Disclosure of what might be a supergiant gas field off Egypt further complicates the geopolitical tangle confronting development of an expanding hydrocarbon treasure in the eastern Mediterranean.
When Eni SPA on Aug. 30 reported plans immediately to appraise "the largest gas field in the Mediterranean Sea," Israel appeared to lose an important option for exports of gas from its own offshore giants, especially undeveloped Leviathan field. Technically, that judgment might be premature. However confident Eni sounds about the discovery of what it says might be 30 tcf of gas in place at its Zohr prospect, development in nearly 5,000 ft of water won't happen overnight. Egypt began importing LNG this year to meet fast-rising demand as domestic production sags. Until Zohr gas flows ashore, it might welcome Israeli supply.
How much gas Israel promptly can export to Egypt or anywhere else remains a huge question, however-though not the largest question hovering over the future of East Mediterranean production.
'Sleepwalking'
Political squabbling has frozen work off Israel since December, when then-Antitrust Commissioner David Gilo raised questions about possible market domination by Noble Energy Inc., operator of the Israeli gas fields, and partner Delek Group. The cabinet recently approved a compromise agreement that would allow development to proceed but force companies to shrink their licenses interests and, in Delek's case, withdraw from some fields. The compromise awaits approval by the legislature, which has been in recess. Minister of the Economy Aryeh Deri recently imposed yet another delay by insisting the agreement not advance until a new antitrust commissioner is in place. As Israeli Energy Minister Yuval Steinitz is reported to have said after Eni announced its Zohr plans, "Israel is sleepwalking [while] the world is changing."
A larger question about development of the Levantine basin's growing cluster of giant, deepwater gas fields might be Turkey. The country needs increasing amounts of gas for domestic use and relishes its expanding role as a transit country for pipeline supply to Europe. Physically and economically, therefore, it's a logical destination for gas from Israel's offshore fields. But the requisite pipeline would have to cross insecure international boundaries. And relations between Turkey and Israel are unsteady.
Turkey has watched events in the eastern Mediterranean with more than the passive interest of a potential gas importer. When Noble and partners discovered Aphrodite field off Cyprus, the Turkish government challenged the right of the Republic of Cyprus, which it doesn't recognize, to develop natural resources unilaterally until maritime border issues are resolved. It underscored its seriousness by dispatching warships to conduct maneuvers near Cypriot drillsites. Aphrodite gas might anchor an LNG project, a potential boon to a country desperate for export revenue, but probably would need to be supplemented by supply from Israeli fields. Until Zohr, Egypt was a likely market for Cypriot LNG.
Another important question is whether the Zohr project will induce Turkey to press a dispute with Cyprus that would make Egypt a maritime neighbor. The Aphrodite block abuts Egyptian territory near the block on which Eni made the Zohr discovery. Territory claimed by Turkey against Cyprus also extends to Egyptian waters.
Friendly to bitter
Relations between Turkey and Egypt swung from friendly to bitter in 2013, when Gen. Abdel Fattah el-Sisi deposed Egyptian President Mohammad Morsi. Elected a year earlier, Morsi had provoked unrest with initiatives that included a temporary constitutional change giving him unlimited power. Now in prison, Morsi was a leader of the Muslim Brotherhood, which Turkish President Recep Tayyip Erdogan supports. Erdogan calls Sisi an "illegitimate tyrant." He might see the boundary dispute as a way to wedge Turkish interests physically into the affairs of two rivals with big gas discoveries. He also might have a distraction. With his political position inside Turkey weakening, he has called for an early election.
In Egypt, notwithstanding international tensions nearby, Zohr promises economic benefits sure to strengthen Sisi. For its part, Eni said it seeks a "fast-track development."
