of vantage points. Turkey would certainly bea Turkey, a candidate member of the EU and a littoral country, is closely following potential of theregion. The European Union (EU)isdeeply interested inthediscoveries andthepromising amount of gaswould remaintobeexported. fields suggest that even after domestic consumption isaccounted for, aconsiderable dependent countries of theSouth-Eastern Mediterranean, because thesizeof the reports issued in2010.Thereports have created optimism for thehitherto energy- and theenergypotential elaborated bytheUnited States Geological Survey (USGS) West. R home tomany civilisations andthemaincommercial routes from theEastto The South-Eastern Mediterranean (SEM)region isof historical importance, being Introduction by ElifBurcu Günaydın* Supply for theEU? Can South-Eastern Mediterranean Gasbea Can South-Eastern Mediterranean GasbeaSupply for theEU? . R T Plan Action T Paper produced within the framework of the IAI-Edison project “ project IAI-Edison of the framework the within produced Paper Elif Burcu Günaydın works as an energy expert in the Energy Market R Market Energy the in expert energy an works as Günaydın Burcu Elif

urkey and Cooperation with the EU in the Neighbourhood”, November 2014. Neighbourhood”, November the in EU the with Cooperation urkey and X epublic of T epublic (COM(2014)330), 28 May 2014, p. 13, (COM(2014)330), 13, p. 2014, May 28 Strategy Security Energy European Commission, European Second Strategic Energy Review: An EU Energy Security and Solidarity and Solidarity Security Energy An EU Review: Energy Strategic Second Commission, European T /?uri=celex:52008DC0781. ecently, it hasbecome afocus of interest because of offshore gasdiscoveries (COM(2008)781), 13 November 2008, http://eur-lex.europa.eu/legal-content/en/ 2008, November 13 (COM(2008)781), urkey (EM R A). She was visiting researcher at the Istituto Affari Internazionali (IAI). Internazionali Affari Istituto at the researcher visiting was A). She 1 After theR ussia-Ukraine crises,which have beenon the T ussian gashasbecome more acute. This X T /?uri=celex:52014DC0330. T he Changing R he Changing 2 egulatory Authority of the of the Authority egulatory egional R egional ole of IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 3 years. Theturningpoint for theLevant Basinwastheyears1999-2000, with the However, except for Egypt, the exploration did not result in findings for many offshore exploration wasbeingcarried out intheSouth-Eastern Mediterranean. of the Eastern Mediterranean: the Nile and the Levant. estimated around 10trillion cubic meters(tcm)of natural gasinthetwo basins The USGSreports concerning theSEMgasresources wereissued in2010.Thereports 1. Overview of theSouth-Eastern Mediterranean gasdiscoveries sub-sea electricity cables. the alternative methodssuch asliquefied natural gas,compressed natural gasand represent apolitical breakthrough at thesametime.Thefourth section explores considered themostfeasible route economically andsuch adevelopment would examined in detail under this section despite the political challenges, because it is on the most traditional method for transporting the gas, pipelines. considered options for supplying thegastoEU. Thethirdsection focuses explorations anddiscoveries. Thesecond section provides anoverview of the The firstpart of thispaper outlines developments intheregion concerning the this probability rather thanthealternatives. a memberstate) –make theUnion alikely export candidate. Thispaper focuses on between theEUandcountries with astake inthefields (one of which isactually However, several factors –such asthetiming,location andthepolitical ties East Asian markets, which aremore promising financially for thetimebeing. countries viaregional pipelines or exports inform of liquefied natural gastothe There areseveral alternatives beingconsidered such asexports totheneighbouring finance furtherdevelopment; makingexports anecessity rather thanachoice. The domestic consumption of theexplorer countries iscertainly notsufficient to that it isnotintending tostay out of thegame. several countries intheregion for hydrocarbon developments offshore, indicating controlled mostly byits allies. Meanwhile, R enthusiastic thantheEUfor creating aMediterranean gascorridor totheEU, watching thedevelopments intheSEMclosely. TheUShasbeeneven more The United States (US)andtheR not currently recognisedasastate bytheinternational community. gas also derives from the desire to protect the rights of in turn,give it increasedpolitical clout in foreign relations. Turkey’s interest inthe Can South-Eastern Mediterranean GasbeaSupply for theEU? 3 gov/fs/2010/3027. Mediterranean Eastern Province, Basin Delta of the Nile Resources and Oil Gas of Undiscovered Assessment Survey, fs/2010/3014; Geological US Mediterranean Eastern Province,

Assessment of Undiscovered Oil and Gas Resources of the Levant Basin of Basin the Levant Resources and Oil Gas of Undiscovered Assessment Survey, Geological US , Fact Sheet 2010 No. 3014, March 2010, http://pubs.usgs.gov/ 2010, No. 2010 March 3014, , Fact Sheet ussian Federation (R , Fact Sheet 2010 No. 2010 3027,, Fact Sheet http://pubs.usgs. 2010, May ussia hassigned agreements with ussia) aretheotheractors Turkish Cypriots, who are 3 Even before the reports, Turkey is IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 4 reserve remainsundeveloped due toIsraeli objections andthepolitical atmosphere; Leviathan Field. Palestine also madeamodestdiscovery offshore Gaza,but the in theAphrodite Field, which neighbours thelargestdiscovery intheregion, the initiated exploration viainternational tendersandmadeasubstantial discovery already significant players inthe global gasmarket. it isdwarfed bythevastreserves of neighbouring countries, some of which are corporate/about-bp/energy-economics/statistical-review-of-world-energy.html. 2014 of World BP, Source: Review Energy tcm. Statistical most significant resources intheregion. Meanwhile, theR Israel hasbeenconducting explorations sincethe1990sandit hasdiscovered the even becoming exporters. countries thechancetobecome at least partly energyindependent andpotentially are certainly important for theregion bothpolitically andeconomically, giving the 6 5 4 consumption forced Egypt to import gas in order to fulfill its export liabilities. in Egypt meantheresources remainundeveloped. R in theSEM.However, theinferred findingsaresmaller andeconomic uncertainties According tothe USGSreports, theNile Basin isestimated toholdmostof thegas modest at first,theywere followed bysignificant discoveries inthe later years. discoveries of Noa, Mari-B and the Gaza Marine Fields. Although the amounts were Can South-Eastern Mediterranean GasbeaSupply for theEU? 8 7 http://www.eia.gov/countries/cab.cfm?fips=eg. Eastern Mediterranean Region Mediterranean Eastern (EIA), Administration Information Energy US Source: bcm. 28 Palestine, (bcm), meters cubic billion sense. near future. Finally, theLevant Basin discoveries arenotsignificant ina global international problems. Therefore, thewhole basinmay notbeexplored inthe from all regional countries inapartof theworld with remarkable domestic and Secondly, utilising the resources would requirecooperation andcontribution exploration, the economic viability of the exploitation cannot be taken for granted. of exploiting them.So,while theenvisaged quantities aresufficient toinspire technically recoverable resources, but theydo notaddresstheeconomic viability the potential of the region. Firstly, it should be stated that the reports address only the Nonetheless, several factors needtobetaken into consideration before evaluating coastal states but also for otherinternational actors. of natural gasthat could beexploited, creating high expectations for notonly the According to the 2010 USGS reports, the Levant Basin is estimated to hold 3.4 tcm 2013, http://www.eia.gov/countries/regions-topics.cfm?fips=em. 2013, Administration.

Amounts of proven reserves: Iran, 33.8 tcm; R tcm; 33.8 Iran, reserves: of proven Amounts Country Information: Egypt Information: Country (EIA), Administration Information Energy US Amounts of discoveries (approximately): Israel, 1.040 trillion cubic meters (tcm), Cyprus 140 140 (tcm), meters Cyprus cubic trillion (approximately): 1.040 Israel, of discoveries Amounts In this article Cyprus refers to the whole Island, while R while whole to Island, the refers Cyprus article this In Eastern Mediterranean Region Mediterranean Eastern (EIA), Administration Information Energy US 6 Even ifthewhole amount estimated inthereport istaken into account, , cit., updated by Noble Press R Noble Press by updated , cit., ussia, 31.3 tcm; Qatar, 24.7 tcm; T tcm; 24.7 Qatar, tcm; 31.3 ussia, , June 2014, http://www.bp.com/en/global/, June 2014, OC refers to the Greek Cyprus Cyprus Greek to the refers OC eleases. 7 Nonetheless, theresources ecently, increaseddomestic epublic of Cyprus , updated August 2014, 2014, August , updated , updated August August , updated urkmenistan, 17.5 urkmenistan, 8 has 4 5

IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 5 December 2012, http://almon.co/1xmg. 2012, December Energy inorder toexplore inits Offshore Block 2. the Soyuznefte GasCompany hasmadeanagreement with theSyrian Ministryof October 2013, http://thebricspost.com/?p=19803. minister-energy-water-gebran-bassil. Europe Gas Natural in Bassil”, http://almon.co/1yll. with thePalestinian Authority for thedevelopment of theGazaMarine Field. 15 14 13 12 11 10 9 level study conducted byaspecialised commission, natural gas,took more thanone year to decideon its export policy. After thehigh first gas exporters from the SEM region. Israel, the owner of significant amounts of to beseeninthefuture. Israel andCyprus,however, canbeexpectedtobecome the Production from the fields in Lebanon, Syria and the Palestinian territory remains as theT of Understanding (MOU) with thedevelopers of anIsraeli offshore gas field known can beseeneven inthefollowing problematic cases.After signing aMemorandum R in disappointment. Syria haslaunched international oil andgasexploration tenderswhich have resulted The othercountries of theregion have also attempted tostarttheirown research. even though found more thanadecadeago. Can South-Eastern Mediterranean GasbeaSupply for theEU? 16 neurope.eu/node/120258. 12/2013 (December 2013), http://www.feem.it/getpage.aspx?id=5321. 2013), (December 12/2013 Developments Between Market Opportunities and Geopolitical R Geopolitical and Opportunities Market Between Developments uncertainties thetenderhasnotbeenfinalised yet. exploration created a great amount of attention, but due to the political and legal billion cubic meters(bcm)of natural gasoffshore. identified areas of potential resources which areestimated toholdaround 700 the explorations tostart.Lebanon, on theotherhand,hascarried out surveys in Policy Regarding Natural Gas in Israel: Executive Summary in Executive Regarding Israel: Policy Natural Gas of the Inter-Ministerial Recommendations The Israel, see: to Committee Examine the Government’s Water and R of Energy Ministry T issue. the of aspects different 2014, http://www.eia.gov/countries/cab.cfm?fips=sy. 2014, exploration tender,which isexpectedtobefinalised bytheend of 2014. natural gasfields inLebanon. Several R alternatives. In October2013,it signed anenergycooperation MoU for developing

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ussia’s determination totake its placeintheEasternMediterranean developments Simone T Simone Karen Ayat, “Lebanon: Interview with Lebanese caretaker Minister of Energy & Water Gebran & Water of Gebran Energy Minister caretaker Lebanese with Interview Ayat, “Lebanon: Karen Helmi Moussa, “ Moussa, Helmi Daria Chernyshova, “ Chernyshova, Daria New Europe Online Israel”, Europe New in with Deal Purchase LNG in “Gazprom Ziad Haidar, “Syria Signs Offshore Oil and Gas Exploration Deal with R with Deal Exploration Gas and Oil Offshore Signs “Syria Haidar, Ziad Country Information: Syria Information: Country (EIA), Administration Information Energy US he committee consisted of Israeli bureaucrats, who each had the expertise to investigate to investigate expertise the had who each bureaucrats, of Israeli consisted he committee amar Field in2012, agliapietra, “ agliapietra, R ussia Preparing to Develop Gaza Gas Field”, Al-Monitor in Gas Gaza to Develop Preparing ussia 10 R T Theconflict in Syria certainly makes it more difficult toexpect owards a New Eastern Mediterranean Energy Corridor? Natural Gas Gas Corridor? Natural Energy Mediterranean Eastern aNew owards The Brics Post Brics Deal”, The in Cooperation Energy Ink Lebanon ussia, , 9 December 2013, http://www.naturalgaseurope.com/lebanon- 2013, , 9December he committee chair was Shaul T Shaul was chair he committee esources, whom the report is named after. For detailed information information For after. detailed named is report whom the esources, 12 R ussia mademoves towards more challenging ussian companies also bidon theLebanese 9 14 , September 2012, http://energy.gov.il/ 2012, , September R The international tenderfor gas 11 ussia also signed anagreement zemach, Director General of the of the General Director zemach, 16 FEEM Note di Lavoro FEEM in isks”, thegovernment decidedto , 2 March 2013, http://www. 2013, , 2March ussia”, in Al-Monitorussia”, in , updated February February , updated , 24 January 2014, 2014, January , 24 13 Meanwhile, , 11 , 11 15 , 27 , No. IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 6 and domestic use is expected to lead to a consumption of around 1 bcm/yearly. electricity generation. Thewhole transformation of generation facilities, industry been planningtotransform its infrastructure toswitch from oil togas,especially in export options aremore limited due tothequantities discovered. TheR development process, asit does nothave natural gasinits energymixyet andthe almost half of theIsraeli export quota. the operators of theliquefied natural gas(LNG) terminals in Egypt andconstituted Jordan andPalestine for small amounts. Subsequent agreements weresigned with prio.org/Publications/Publication/?x=7411. Reports Centre Approach”, Cyprus PRIO Sectoral in and Productivity nobleenergyinc.com/releases.cfm. www.cyprusgasnews.com/archives/5810. of the10thand11thBlocks plantostartdrilling inmid-2015. the explorer of the12thBlock andFrench energyfirmT 21 20 19 18 17 English/Subjects/Natural%20Gas/Pages/GxmsMniNGPolicyIsrael.aspx. The R of Justice andfinalised inOctober2013. export 40percent of its production. Thisdecision wasendorsed bytheHigh Court Can South-Eastern Mediterranean GasbeaSupply for theEU? 23 22 aspx?code=21782&nl=273. in Israel Industry of &Gas the Oil Overview of Commerce, Chambers of Israeli Federation see, information For further Exploration. Gas Dor R Avner Oil, and Drilling Group, Delek Energy, Delek the firstresults areexpectedaround theend of 2014. drilling at areservoir named“Onasagoras” inBlock 9asof theendof Septemberand holders ENISpA (ENI)andKorea GasT Nevertheless, this picture may change due to upcoming explorations. export projects. is still ambiguous astheestimate gasresources arenotsufficient for the proposed 94b8-351da4f97a15/2014_09_Barclays_In%20 files.shareholder.com/downloads/ABEA-2D0WMQ/2975341938x0x779016/4b4783f5-9627-4930- famagusta-gazette.com/cyprus-can-be-a-regional-energy-hub-says-minister-p24230-69.htm. location tobecome anenergyhub. this opportunity asaneconomic breakthrough andplanstoexploit its convenient alone, but it allows mostof thegasproduction tobeexported. TheR Such a low energy consumption would not financially support the production first agreements weresigned betweentheexplorer companies study, which recommended exporting firstto Israel’s immediate neighbours. The Israel’s firstexport agreements. Theywereconsistent with theadvice from the http://toi.sr/1a2FKou.

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The Times of Israel Times The in light export”, to gas green Yaacov,Yifa gives “Court Famagusta Gazette Famagusta in Minister”, hub, says energy aregional be can “Cyprus For detailed information on the agreements, see Noble Press R Noble Press see agreements, on the information For detailed Noble Energy presentation at Barclays CEO Energy Power Conference, 2 September 2014, http:// 2014, 2September Conference, Power Energy CEO at Barclays presentation Noble Energy Cyprus Gas News Gas 9”, Cyprus in Block in Drilling Starts “Saipem Hazou, Elias Fiona Mullen, Alexander Apostolides and Mustafa Besim, “Cyprus Peace Dividend R Dividend Peace “Cyprus Besim, Mustafa and Apostolides Alexander Mullen, Fiona he main explorer companies in the major gas fields of Israel ( Israel of fields gas major the in companies explorer he main epublic of Cyprus(R OC), on theotherhand,isalittle slower inthe 21 , March 2013, http://www.chamber.org.il/Content. 2013, , March However, thecommencement of production echnology Cooperation (KOGAS) have started R 19 oom.pdf; “French T “French oom.pdf; 17 Theendorsement wasfollowed bythe atio Oil Exploration, Isramco Negev 2LP, Negev Isramco Exploration, Oil atio eleases, http://investors. eleases, T 22 otal Expects to Start Drilling Drilling to Start Expects otal amar and Leviathan) are Noble are Leviathan) and amar Meanwhile, Noble Energy otal S.A, thelicence holder , No. 1/2014, p. 72, http://www. 72, p. , No. 1/2014, , 26 September 2014, http:// 2014, September , 26 23 18 andcustomers from , 21 October 2013, 2013, October , 21 , 7July http:// 2014, OC considers The licence evisited: A evisited: OC has 20

IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 7 gazpromexports.com. 29 28 27 26 25 24 french-total-expects-to-start-drilling-in-cyprus-ezz-in-mid-p22543-69.htm. Gazette mid-2015”, in Famagusta in EEZ Cyprus in economic difficulties; theEUiscertainly interested indevelopments taking considering that one of theexplorers isanEUmemberstate going through In thisframework theSEMdiscoveries areintriguing for theEU. Especially offered byseveral exporters such asQatar starting with pipelines from theCaspianregion. Meanwhile theLNG opportunities than ever before. Thus, theEUisconsidering several alternatives asaremedy, T the political controversies or divergences with theEUacquis. indicate that Europe’s dependenceon R majors andthelong-term gasagreements of most of theEuropean countries The sizeof thejoint gasprojects of R thus farinthisdirection have remainedinsufficient. main gas import route and proved the correctness of this policy, even if the steps in the second half of the 2000s and deteriorating overtime, endangered Europe’s before theneedbecamemore vital. ThecrisesbetweenR The EUadopted its energydiversification policy, including for gassupplies, even 2. Will theSouth-Eastern Mediterranean gasheadtotheEU? Can South-Eastern Mediterranean GasbeaSupply for theEU? 30 http://www.euractiv.com/node/269160. Exports”, in Financial in Post Exports”, resolved. to come on-stream in2017,although notall aspectsof thisproject have beenfinally htm. Reports Studies R Qatari Alternative the and Europe in Crisis “Gas Gaub, Florence see, High”, News Bloomberg in a capacity of 63bcm/yaretheresults of thisapproach. TheNord-Stream projects of theNord-Stream with acapacity of 55bcm/yandtheSouth Streamwith diversification of transport routes isregardedasatemporary solution. Thegiant supplying gastoGermany sinceOctober2012,while theSouth Stream decisions taken. 2014which touches on the current energy projects with the financial investment emphasized in the working document of are also regardedasoptions. oday, theneedtocomplement thegassupplies from othersuppliers ismore acute

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For information further see: http://www.south-stream.info/en. European Energy Security Strategy Security Energy European Commission, European For further information see: http://www.nord-stream.com. see: information For further Yadullah Hussain, “How Europe is T is Europe “How Yadullah Hussain, “South Stream Bilateral Deals Breach EU Law, Commission Says”, in EurActiv Says”, in Law, EU Commission Breach Deals Bilateral Stream “South For further information on the projects and the extended agreements see: http:// see: agreements extended the and projects on the information For further obert T obert 28 uttle and Anna Shiryaevskaya, “Qatar to Boost Europe LNG Sales as Gas T Gas as Sales LNG Europe to Boost “Qatar Shiryaevskaya, Anna and uttle , May 2014, http://studies.aljazeera.net/en/reports/2014/05/20145665624846681. 25 Since it ismore difficult tochange suppliers intheshort term,the , 18 March 2014, http://natpo.st/1ABjQp4. 2014, March , 18 , 23 December 2013, http://bloom.bg/1cpqxPK. For further information information For further http://bloom.bg/1cpqxPK. 2013, December , 23 30 urning to North America to wean itself off R off itself to wean America to North urning ussian Gazprom andtheEuropean energy ussia will lastfor decades,notwithstanding 29 , 6 March 2014, http://famagusta-gazette.com/ 2014, , 6March The European Energy Security Strategy andupcoming North American exports , cit., p. 58-59. p. , cit., ussia andUkraine,starting Al Jazeera Center forole”, Jazeera Al in 24 Thisfactisalso , 5 December 2013, 2013, , 5December ussian Energy Energy ussian 27 rades at 7-Yearrades isexpected 26 hasbeen IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 8 ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_projects_country.pdf. support. awarded for theinvestments. Theyhave tobeproved feasible for receiving the (MEMO/13/880), 14 October 2013, http://europa.eu/rapid/press-release_MEMO-13-880_en.htm. htm. 35 34 33 32 31 transport gasfrom theEastern Mediterranean totheEUshould beconsidered and term infrastructure vision for Europe and beyond, states clearly that all options to the listisrevisedevery two years andtheCommunication concerning thelong- Even though agas pipeline viaTurkey does nothave aplaceinthecurrent PCIList, Europe Facility; The PCIprojects areeligible toreceive financial support undertheConnecting 3. 2. 1. The EasternMediterranean gasprojects concerned are: treatment. faster andmore efficient permit-granting procedures andprivileged regulatory competition andenhancingthesecurity of supply. Therefore, thePCIs aretoreceive significant benefits for at least two MemberStates, inregardstomarket integration, Commission for the years 2014-20. officially included inthe Projects of Common Interest (PCI)List ofthe European Moreover, in 2013, three Eastern Mediterranean gas development projects were a Mediterranean GasHub. European EnergySecurity Paper released inMay 2014,which posits thecreation of place intheoffshore Mediterranean. Thisinterest caneasily beseeninthelatest Can South-Eastern Mediterranean GasbeaSupply for theEU? 36 viable, according toseveral studies. release_IP-13-932_en.htm. http://europa.eu/rapid/press- 2013, Billion October 14 of Funding (IP/13/392), for €5.85 qualify may Dividend R Dividend Peace “Cyprus Besim, Mustafa and Apostolides Mullen,Alexander Fiona pathways-cyprus; http://mitei.mit.edu/publications/reports-studies/interim-report-study-natural-gas-monetization- Options Development of Economics Project Pathways for Cyprus. Monetization

European Energy Security Strategy Security Energy European Commission, European Full list of projects of common interest bycountry of projects list Full Commission, European of Common Interest in Energy Projects and Answers: Questions Commission, European Energy: Commission unveils list of 250 infrastructure projects that projects infrastructure unveils Commission of 250 list Energy: Commission, European For detailed information see, MI see, information For detailed For further information on Connecting Europe Facility see, http://inea.ec.europa.eu/en/cef/cef. see, Facility Europe on Connecting information For further Cyprus andIsrael, for anelectrical capacity of 2000megawatts. and additional equipment inorder toallow electricity tradebetweenGreece- The Euro-Asia Electricity Interconnector for theconstruction of subsea cables capacity of approximately 8.5bcm/y. 1,600 km in length, for connecting the Levantine gasfields toGreecewith a The Eastern Mediterranean Pipeline, which projects subsea pipelines around exporting Cypriot andIsraeli gas,for anamount of 6bcm/yinitially. The Mediterranean GasStorage, envisaging anLNG T 35 evisited…”, cit. evisited…”, Sofar,these alternatives have notbeenconsidered tobefinancially 32 34 however, beinginthelistdoes notguarantee fundingwill be 31 Interim Report for the Study Natural Gas Natural Gas for the Study Interim Report Initiative, T Energy 36 The PCI List indicates the projects having , cit, p.16-17., cit, erminal inCyprusfor , January 2014, http:// 2014, , January , August 2013, 2013, , August 33 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI 9 from current production andneedsadditional gasfrom theplannedexpansion. imports, development plan.Theamount roughly equates to5percent of thetotal EUgas years, thegascontribution from thefields would bearound 20bcm/yina 25-year if all of thediscoveries of Israel andR 14 October 2013, p. 7, p. 2013, http://eur-lex.europa.eu/legal-content/en/14 October between Israel and Firstly, even though theexploration studies andthedeterioration of therelations possible inmany respects. terminal. See, “Next 6-12 Months ‘Crucial’ for Cyprus LNG T LNG for Cyprus 6-12 ‘Crucial’ Months “Next See, terminal. Cypriot field for gas Leviathan their from more reserves deliver can they if investigating are they earliest. ibidem, p. 143. p. ibidem, and_Appendix_Presentation.pdf. b31eaec0c6fd/2013_12_16_Analyst_Conference_In_ shareholder.com/downloads/ABEA-2D0WMQ/2975341938x0x714017/96d5af1f-ee87-485a-b49f- 44 43 42 41 40 39 38 37 by Israel isapproximately 400bcm. estimated Cypriot reserves are around 140 bcm, while the export amount decided The exportable amount from Israel andCyprusneedsacloser look at thispoint. The may beenvisaged inthecoming years. evaluated according their economic costs and benefits. Can South-Eastern Mediterranean GasbeaSupply for theEU? 46 45 by 2018. the second phaseof exploitation andtheLeviathan isexpectedtocome on-stream development will differ among the fields. As oftoday theT total, 7bcm/y tobesupplied byIsrael undera25-year development plan. all the agreements are to be finalised, that leaves around 11bcm/y tobe exported in the reserves should beevaluated separately. not anagreement for acommon export policy betweenthecountries. Therefore, of theexport quota, gr/?p=18780. ELIAMEP Policy Papers Policy ELIAMEP in & Cyprus”, R bcm, which isfar less thantheaverage R is also taken into account, the total amount remainingfor export isaround 500 2014, http://financialmirror.com/news-details.php?nid=32833. 2014, elations after the Mavi Marmara Incident and the Strategic Energy Calculations of Greece of Greece Calculations Energy Strategic the and Incident Marmara Mavi the after elations t

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Ibidem. Ibidem.

(COM/2013/711), (COM/2013/711), for Vision and Europe Beyond Term Infrastructure Long Commission, European Noble Energy presentation at Barclays CEO Energy Power Conference, cit., p.18-20. cit., Conference, Power Energy CEO at Barclays presentation Noble Energy However, it should be stated that as the same companies are on the field for Israel and Cyprus, Cyprus, and Israel field for on the are companies same the as that However, stated it be should Noble Energy presentation at Analyst Conference, 17 December 2013, p. 150, http://files. 150, p. 2013, 17 December Conference, at Analyst presentation Noble Energy heodoros T heodoros he export quota for the T for quota the he export he calculation is based on the data from the EIA updated by the Noble Press R Noble Press the by updated EIA the from data on the based is he calculation Statistical Review of World Energy 2014 of World Review Energy Statistical 44 43 40 Moreover, theagreements for theLeviathan Field reserves more thanhalf Meanwhile, thepredictions for theAphrodite Field indicate late 2019at the which isnotvital but only supplemental. Still even thisscenario isnot sakiris, “Shifting Sands or Burning Bridges? T Bridges? or Burning Sands “Shifting sakiris, 45 Turkey, led to a Greece- while theagreements for T amar and the Leviathan Field equals the half of the production, see, see, production, of the half the equals Field Leviathan the and amar , No. 22 (February 2014), p.15-30, http://www.eliamep. 2014), p.15-30, , No. (February 22 38 , cit. , If theestimated Cypriot gasconsumption OC weretocome on-stream inthecoming ussian production yearly. Room_Combined_with_B R OC-Israel rapprochement; 42 amar exceeds thereserved amount Secondly thetime frame of the Financial Mirror Financial in erminal”, he Evolution of T T X T /?uri=celex:52013DC0711. 37 amar Field isheadingfor Accordingly, a project urkish-Israeli urkish-Israeli R 39 EAK_SLIDE__ eleases. Consequently, , 9July 41 there is 46 If If 10 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI IPOL-I http://www.europarl.europa.eu/ 33-62, p. 2014, February Prices Energy on EU of Price Impact the Oil The al., et Albrecht http://bloom.bg/1oV9HOH. 2014, Almeida, “GDF Suez to R “GDF Suez Almeida, News Stall”, Bloomberg in the region tothebroader EU. corridor. Thefollowing sections focus on theoptions for transporting thegasfrom effective method,astheamounts arecurrently toomodesttofinanceanewenergy Member State andanimportant ally. However, thefocus must beon findingacost- contribute totheEUgassupply, with at least some of thegascoming from anEU Consequently, despite theabove-mentioned issues, gasfrom theLevant Basinmay may differ accordingly. the otherhand,prices aredeterminedon acontractual basisandtheconditions 50 49 48 47 according tolong-term agreements, asexpected. The majority of the EU gas trade is realised via pipelines which are laid down 3. T linked totheBrent crude-oil price, the SEMgasasasupply totheEU. In Israel’s current agreements, prices aremostly There is another important fact that should be taken into account while considering Can South-Eastern Mediterranean GasbeaSupply for theEU? 52 51 via long-term contracts linked tooil prices once more may notbesoappealing. http://investors.nobleenergyinc.com/releases.cfm. of oil-indexation intheirlong-term gascontracts with R Considering that some of the European countries succeeded to decrease the share prices (thelatter aresetbythemarket conditions formed ingastradinghubs). is quite problematic because it makes it impossible topurchase gasat hub-based oil prices instead of real cost or market conditions. conditions. or market cost of real instead oil prices the with linked to be prices the causes which long-term the input agreements, in major gas the also it of oil is worldwide for purchases price benchmark amajor as it serves While oil. light crude sweet transportation tothe broader EU. these connections isnotpossible, theSEMgas will need anotherpipeline route for connected to producers from R contracts. Sobieski Institute, http://www.sobieski.org.pl/the-future-of-gas-pricing. 2012, Particularities Versus Regional Market Trends Global Europe. Eastern in Central Contracts Italy pipelines. BP, BP,

t Brent crude refers to the oil produced from North Sea and it is a major trading classification of classification trading amajor it is and Sea North from oil produced to the refers Brent crude Greece is also connected to Azerbaijan via the first part of the Interconnector T Interconnector the of part first the via to Azerbaijan connected also is Greece For detailed information on the gas pricing mechanisms and the EU gas prices see, Uwe see, prices gas EU the and mechanisms pricing gas on the information For detailed Anna Shiryaevskaya and T and Shiryaevskaya Anna he price conditions can be reached at the Noble Press R Noble Press at the reached be can conditions he price raditional methodfor transport: pipelines Statistical Review of World Energy 2014 of World Review Energy Statistical TR E_E 48 T Thislinkage,which existsinmostof theagreements of EUcountries, (2014)518747_EN.pdf; R (2014)518747_EN.pdf; Bloomberg News Bloomberg Push”, in Market in Contract Gas Gazprom eview , 7 November 2012, http://bloom.bg/VzKfQ3; Anna Shiryaevskaya and Isis Isis and Shiryaevskaya Anna http://bloom.bg/VzKfQ3; 2012, , 7November ino Andresen, “Gazprom Awaits Arbitration as R as Arbitration Awaits “Gazprom Andresen, ino The Future of Gas Pricing in Long-Term Pricing of Gas Future The Zadjler, obert ussia, Norway and North Africa. As joining one of 47 , cit. , consistent with traditional long-term gas R egData/etudes/etudes/join/2014/518747/ eleases concerning each agreement, agreement, each concerning eleases 51 TheEUcustomers aremostly , Brussels, European Parliament, Parliament, European , Brussels, ussia; 49 supplying thegas WE Gas Price T Price Gas WE urkey-Greece- , Warsaw, , 23 May May , 23 alks alks 50 On 52

11 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI http://chaniapost.eu/?p=7353. Exploration (22.67%) and R and (22.67%) Exploration around theendof 2014. a pipeline from theLeviathan Field toVasilikos. Theresults aretobeannounced become viable incaseof newdiscoveries offshore Cyprus or Greece 57 56 55 54 53 cheapest alternative for exporting gasfrom theregion, from theoffshore fields toTurkey. Although Turkey hasbeenclaimedtobe the The otherconsidered route for transporting thegastoEU, isbuilding pipelines may notbesufficient tofinancethis project. Moreover, it would beone of thelongest subsea pipelines andtheexport amounts to many reasons, such asphysical constraints or probable maritime disputes. to export gasfrom theregion totheEU. However, thisalternative isshelved due As mentioned previously, thereistheEasternMediterranean Pipeline proposal Can South-Eastern Mediterranean GasbeaSupply for theEU? 58 the needfor diversification andthedesiretodecrease its gasbill meanTurkey is other mainsupplier, Iran, arethemostexpensive sources for Turkey. Therefore, half of this gas coming via Ukraine. accounts for almost 58percent of Turkish gasimports asof 2013,with almost has diversified suppliers overtime, its mainsupplier continues tobeR its consumption. Consequently, an increasingdemand and the domestic production meetsless than2 percent of rather thananexport route. It isone of thefew largeconsumers intheregion with Firstly, it should besaidthat Turkey itself, might beacustomer for theSEMgas, are constantly influx, this alternative deserves tobeexplored. the present projects due topolitical challenges. However, asinternational relations R Dividend Peace “Cyprus Besim, Mustafa and Apostolides p.75-77;cit., Alexander Mullen, Fiona MI The Leviathan partners come on-stream soon, theR tender opened bytheR Nonetheless, thefirstphase of thepipelines may berealised due tothe gassupply technological developments. 1/2013, p. 83-85, http://www.prio.org/Publications/Publication/?x=7365. 83-85, p. 1/2013, Reports Centre Cyprus PRIO in Scenarios”, Future and Positions Context, Issue: Hydrocarbons T Mullen Harry Fiona and Ayla 56-58; Gürel, p. Bridges?”, cit., Burning T studies: to several according billion dollars 20 around raporlar. R Market Gas mail.com/?p=24337. evisited…”, cit., p. 71-74. p. cit., evisited…”,

t

Ayla Gürel, Fiona Mullen and Harry T Mullen Harry Fiona and Ayla Gürel, Leviathan Partners are currently Noble Energy (39.66%), Delek Drilling (22.67%), Avner Oil (22.67%), Drilling (39.66%), Delek Noble Energy currently are Partners Leviathan Elias Hazou, “High Price for Israeli Gas, R Gas, for Israeli Price “High Hazou, Elias Energy Market R Market Energy “25 Companies are interested in natural gas and oil in Crete”, oil in ChaniaPost.eu and in gas natural in interested are Companies “25 Interim Report for the Study Natural Gas Monetization Pathways for Cyprus Monetization Natural Gas for the Study Interim Report Initiative, T Energy he Eastern Mediterranean Gas Pipeline would be over 1000 km and cost is expected to be to be expected is cost and km 1000 over would be Pipeline Gas Mediterranean he Eastern eport 2013), 2014, p. 24, http://www.epdk.org.tr/index.php/dogalgaz-piyasasi/yayinlar- 24, p. 2014, 2013), eport egulatory Authority (EM Authority egulatory atio Oil Exploration (15%). Exploration Oil atio 56 55 OC in2014.Since theAphrodite Field isnotexpectedto gave abidfor thetenderincluding theconstruction of OC decidedtobuy natural gasfor electricity generation. Turkey is heavily dependent on imports. Even if it zimitras, “ zimitras, R 58 Cyprus Mail Cyprus Say”, in eports (Natural (Natural 2013 Raporu Sektör Piyasası Gaz Doğal A), Additionally, T he Cyprus Hydrocarbons Issue…”, cit. p. 84-86; 84-86; p. Issue…”, cit. Hydrocarbons he Cyprus heodoros T heodoros 53 Nevertheless thisproject may R ussia, together with 57 sakiris, “Shifting Sands or Sands “Shifting sakiris, it does nothave aplacein zimitras, “ zimitras, , 12 May 2014, http://cyprus- 2014, May , 12 T , 3 October 2014, 2014, , 3October he Cyprus he Cyprus ussia. R 54 or due to Turkey’s ussia , No. , 12 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI to come on-stream in 2018 and T and 2018 in to come on-stream T to markets. adjacent to Italy transported to be 8bcm/y and Bulgaria and to Greece bcm/y T T in consumed be will gas of this bcm 2014”, Reuters in demand andit also exports gastoits neighbours. 24 bcm/yby2023andto312026.Azerbaijan hasagrowing natural gas capacity of theT from companies who wereawarded licences toexport gastoMacedonia andBulgaria interconnection needsreverse flow adjustments for exports. Fortunately, thereare interconnection isworking at full capacity andthecurrent Bulgarian- and Bulgaria also cannot be used without further investments. (T Gas Corridor project. Thefirststeps of thisplanarethe T The alternative route for transporting thegastoEurope viaTurkey istheSouthern and later paidfor bythetransport fees. the SEMexports, therequiredinvestments canbeprovided bytherelated parties be completed in2015.If theBOT the MOU for Bulgaria- Europe. 62 61 60 59 other producers. the EU. Ontheotherhand,Turkey hasframework gasbuying agreements with gas would beconsumed domestically byTurkey rather thanbeingtransported to open toalternatives. Accordingly thereisastrong possibility that theLevantine Can South-Eastern Mediterranean GasbeaSupply for theEU? 64 63 supplied from the Shah Deniz 2production. Deniz Shah the from supplied T the concerning T between agreement intergovernmental to the according that, mentioned 1999 T genelenergy.com/operations/kurdistan-region-of-iraq.aspx, R Kurdistan Energy, Operations: General see, agreements, on these T Application File Assessment expansion for hostingadditional amounts. system. However, thesystemisworking full capacity inwinter. Soit would need be connected totheBoru Hatları ile Petrol T probably enter thecountry from Mersin or Ceyhan andthepipeline caneasily The second question inthisscenario isthecapacity constraints. Thegaswould strengthen its position asanenergybridge andprovide political leverage. SEM gastotheEuropean countries may beappealing for Turkey because it would AP project. T project. AP ANAP_EIA_Application_File-1.pdf.

T t BO BP, BP, ANAP)- Energy Market R Market Energy Such as Iraq (Kurdistan R (Kurdistan Iraq as Such AP, AP, he T (in T (in AŞ, TAŞ, Statistical Review of World Energy 2014 of World Review Energy Statistical Turkey, which indicates further investments in that direction. TAP at aGlance ANAP will carry the 16 bcm gas/pa from Azerbaijan via Georgia and T and Georgia via Azerbaijan from gas/pa 16 bcm the carry will ANAP 62 urkish), http://www.tbmm.gov.tr/kanunlar/k4466.html. Additionally, it be should http://www.tbmm.gov.tr/kanunlar/k4466.html. urkish), e-Bulletin Bothprojects areplannedsuitable for capacity increases. T rans-Adriatic Pipeline (T AP project is planned to end in Italy. to in end T planned is project AP , 19 May 2014, http://uk.reuters.com/article/2014/05/19/azerbaijan-gas-exports- 2014, May , 19 ANAP project, T project, ANAP egulatory Authority (EM Authority egulatory 59 (in T ANAP project is16bcm/y, but it isexpectedtobeincreased If theseagreements satisfy Turkish energyneeds, directingthe , http://www.tap-ag.com/the-pipeline; T urkish), http://ebulten.botas.gov.tr/maxKapasite.aspx. Turkey interconnection wassigned in2014andisplannedto egional Government) and T and Government) egional , March 2013, http://www.tanap.com/en/wp-content/uploads/2013/03/ 2013, March , AP in 2020. in AP urkey has priority rights on buying additional amounts to be to be amounts additional on buying rights priority urkey has urkey while the 10 bcm will be carried through the EU by the the by EU the through carried be will 10 bcm the urkey while AŞ transmission systemisdecidedtobeusedfor AP) Projects, inorder tobringCaspiangas R Doğal Gaz Piyasası Sektör Raporu 2013 Raporu Sektör Piyasası Gaz Doğal A), , cit.; “Azerbaijan’s SOCA , cit.; he contracts are signed in order to order supply 1 in signed are he contracts 60 aşımacılık A.Ş.(BOT Theexistingconnections toGreece urkmenistan. For further information information For further urkmenistan. 64 Law No. 4466 of 3 November of 3November urkey, No. 4466 Law Therefore, thepipelines may ANAP, Environmental Impact egion of Iraq, http://www. of Iraq, egion to lower gas exports in in exports R to gas lower rans-Anatolian Pipeline urkey and Azerbaijan Azerbaijan urkey and The Greece- urkey to the EU.urkey to 6 the AŞ) transmission 61 Furthermore, 63 Theinitial , cit. p. 31. p. , cit. Turkish ANAP is is ANAP Turkey 13 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI infrastructure/exemptions/doc/doc/gas/2013_tap_decision_en.pdf. http://ec.europa.eu/energy/ unbundling and ownership 2013, 16 May …(C(2013)2949), regulation tariff access, the on third requirements from party Pipeline Adriatic on the of exemption the Trans Macedonia and Bulgaria-Serbia interconnection is to be completed in the medium term. medium the in completed to be is interconnection Bulgaria-Serbia and Macedonia “BP to become member of T member to become “BP Source: of end 2014. the before to happen expected is which completed, is procedure legal the after of SOCA percent 12 to buy the BP agreed However 2014, http://uk.reuters.com/article/2014/10/27/uk-azerbaijan-tanap-idUKKBN0IG1SK20141027.2014, 7.4. T azerbaijans-cooperation-with-israel-goes-beyond-iran-tensions. Policywatch south-east European countries viainterconnections. via Ukraine.ThegascanheadtoGreeceor Bulgaria andeasily bedirectedtoother directing thegastocountries with high dependencyon R The urkish route, either via thecurrent systemor theplannedpipelines, would be pipelines. political move but also provide economic benefits bothviatheT S.A., (DESFA). Therefore, allowing Israeli or Cypriot gaswould notonly beabright owns thetransmission company of GreeceNational Natural GasSystem Operator 67 66 65 idUKL6N0O52AH20140519. this obligation. governmental agreement betweenTurkey andAzerbaijan exempts T party accesstothetransmission, distribution, LNG andstorage systems,theinter- of thetariffs. Even though Turkish Natural GasMarket Law (NGML) enforces third Other questions over theT have surplus capacity tohostadditional amounts from otherproducers. Can South-Eastern Mediterranean GasbeaSupply for theEU? 69 68 one of theIsraeli offshore oil fields. of State Oil Company of Azerbaijan R turn, imports military equipment andknow-how. Additionally, thefirst operation Azerbaijan’s top tradingpartners.Azerbaijan isthetop oil supplier toIsrael andit, in exporters astheyhave considerable relations with Azerbaijan. Israel isamong Still, if surplus capacity is available in the pipelines, it may be available for the SEM of theSEMgas. linked gasprices of thecurrent agreements of Israel may overshadow theattraction third partyaccessandthetariffs.Thissituation ifconsidered togetherwith theoil- because of thesignificant problems Turkey haswith thesupplier countries. advantages, theTurkish route cannotbeexplicitly considered inthecurrent plans SDstage2.html. t BP, BP,

Greece and Albania is to be connected via T via connected to be is Albania and Greece Intergovernmental Agreement between T between Agreement Intergovernmental Brenda Shaffer, “Azerbaijan’s Cooperation with Israel Goes Beyond Iran T Iran Beyond Goes Israel with Cooperation Shaffer, Brenda “Azerbaijan’s ANAP company consists of two shareholders as of today, as SOCA shareholders of two consists company ANAP he T Shah Deniz Stage 2 Stage Deniz Shah Decision Decision Commission, European see, acquis, EU the from exempted also is project AP , No. 2067 (April 2014), http://www.washingtoninstitute.org/policy-analysis/view/ (April , No. 2067 66 Theexemption gives theT , http://www.bp.com/en_az/caspian/operationsprojects/Shahdeniz/ ANAP pipeline project before the end of end 2014”, the before Reuters in project pipeline ANAP ANAP pipelines arethirdpartyaccessanddetermination 68 urkey and Azerbaijan Concerning the T the Concerning Azerbaijan urkey and And it should bementioned that SOCARnow epublic (SOCAR)outside theCaspianSeais AP, Bulgaria is already connected to R connected already is AP, Bulgaria R ’s share and will become the third shareholder shareholder third the become will and ’s share ANAP company 69 However, despite all these (70%) and BO and R (70%) ensions”, in in ensions”, 67 ussian gascoming jurisdiction over ANAP andDESFA T AŞ (30%). AŞ ANAP, art. ANAP, art. omania and and omania , 27 October , 27October ANAP from 65 14 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI cumhuriyet.com.tr/haber/siyaset/93751. last condition wasrevisedasallowing theentrance of humanitarian aidtoGaza. slow pace,theywerealmost concluded inthespringof 2014.Additionally, the have startedafterthefirstcondition wasmet. Even though talks continued at a http://almon.co/22ur. T The Jerusalem Post Jerusalem The in achieved”, todayszaman.com/news-339887-israel-turkey-step-up-gas-exports-negotiations.html. 73 72 71 70 was notpossible inthenearfuture, then-Prime MinisterR developments affected theidea of agas route tobebuilt betweenthecountries. While damaged relations andreversed thenormalisation process. Predictably, these which was launched by Israel in July 2014. However, things changed courseimmediately afterOperation Protective Edge, met clearly after theUSefforts. Israel in2013. none of these conditions were met, until the US President Barack Obama visited Gaza Siege hadtobeended.As Israel wasclaimingthat theraidwasself-defense, the raid.Secondly, families of thevictims should bepaidcompensation. Lastly, the conditions inorder tonormalise relations. Firstly, anapology hadtobemadefor raid, which caused thedeath of nineTurkish citizens in2010.Turkey hassetthree in December2008.Therelations downgraded diplomatically aftertheMavi Marmara and took ablow with theDavos incident in2009following theOperation CastLead Turkish-Israeli relations started to deteriorate after Hamas took over Gazain 2007 Can South-Eastern Mediterranean GasbeaSupply for theEU? 75 74 toi.sr/1mq49GL. much lower thantheTurkey’s current export prices. prices aresupposed tobeconfidential, theywerereported bythenewspapers tobe cost and the probable gas prices were reportedly determined. Even though the gas and meetingwith theexplorers of theregion. Additionally, theaverage production Encouraged by this course of events, several firms were making feasibility studies in July 2014,rapprochement wasalmost sealed. Therefore, it canbesaidthat before the latest operation, Operation Protective Edge Israeli soldiers involved, thedecision wasnotseenasanobstacle totheprocess. Even though therewasacourtdecision from Istanbul ordering thearrestof the until thesituation inGazaimproves. announced that urkey-forbids-completion-of-gas-deal-with-Israel-until-peace-with-Gaza-achieved-370192.

t Arad Nir, “Netanyahu Stalls on R Stalls Nir, “Netanyahu Arad “Başbakan Erdoğan’dan Israil Flaş Açıklaması”, in Cumhuriyet Sharon Udasin, “ Udasin, Sharon “Israel, T “Israel, AFP, “Ya’alon: T about’ ‘not happy Israel heodoros T heodoros , 19 February 2014, http://www. 2014, February , 19 Zaman Today’s in negotiations”, export upurkey step gas sakiris, “Shifting Sands or Burning Bridges?”, cit., p.7-8. Bridges?”, cit., or Burning Sands “Shifting sakiris, The apology cameat theendof thisvisit andthefirstcondition was T Turkey closed its doors for the Israeli gas and will keep them closed urkey forbids completion of gas deal with Israel until peace with Gaza Gaza with peace until Israel with deal ofurkey forbids completion gas ecep T , 6 August 2014, http://www.jpost.com/Enviro- 2014, , 6August econciliation Process with T with Process econciliation ayyip Erdoğan announcedthat thenormalisation 70 Thenegotiations on thecompensation amount Times of Israel Times in move” urkey arrest 74 75 theenergyministerof Turkey, T The harsh declarations from each side 73 urkey”, Al-Monitor in , 13 July http://www. 2014, , 13 , 28 May 2014, http:// 2014, May , 28 T ech/ , 8 May 2014, 2014, , 8May R aner Yıldız, eport- 72 71

15 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI Petroleum Company wasawarded alicence for offshore explorations. Turkey and the hydrocarbon resources andrevenues. After thisproposal was rejected bytheR a proposal totheUNform ajoint commission for decidingthefuture of the offshore exploration activities until apermanent solution is found. Theyalso made content.asp?langid=2&contentid=1078. Working Papers IAI in Corridor”, Mediterranean after thenegotiations wereresumed. mentioned thepossibility of apipeline toTurkey for thefirsttimejusta few days interest in the accords is based on the possibility for energy cooperation. He also is supported bytheR February 2014, http://apne.ws/ZGNlpV. 2014, February 76 re-launch of thenegotiation over theCyprusissue inFebruary 2014. The energydiscoveries, however, wereamajor factor behindtheUS-championed the offshore hydrocarbon reserves. Turkey andtheTR Other opposition derives from thebelief that bothcommunities have rights over Consequently, theseblocks either coincidentally or on purposewerenotlicensed. announcement, Mediterranean overlaps with several Cypriot gasblocks. After thetender has beencontested byTurkey. Firstly, Turkey’s continental shelfintheEastern present form. Every stepit hastaken on thedelineation of themaritime borders The R (TR of CyprusandTurkish Cypriots founded the Turkish R the problems changedform. GreekCypriots continued toadministertheR intervention in1974 following theGreekcoup aimedat annexation of theisland, of dispute from thefoundation of theR Turkey’s problems with theR But themutual distrustmust beovercome inorder toenvisage energycooperation. since anenergycorridor intheregion would beincomplete without theseactors. reliable prospect intheshort term.Thealternative cannotberuled out permanently situation madeclear that anIsrael- Even though cease-fire was achieved shortly after these announcements, the Can South-Eastern Mediterranean GasbeaSupply for theEU? 79 78 77 further asit aggravated thesovereignty discussions over thesea. initiatives have succeeded. Theoffshore gasexploration complicated theconflict been several initiatives for providing apermanent settlement but none of these gas. Additionally, thisroute istheonly one that would passthrough theislandfrom Cyprus- http://cyprus-mail.com/?p=18387.

Ibidem, p.15. Ibidem, Elif Burcu Günaydın, “ Günaydın, Burcu Elif Cyprus Mail Involvement”, US Cyprus in Behind Alliances and View: Energy “Our Menelaos Hadjicostis, “Cyprus President T President “Cyprus Hadjicostis, Menelaos NC) in1983.TheTR OC, administeredbyGreekCypriots, isnotrecognisedbyTurkey inits Turkey pipeline may betheonly economically viable alternative for Cypriot TR Turkey made clear that it would not allow any activity in this area. NC signed an agreement for maritime delimitation and T OC President Nicos Anastasiades’ statement that thegrowing he Potential R he Potential NC isrecognisedonly byTurkey. Since thentherehave OC areeven more complex. Cyprushasbeenapoint ole of T Turkey pipeline cannotbeconsidered asa rumpets Energy Boost for T Boost Energy rumpets 79 Due tothecurrent expectedvolumes the urkey in the Emerging South Eastern Eastern South Emerging the urkey in , No. 14/05 (March 2014), p.14, http://www.iai.it/ 2014),, No. p.14, 14/05 (March epublic of Cyprusin1960.After Turkey’s epublic of Northern Cyprus NC urgedtheR AP News urkey”, AP in , 9 February 2014, 2014, , 9February 76 77 78 OC tocease Thisclaim Turkish epublic , 17 OC, 16 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI achieve thisalternative. the countries andrelations have tobenormalised or at least stabilised inorder to regards to foreign policy. On the other hand, energy policy is a vital decision for picture. Additionally Israel andTurkey certainly needapolitical breakthrough in The economic benefit argues infavor of the options that include Turkey inthe coming days. while not irreversible, arecertainly unnerving.Theeffects remaintobeseeninthe Cypriot Leaders,17 September 2014, http://www.uncyprustalks.org/nqcontent.cfm?a_id=6605. 2014, September Leaders,17 Cypriot circumstances anddecided tohalt thenegotiation process. the Turkey urged the drilling operations sparked the conflict on the sovereignty issues once more. While cit., p. 72-74. p. cit., terminal investments plannedall over theworld. coming years due totechnological developments, discoveries andthevastLNG 81 80 the timeEasternMediterranean exporters complete theirinvestments, the carried out and areexpectedtocome on-stream inthenear-term.Therefore, by to becompleted thanregional pipelines. Therearemany projects that have been especially for modestreserves. Additionally, theLNG investments take more time use 12percent of theproduction intheprocess, it canbeconsidered ineffective, may requireguaranteed customers inorder tobefinanced. Also, asLNG terminals aspects that arehardtoignore. Firstly, LNG terminals arehigh costinvestments and and provides more flexibility thanpipelines. Nevertheless, it also hasnegative LNG tradeistheonly alternative for some countries with limited pipeline options percent of theworld gastradewasmadeviaLNG. The liquefied natural gas(LNG) tradeisarisingtrendinthe world. As of 2013,30 4.1 Rising trend:liquefied natural gas 4. Alternative methodsfor transport accelerate the pace of the negotiation. At a September 2014 meeting, the two Cypriot leaders signaled the intention to south tonorth andprovide investment for supplying gastothewhole island. Can South-Eastern Mediterranean GasbeaSupply for theEU? 84 83 82 2014, http://www.globallnginfo.com/world%20lng%20plants%20&%20terminals.pdf.

BP, BP,

Statement of Mr.Eide Special Adviser of the Secretary-General following his meeting with with meeting his following Secretary-General of the Adviser Special ofStatement Mr.Eide AP, “Cyprus halts unity talks with T with talks unity halts AP, “Cyprus World’s LNG Liquefaction Plants and Regasification and World’s Regasification Terminals Plants Liquefaction LNG LNG, Global Fiona Mullen, Alexander Apostolides and Mustafa Besim, “Cyprus Peace Dividend R Dividend Peace “Cyprus Besim, Mustafa and Apostolides Alexander Mullen, Fiona R Statistical Review of World Energy 2014 of World Review Energy Statistical OC announced that the negotiations cannot be conducted under these R OC to refrain from unilateral acts on the hydrocarbon resources, urkey”, Al-Jazeera in , cit. , 81 Notwithstanding, in October2014, new , 7 October 2014, http://aje.me/ZrXiqV. 2014, October 7 , 84 83 Thisshareistoincreaseinthe 82 Thesedevelopments, , updated September September , updated evisited…”, evisited…”, 80 17 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI Lakotyrtiptis, inaddition toseveral studies referenced above. project isadmitted tobeinfeasible even bytheEnergyMinisterof theR considerably cheaper andfasterthananonshore LNG terminal facility. also beconvenient asit does notrequireonshore facilities andit isregardedtobe for offshore developments for smaller resources anddepleting reserves. It would The Floating LNG terminal (FLNG) hasbeenproposed asacost-effective alternative terminal, even ifthemarket conditions arefavorable. are finalised, the remaining amount may not besufficient tofinance the LNG 2256e6600488e3a/02b6e904de1dc822c2257b2100257b20?OpenDocument. com/?p=4489. to R Petronas and Shell Consulting, 2b1st see, information For further projects. these in place have possibilities LNG Cypriot on the T and Blocks Cypriot in holders license one of the KOGAS, before. stream to come on- expected is Malaysia in (Petronas) Berhad Nasional Petroliam by project another 90 89 88 87 86 85 to 15million tons (20bcm)/yinthecaseof furtherdiscoveries. train with capacity of 5million tons of LNG (6.8bcm)/yinitially tobeexpanded on thesouthern shore of theisland. beginning, especially bytheR Nonetheless, LNG exports have beenconsidered bytheexplorer countries from the promising LNG market might bealready taken up bythelargerproducers. Can South-Eastern Mediterranean GasbeaSupply for theEU? gasification capacity of theEUisaround 200bcm/yandplannedtoreach275 The receiving endof theLNG tradeisalso important inthisassessment. There- without vastreserves. commence operation seemsmore rational thaninvesting insuch ariskyproject http://www.jpost.com/Business/Business-News/Woodside-terminates-Leviathan-deal-352893. to come on-stream in2016. Moreover, the FLNG terminal is a brand-new technology and the first one is planned especially for Israel thesecurity issue isalways ahigh concern inregardstoFLNG. the LNG project isshelved for now. agreement with one of theglobal LNG players, Woodside Petroleum Ltd., indicates environmental issues andsecurity concerns. Notably, thecancellation of an Proposed Israeli LNG exports have facedquestions regardingterritorial constraints, out incaseof newdiscoveries. have MOUs with thegovernment for theLNG project, theyareonly tobecarried companies also do notconsider it financially viable. Although almost all of them www.financialmirror.com/news-details.php?nid=32421.

IEA, IEA,

t “Deutsche Bank eyes Cyprus LNG T LNG Cyprus eyes Bank “Deutsche Resources to Reserves 2013 to Reserves Resources (IEA), Agency Energy International Natural Gas Center, Natural Energy Vasilikos Sharon Udasin, “Woodside T “Woodside Udasin, Sharon he world’s first FLNG terminal Project is being constructed in Australia mainly by Shell, while while Shell, by mainly in Australia constructed being is Project terminal FLNG he world’s first Resources to Reserves 2013 to Reserves Resources The Jerusalem Post Jerusalem Deal”, The in Leviathan erminates 90 , cit., p. 110. p. , cit., Therefore waiting for theplannedFLNG terminals to ace on floating LNG, 7 June 2012, http://www.2b1stconsulting. 2012, 7 June LNG, on floating ace OC. It hasbeenplanningtobuild anLNG terminal Financial Mirror Financial in Funding”, erminal , http://www.mcit.gov.cy/mcit/mcit.nsf/b1d9808b11a79c45c , 88 The terminal would consist of one liquefaction Additionally, ifthecurrent sales agreements , Paris, IEA, 2013, p. 103-106. p. 2013, IEA, , Paris, echnip S.A the researcher researcher the S.A echnip , 24 April 2014, http:// 2014, April , 24 86 87 , 21 May 2014, 2014, May , 21 However, this Theexplorer OC, Yiorgos 89 However, 85 18 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI Central or EasternEuropean countries. diversified sources andtheirdependency on R and south-west of Europe. Thesecountries such asFrance andSpain already have supply diversification. However, most of the available capacity is located inthewest increase of there-gasification capacity isdescribed as one of theways toprovide development-plan-2013-2022. 137, p. 10 July http://www.entsog.eu/publications/tyndp#entsog-ten-year-network- 2013, Corrigendum Projects -Annex Infrastructure A: 2013-2022 TYNDP 2013-2022, Plan Development conducted andthereisnodefinite timeframe for thisproject as yet. and isplannedtobecompleted in2020.However, thefeasibility studies arebeing send theSEMLNG toCentral Europe. Thisproject also hasaplaceinthePCIList This project allows Spain tosendgas north; soit would beimportant inorder to interconnector project that enables bi-directional flows between France and Spain. route andaprecaution incaseof adisruption. (T known astheHungary-Austria GasPipeline (HAG) andT 2011, regarding the connections between Baumgarten and theimport pipelines of them is the Austria reverse flow modifications, which have been completed in There aretwo projects that aremore important inregardstotheSEMcargoes. One be completed, inorder tosendtheadditional amounts tothevulnerable states. western countries, insteadof theeasternroute, thereverse flow investments must completed asplanned.Secondly, asthegaswould beflowing from thesouth- these resources. Firstly, theinterconnectivity of transmission systemsshould be Therefore, some adjustments should bemadeinorder tomake themostof bcm by2022,according tothelatest Communication on theenergysecurity. Can South-Eastern Mediterranean GasbeaSupply for theEU? 95 94 93 92 91 the EUexports have declinedsignificantly due tothe stagnating production and Egypt usedtosupply theEUviaLNG terminals built during the2000s.However, terminals will probably seetheSEMgasheadingtoEurope. explorer companies of Israel and the operators of the under-utilised Egyptian LNG exporting it directly from countries intheLevant. Theagreements betweenthe There is,however, away of transporting theSEMgastoEUas LNG otherthan these markets. Greece to Bulgaria and further are also highly important to provide flexibility to LNG cargoes would bedirectedfrom theSEM,investments toflow gasfrom Additionally, as Greece has a high probability to host the facilities from which the

Ibidem.

AG). European Energy Security Strategy Security Energy European Commission, European European Energy Security Strategy Security Energy European Commission, European Statistical Review of World Energy 2014 of World BP, Review Energy Ibidem; Statistical European Network of T Network European These connections allow the use of the Italian LNG terminals as a new trading 95 ransmission System Operators-Gas (EN Operators-Gas System ransmission 92 , cit. , 93 ussian gasisalready lower thanthe Theotherone istheES-FR “Midcat” , cit., p. 53. p. , cit., , cit., p. 48. p. , cit., T SOG), TenSOG), Year Network rans-Austria GasPipeline 94 91 An An , 19 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI Jazeera America Jazeera considered asnewsupplies. agreements may redeemtheexports totheEUfrom Egypt, but theycannotbe but will besigned betweencompanies. urgent for both sides and the agreements are not inter-governmental agreements energy minister of Egypt declared that the outcome will be positive asthe need is Group. See BG Group, Egypt BG See Group. 2014, http://www.gastechnews.com/lng/egypts-worsening-gas-crisis-takes-its-toll-on-bg. 2014, to theIdku facility, asit didnothave enough gastooperate. liabilities. At thebeginningof 2014,BGGroup declaredforce-majeure inregards faced with paying compensation totheshareholdersfor notmeetingits export 2013, http://www.reuters.com/article/2013/04/24/egypt-gas-idUSL6N0DB30820130424. 2013, provide thecontracted supplies for theexports. terminal, claimingthat Egyptian Natural GasHolding Company (EGAS) didnot a complaint totheInternational Chamberof Commerce (ICC), for theDamietta European shareholdersfor 20years. customers as LNG. The production from the Idku LNG to fulfill Egypt’s contractual obligations, theywill beprobably shipped to European The gasexports from Israel toEgypt will bepipeline gas tradefor Israel, but inorder 102 101 100 99 98 97 96 strengthened during Israel’s Operation Protective Edge inGaza,July 2014. after General Abdel Fattah ElSisi became president inearly 2014andwerefurther brief spell inpower of theMuslim Brotherhood inCairo, improved significantly by theendof 2014.Israeli-Egyptian relations, which haddeteriorated underthe The agreements areexpectedtobeapproved bybothgovernments andfinalised In thisframework theIsraeli-Egyptian gastradepromised asolution for bothparties. increasing domestic consumption. Can South-Eastern Mediterranean GasbeaSupply for theEU? 104 103 Statistical Review of World Energy 2014 of World Review Energy Statistical Daily News Egypt Daily News in minister”, approval:state’s Petroleum is bought bythestate-owned Egyptian company. share of 80 percent of the Spanish Egyptian Gas Company and the Damietta LNG T LNG Damietta the and Company Gas Egyptian Spanish of the percent of 80 share headed toAsia where theycould obtainbetterprices. English for the years 2007 to 2014. 2007 years for of World the BP,Source: Review Energy Statistical consumption. due increasing to the years, six in 10 bcm/y dropped amounts export the while percent of theproduction for Union-Fenosa Gas,

t

t t t For instance, 3 bcm of the total 3.7 bcm to be exported headed to Asia in 2013. Source: BP, Source: 2013. in to Asia headed exported to be bcm total 3.7 of the 3bcm For instance, Gastech News toll its on Gastech BG”, in takes crisis gas worsening “Egypt’s Forbes, Alex El País País in El Plant”, Gas stoppageEgyptian of over suit file ENI Natural, “Gas Jiménez, Miguel Mohamed Ayyad, “No shame in Egypt using Israeli gas through British Oil Company, Oil after British through gas Israeli using Egypt in shame “No Ayyad, Mohamed Union Fenosa Gas is a partnership of Italian ENI and Gas Natural Fenosa of Spain; it a holds of Spain; Fenosa Natural Gas and ENI of Italian apartnership is Gas Union Fenosa he EU exports have decreased to 3.7 bcm/y in 2013 from the amount of 13.61 bcm/y in 2007, in bcm/y of 13.61 amount the from 2013 in to bcm/y 3.7 decreased have exports he EU om Kutsch, “In Israel operation in Gaza, a clear sign of Egypt’s distaste for Hamas”, in Al- in for Hamas”, distaste of Egypt’s sign aclear Gaza, in operation Israel “In om Kutsch, he production of T he production racy R racy , 3 March 2014, http://elpais.com/elpais/2014/03/03/inenglish/1393848770_325514.html. 2014, , 3March ucinski, “Damietta LNG plant files complaint against Egypt’s EGAS”, in Reuters EGAS”, Egypt’s against complaint files plant LNG “Damietta ucinski, , 18 July, 18 http://alj.am/1oNK2S 2014, R rain-1 is reserved for GDF Suez S.A while T while for S.A GDF Suez rain-1 reserved is : http://www.bg-group.com/databook/2014/27/where-we-work/egypt. , cit. , 96 Theremainingcargoes from Egypt mostly 102 101 TheDamietta LNG T . 99 , 6July http://shar.es/1Xj7mz. 2014, 103 while theremainingamount 104 rain-2 is reserved for the British British for the rain-2 reserved is 97 Consequently thesenew T Consequently, Egypt was erminal is reserved for its 98 Meanwhile, ENIfiled erminal reserves 60 , 31 January , 31 January erminal. , 24 April April , 24 100 The 20 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI this technology, theCanadianSeaNG Corp., hints that it isinterested inCypriot region andthecompanies involved plantoincreaseproduction. almon.co/25av. mail.com/?p=30994. 107 106 105 and theamount isunder5bcm/y. would beconvenient economically ifthedistanceinvolved isless than2,000km According tothelatest R production profile. may bemore flexible according totheassets,market location, reservoir sizeand development periods compared to the LNG facilities or pipelines. Also CNG exports to be technically less complicated, lower-cost, energy-efficient and have shorter it ismostly useddomestically rather thanfor exports. CNG investments aresaid Compressed natural gas(CNG) isanotheralternative for gastrading,although 4.2 Benefits of newtechnology: compressed natural gas reserved for theshareholders with long-term agreements. the short term,except for theredeemed Egyptian LNG exports, which are already Consequently, theLNG exports from theSEMproducers will notbeavailable in new findingsin August 2014. Energy Ministerannouncedthecountry’s intention toexport toEgypt incaseof carbon developments andtheties arestrong concerning energyissues. Cypriot first place.Thetwo countries have cooperation agreements on offshore hydro- Cyprus isalso considering usingEgyptian LNG terminals for gasexports inthe Can South-Eastern Mediterranean GasbeaSupply for theEU? 110 109 108 makes thefloating CNG option possible for small reserves. vessels, which do notneedaFloating Production Storage Offloading (FPSO)facility, Cyprus may be a more proper candidate for CNG projects. already took its decision for regional exports for its production inthefirstphase, method tothetable for the SEMgasexports. As Israel haslarger quantities and english.ahram.org.eg/News/103514.aspx. Israeli imports. pipeline connection iscompleted, theneedfor gasinEgypt may beeaseddue to However, bythetimeadditional discoveries aremadeinoffshore Cyprusandthe gas supplies viaEgyptian LNG terminals. natural gasprice, which may slow down thegrowth of domestic consumption. major decreaseintheenergysubsidies therehasbeenasignificant increaseinthe

IEA, IEA,

Coselle System Overview System Coselle NG, Sea “Egypt’s gas production to increase 500 mcf per day”, in Ahram day”, Online in per mcf 500 to increase production gas “Egypt’s Cyprus Mail Cyprus in on hydrocarbons”, for talks Egypt in “Lakkotrypis Amer T Amer Israeli imports reserve 11.2/y of 16.7/y LNG capacity of the terminals. of of 16.7/y the capacity LNG 11.2/y reserve imports Israeli Resources to Reserves 2013 to Reserves Resources hiab al T hiab 106 amimi, “Egypt decides to cut subsidies”, in Al-Monitor in to subsidies”, cut decides “Egypt amimi, Additionally, explorations arebeingcarried on intheNile Delta esources andR , cit., p.114-116. cit., , 105 , http://www.coselle.com/coselle-system/overview. , Therefore, Cypriot gasmay contribute totheEU 109 Thiskindof anassessment bringstheCNG eserves study of theIEA,CNG projects , 18 August 2014, http://cyprus- 2014, August , 18 The introduction of new 110 , 27July http:// 2014, , 12 June 2014, http:// June 2014, , 12 Also theinventor of 107 Also due toa 108 21 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI in theproject or until thefirstresults from theotherinitiatives. exporters may avoid tryingthisnewmethodwithout aqualified partnerincluded the CNG exports may only beconsidered asaninterim solution. Moreover, the Mirror the additional amounts would increasethecostsinsteadof profits. share of theprocess. So,iffurtherexplorations weretoresult indiscoveries soon, both the sending and the receiving ends, the shipping costs constitute the largest to endtheenergyisolation of theGreekislandsandIsrael. 2020. Theproject envisages aconnection that canbeoperated bothways, inorder The firststageisprojected tostartin2018, while thesecond stageisplanned for Israel toCyprus,CreteandtheGreek mainland, inorder toexport 2,000megawatts. The Euro-Asia Interconnector project plansasubmarine electricity cable from above. exporting gasviaelectricity isintroduced for theSEMgasexports asmentioned alternative for utilising thenatural gasreserves. In thisframework aproject for product. 114 113 112 111 electricity generation isrising. As natural gasiscleaner andmore efficient thanotherenergysources, itssharein 4.3 Sub-sea electricity cables of scale”. contrast toLNG trading,CNG tradingdoes nothave theadvantage of the“economies Nevertheless, thereareseveral negative aspectsthat should also bementioned. In monetise thereserves andhelp financefurtherinvestments. contributing toGreece’s supply diversification it could also bethefirststepto The production may headtoGreekgeneration facilities located inthecoast.While require pipelines toshore andenable thegastobeexported directly from thefield. Aphrodite Field comes on-stream. Meanwhile, anoffshore CNG facility will not An onshore CNG facility andthepipelines to theshore may beready until the The position isconvenient for European markets aswell asNorth Africa or Turkey. reserves. Can South-Eastern Mediterranean GasbeaSupply for theEU? 116 115 CNG Carrier in China”, in Sea-Trade in China”, in Global CNG Carrier P “Indonesia’s Hand, Marcus 2016. in operation to commence expected publication/key-world-energy-statistics-2014.html. r IEA, IEA,

IEA, IEA,

Ayla Gürel, Fiona Mullen and Harry T Mullen Harry Fiona and Ayla Gürel, Economies of scale basically refers to the cost advantage that arises with increased output of a increased with arises that advantage cost to the refers basically of scale Economies Indonesia will be the first to utilise this method as it ordered the first CNG marine to China. It is It China. to marine CNG first the as it ordered method this to utilise first the be will Indonesia Financial in Financial sector”, hydrocarbons offshore Cyprus involvement in seeks “Canada Peck, obert , 13 March 2014, http://www.financialmirror.com/news-details.php?nid=32151. 2014, March , 13 Key World Energy Statistics 2014 Key Statistics World Energy Resources to Reserves 2013 to Reserves Resources 111 112 While it hasvisible costadvantages concerning theinfrastructure at , cit., p. 115. p. , cit., 115 Thisconcept makes electricity generation another zimitras, “ zimitras, , p. 24, http://www.iea.org/publications/freepublications/ 24, p. , , 29 July, 29 http://www.seatrade-global.com/fw3w. 2014, T he Cyprus Hydrocarbons Issue…”, cit., p. 88. p. Issue…”, cit., Hydrocarbons he Cyprus 116 PLN Orders World’s Orders First T PLN 114 113 In thiscase 22 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI energy-and-water-p20222-69.htm. Gazette step of exports andusedto provide fundingfor otherinvestments. However, asit is and theamounts areconvenient especially for Cyprus.Hence, it canbethefirst The SEMgascould contribute toEUgas consumption viaCNG exports. Thelocation of theLeviathan Field, while for Cyprusit awaits additional discoveries. the plansof thecompanies, but for Israel it isplannedinthesecond development developments tobecome economically viable. TheLNG terminal isconsidered in financial aspects.Thepipelines needadditional supplies or drastic technological The alternative routes, on theotherhand,seemproblematic inbothtechnical and will isrequiredtobuild theright atmosphere for thiskindof development. all thedifficulties. Energypolicy is of vital importance for thecountries andpolitical carrying gas from Israel. However, this bright promise is notenough to overcome the whole islandof Cyprusandthereareseveral companies ready toinvest in The gas from several othersuppliers it may actasatransport route in thecoming years. overcome bythetime production commences and asTurkey planstoreceive way for theexports totheEU. Thechallenges on thecapacity constraints may be As examinedindetail above, theTurkish route would bethemostconvenient regarded asaconsiderable supplier for theEU. for thewesterncustomers. However, thereisalong way aheadbefore it canbe the welfareof theregional countries andalso provides areliable energymarket The SEMgascorridor isanideal tobecreated. It hasgreat potential for increasing Conclusion of theroute andthetotal distanceinvolved make theroute more challenging. the potential profits to be madefrom gastrading. Additionally, the subsea depths incur additional costs.Theexpectedrevenues for theproposal aremuch lower than need newgeneration facilities inorder tocreate thesurplus capacity andthiswill cost isjustfor laying down thecables. Certainly thiskindof anexport route will will build theinterconnection at anestimated costof $1.5billion for theproject. This There arefinancial andphysical constraints intheway. DEH-Quantum Energy Ltd project. Nevertheless, theMOU isambiguous about concrete stepsforward. another in2013,emphasising theircommitment totheEuro-Asia interconnector The ministersof Israel, theR Can South-Eastern Mediterranean GasbeaSupply for theEU? 118 117 an economic alternative for thetimebeing. Consequently, thefeasibility studies carried out on thisproject do notconsider it

Famagusta water”, Famagusta and in MoU sign on energy Greece and Israel “Cyprus, Phillips, Mitsidou Evie Ayla Gürel, Fiona Mullen and Harry T Mullen Harry Fiona and Ayla Gürel, Turkish route has additional advantages as it provides investment for gasifying , 8 August 2013, http://famagusta-gazette.com/cyprus-israel-and-greece-sign-mou-on- 2013, , 8August OC andGreecehave signed anMOU in2012followed by zimitras, “ zimitras, T he Cyprus Hydrocarbons Issue…”, cit., p. 88. p. Issue…”, cit., Hydrocarbons he Cyprus 117 118

23 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI parties. be taken assoon aspossible inorder toutilise theresources for thebenefit of all opportunity for Eastern Mediterranean countries. Consequently, action should sources may findtheirway to European customers andclose thiswindow of regional states standintheway of thefull development of SEMgasfields, other diversification warrants that asolution is found rapidly. While disputes between expected tocome on-stream inthenearfuture. TheEU’s urgent needfor energy key factor for energyinvestments. Thereareseveral resources all over theworld resolution, while theothersneeddevelopment inotherrespects.T In conclusion, themostfeasible alternative, theTurkish route, requirespolitical sufficient incentives tostart importing gas from Eastern Mediterranean. combined with theprice formulation inthecurrent contracts might notprovide Moreover, theEUisstriving toreachgasat market prices. Thehigh transport costs a newmethodtobeintroduced, thecompanies may behesitant totry. Can South-Eastern Mediterranean GasbeaSupply for theEU? Updated 25November 2014 iming isa 24 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI europa.eu/legal-content/en/TX/?uri=celex:52008DC0781 and Solidarity Action Plan (COM(2008)781), 13November 2008,http://eur-lex. European Commission, Second Strategic Energy Review: An EUEnergy Security MEMO-13-880_en.htm Energy (MEMO/13/880), 14October 2013,http://europa.eu/rapid/press-release_ European Commission, Questions and Answers: Projects of Common Interest in TX/?uri=celex:52013DC0711 (COM/2013/711), 14 October 2013, http://eur-lex.europa.eu/legal-content/en/ European Commission, Long Term Infrastructure Vision for Europe and Beyond country.pdf 2014, http://ec.europa.eu/energy/infrastructure/pci/doc/2013_pci_projects_ European Commission, Full list of projects of common interest by country, January 2014, http://eur-lex.europa.eu/legal-content/en/TX/?uri=celex:52014DC0330 European Commission, European Energy Security Strategy (COM(2014)330), 28 May http://europa.eu/rapid/press-release_IP-13-932_en.htm projects that may qualify for €5.85 Billion of Funding (IP/13/392), 14 October 2013, European Commission, Energy:Commission unveils list of 250infrastructure infrastructure/exemptions/doc/doc/gas/2013_tap_decision_en.pdf ownership unbundling… (C(2013)2949),16May 2013,http://ec.europa.eu/energy/ Pipeline from the requirements on third party access, tariff regulation and European Commission, Decision on theexemption of theTrans Adriatic dogalgaz-piyasasi/yayinlar-raporlar 2013 (Natural GasMarket R Energy Market R energy.html en/global/corporate/about-bp/energy-economics/statistical-review-of-world- BP, about-bp/energy-economics/energy-outlook.html BP, etudes/etudes/join/2014/518747/IPOL-ITR European Parliament, February 2014,http://www.europarl.europa.eu/R Uwe Albrecht etal., TheImpact of theOil Price on EUEnergy Prices, Brussels, R Can South-Eastern Mediterranean GasbeaSupply for theEU? eferences Energy Outlook 2035,January 2014,http://www.bp.com/en/global/corporate/ Statistical Review of World Energy 2014,June 2014,http://www.bp.com/ egulatory Authority (EMRA),Doğal GazPiyasası Sektör Raporu eport 2013),2014,http://www.epdk.org.tr/index.php/ E_ET(2014)518747_EN.pdf egData/ 25 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI No. 1/2014, p.72,http://www.prio.org/Publications/Publication/?x=7411 R Fiona Mullen, Alexander Apostolides andMustafa Besim,“CyprusPeace Dividend January 2014,http://almon.co/1yll Helmi Moussa, “R gas-monetization-pathways-cyprus http://mitei.mit.edu/publications/reports-studies/interim-report-study-natural- Pathways for Cyprus. Economics of Project Development Options, August 2013, MIT EnergyInitiative, Interim Report for theStudy Natural GasMonetization GxmsMniNGPolicyIsrael.aspx September 2012,http://energy.gov.il/English/Subjects/Natural%20Gas/Pages/ the Government’s Policy Regarding Natural Gasin Israel: Executive Summary, Israel, International EnergyAgency (IEA),Resources toReserves, Paris, 2013 IEA,2013 html. org/publications/freepublications/publication/key-world-energy-statistics-2014. International EnergyAgency (IEA),Key World Energy Statistics 2014,http://www.iea. Monitor Ziad Haidar,“Syria Signs Offshore Oil and GasExploration Deal with R 1/2013, http://www.prio.org/Publications/Publication/?x=7365 Context, Positions andFuture Scenarios”, inPRIO Cyprus Centre Reports, No. Ayla Gürel,Fiona Mullen andHarryT www.iai.it/content.asp?langid=2&contentid=1078 Mediterranean Corridor”, inIAIWorking Papers , No. 14/05(March 2014),http:// Elif Burcu Günaydın, “ThePotential R reports/2014/05/20145665624846681.htm Jazeera Center for Studies Reports, May 2014,http://studies.aljazeera.net/en/ Florence Gaub, “GasCrisisinEurope andtheAlternative Qatari R Israel, March 2013,http://www.chamber.org.il/Content.aspx?code=21782&nl=273 Federation of Israeli Chambersof Commerce, Overview of theOil &GasIndustry in tyndp#entsog-ten-year-network-development-plan-2013-2022 Projects Corrigendum, 10 July 2013, http://www.entsog.eu/publications/ Network Development Plan 2013-2022, TYNDP 2013-2022 -Annex A:Infrastructure European Network of T Can South-Eastern Mediterranean GasbeaSupply for theEU? evisited: AProductivity andSectoral Approach”, inPRIO Cyprus Centre Reports, The Recommendations of theInter-Ministerial Committee toExamine , 27December2012,http://almon.co/1xmg ussia PreparingtoDevelop GazaGasField”, inAl-Monitor ransmission System Operators-Gas (ENTSOG),Ten Year ole of Turkey intheEmergingSouth Eastern zimitras, “TheCyprusHydrocarbons Issue: ussia”, in ole”, inAl , 24 Al- 26 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI Institute, 2012, http://www.sobieski.org.pl/the-future-of-gas-pricing Europe. Global Market TrendsVersus Regional Particularities, Warsaw, Sobieski R 2010, http://pubs.usgs.gov/fs/2010/3027 Nile Delta Basin Province, EasternMediterranean, Fact Sheet2010No. 3027,May US Geological Survey, Assessment of Undiscovered Oil and GasResources of the 2010, http://pubs.usgs.gov/fs/2010/3014 Levant Basin Province, EasternMediterranean, Fact Sheet2010No. 3014,March US Geological Survey, Assessment of Undiscovered Oil and GasResources of the updated August 2013,http://www.eia.gov/countries/regions-topics.cfm?fips=em US EnergyInformation Administration (EIA), EasternMediterranean Region, February 2014,http://www.eia.gov/countries/cab.cfm?fips=sy US EnergyInformation Administration (EIA),Country Information: Syria, updated August 2014,http://www.eia.gov/countries/cab.cfm?fips=eg US EnergyInformation Administration (EIA), Country Information: Egypt, updated http://www.eliamep.gr/?p=18780 Calculations of Greece&Cyprus”, inELIAMEPPolicy Papers, No. 22(February 2014), Israeli R Theodoros T http://almon.co/25av Amer Thiabal T aspx?id=5321 in Natural GasDevelopments BetweenMarket Opportunities andGeopolitical R Simone 1.pdf www.tanap.com/en/wp-content/uploads/2013/03/T T analysis/view/azerbaijans-cooperation-with-israel-goes-beyond-iran-tensions in Brenda Shaffer, “Azerbaijan’s Cooperation with Israel GoesBeyond Iran T 8 May 2014,http://almon.co/22ur Arad Nir, “Netanyahu Stalls on R Can South-Eastern Mediterranean GasbeaSupply for theEU? ANAP, obert Zadjler, TheFuture of GasPricing in Long-Term Contracts in Central Eastern FEEM Note di Lavoro, No. 12/2013 (December2013),http://www.feem.it/getpage. Policywatch, No. 2067(April 2014),http://www.washingtoninstitute.org/policy- Environmental Impact Assessment Application File , March 2013,http:// T elations aftertheMavi MarmaraIncident andtheStrategic Energy agliapietra, “T sakiris, “ShiftingSandsor Burning Bridges? TheEvolution of Turkish- amimi, “Egypt decidestocut subsidies”, inAl-Monitor owards a New Eastern Mediterranean Energy Corridor? econciliation Process with Turkey”, inAl-Monitor ANAP_EIA_Application_File- , 27July 2014, ensions”, isks”, , 27 IAI Working papers 14 | 17 - November 2014 ISSN 2280-4341 | ISBN 978-88-98650-22-4 © 2014 IAI Latest IAIW Can South-Eastern Mediterranean GasbeaSupply for theEU? www.iai.it [email protected] F +39 T +39 Via Angelo Brunetti, 9-I-00186 R and otherpapers’ series related toIAIresearch projects. (AffarInternazionali), two series of research papers (QuaderniIAIandR publishes anEnglish-language quarterly (TheInternational Spectator), anonline webzine and theMiddle East;defence economy andpolicy; andtransatlantic relations. TheIAI in the global economy and internationalisation processes in Italy; the Mediterranean research sectors are:European institutions andpolicies; Italian foreign policy; trends and abroad andisamemberof various international networks. More specifically, themain that end,it cooperates with otherresearch institutes, universities andfoundations inItaly and disseminate knowledge through research studies, conferences andpublications. T economy andinternational security. Anon-profit organisation, theIAIaimstofurther Founded byAltiero Spinelli in1965,does research inthefields of foreign policy, political Istituto Affari Internazionali (IAI) 14 |08 14 |09 14 |10 14 |11 14 |12 14 |13 14 | 14 |15 14 |16 14 |17 06 3224360 06 3224363 Opportunities Sohbet Karbuz,EU-Turkey Energy Cooperation: Challenges and Eleonora Poli, Is theEuropean Model Relevant for ASEAN? Policies Towards theSouthern Mediterranean Region Silvia Colombo andNicolò Sartori, Rethinking EUEnergy Guillaume Lasconjarias, NATO’s Posture after theWales Summit for European Foreign Policy Along its Arc of Instability? Nathalie T a Supply for theEU? Elif Burcu Günaydın, Can South-Eastern Mediterranean Gasbe Dominant System Neera Chandhoke, India 2014:Return of theOne-Party and Choices Dialogue in theMediterranean: Lessons Learnt, Opportunities Eduard Soler iLecha,TheFuture of Multilateral Security Kristina Kausch, Competitive Multipolarity in theMiddle East Project for theSingle Market Immediate Tool for Euro CrisisManagement and aLong-Term Giulia R osa MariaCavallo, European Banking Union: An occi, TheNeighbourhood Policy isDead.What’s Next o r ome, Italy king P aper s esearch Papers) o