Full-potential development of natural gas in the Eastern Mediterranean remains a distant hope. Yet gas from deepwater fields off Israel, Cyprus, and Egypt and from discoveries yet to be made in the region could solve many problems. It could fuel the generation of electrical power and avert a developing water crisis by supporting desalination. It could fuel manufacturing, boost employment, and generate revenue from sales abroad.
But development requires cooperation among neighbors too often fiercely uncooperative.
Rising potential
Noble Energy Inc. and subsidiaries of Delek Group have made a series of discoveries, some giant, in the Levant basin off Israel and Cyprus. Last year, Eni extended the potential southward into the Nile Delta basin with its giant Zohr discovery off Egypt.
So far, development has been limited to Israeli fields supplying local markets. Production could be much higher, but further field development requires exports by pipeline or LNG. Those prospects are controversial to the point of paralysis in Israel and stymied elsewhere by international conflict.
The Zohr discovery might obviate one former export option: a pipeline between the Levant basin fields and Egypt. Its development is under way. Eni expects Zohr output to start by the end of next year and to reach 2.6 bcfd by 2019. Egypt needs the gas. Sagging production and rising consumption have slashed exports of LNG, which the country now must import.
Off Israel and Cyprus, meanwhile, development has stalled. The immediate reason is stubborn political opposition in Israel, based initially on concerns about domestic supply and more recently on quarrels over antitrust. Even without that impasse, however, work would be impeded by the absence of a way to handle gas beyond the needs of Israel and Cyprus, the export of which is crucial to development economics.
Every likely scheme-A pipeline to Turkey? An LNG plant in Cyprus?-encounters a sensitive or disputed border or bilateral conflict. That's why cooperation remains a missing imperative.
Shaul Zemach, former director-general of Israel's Ministry of Energy and Water Resources, appealed for cooperation in a two-part Oil & Gas Journal series last year (OGJ, Apr. 6, 2015, p. 46; May 4, 2015, p. 62). Appearing before reports of the Zohr discovery, the articles warned of a fading East Mediterranean opportunity.
Zemach advances the case in a paper published last month by the German Marshall Fund of the United States. Calling for creation of a regional gas market, he recommends development based on existing transportation systems. Central to his idea is the Arab Gas Pipeline, built to carry Egyptian gas around Israel to Jordan, Lebanon, and Syria with a marine spur between El-Arish, Egypt, and Ashkelon, Israel. Since Egypt's revolution in 2011, deliveries to Jordan, which desperately needs the gas, have been hampered by sabotage and declining Egyptian production. Deliveries to Israel have ceased.
Zemach proposes connecting Israel to the Arab Gas Pipeline and extending the system to Turkey-or at least using the rights-of-way in a regional strategy. Rights-of-way of the idle Trans-Arab Pipeline in the Golan Heights could provide a temporary bypass from Jordan into Lebanon, Zemach says, "if conditions on the ground make this possible."
The former official leaves open the possibility of a pipeline between Cypress and Egypt, which could be connected to the Arab Gas Pipeline. Cypress also might be connected to the regional grid through Israel. And although he considers LNG to be "not a realistic option in the region," he believes Egypt's underutilized liquefaction plants at Idku and Damietta might be useful "in the medium term" as part of a concept he calls the Eastern Mediterranean Integrated Gas Infrastructure.
Hope for cooperation
The scheme literally brings hope for cooperation to ground level and, by exploiting existing installations, lowers investment needs. And it pivots on Zemach's renewed warning of the costs of truncated development: "Gas prices will remain high, and regional economies will not harvest maximum gains from the resource."
Squandered opportunity represents costly failure wherever it occurs.