Golda Meir once quipped that Moses could have done the Jewish people a better service. “He took us 40 years through the desert,” she said, “to bring us to the one spot in the Middle East that has no oil.”
Today, Golda Meir’s quip has lost its punch. Last week, natural gas began flowing out of the Tamar gas field, discovered off the coast of Israel in January 2009. Tamar and Leviathan, its neighboring gas field, discovered in June 2010, are among the world’s largest recent offshore natural gas discoveries. The Israeli companies controlling the fields are even considering exporting gas to neighboring countries.
Geologists assume that commercial oil reserves may lie beneath the gas find. Some analysts say that the Tamar and Leviathan fields might change Israel’s position in the geopolitical and energy world. But not just Israel’s.
The Israeli fields are adjacent to the Aphrodite gas field, discovered in December 2011, which lies in Cypriot territorial waters, less than 25 miles west of Leviathan. The government in Nicosia expects that the result of offshore drillings will confirm later this year that the island is sitting on vast amounts of natural gas worth billions of dollars. The recent banking crisis in Cyprus –the latest episode in the saga of the collapsing euro – came too early for the country to benefit from its future natural gas wealth. It is, however, indicative that Cyprus turned down the European Union’s demands that the gas reserves be used as collateral for the loans which the E.U. has just extended to Cyprus.
Brussels had demanded that a fund be created in which it was given a direct say over the revenues from Cypriot gas reserves, but Nicosia refused to do so. The Cypriots feel betrayed by the E.U. Hence, they are not inclined to let Europe share in the future wealth which they hope to derive from gas. Nicos Anastasiades, the president of Cyprus, said that Cyprus had no other choice than give in to the harsh demand of Brussels that it dismantle its banking sector. He, however, promised that savers who lost money in the Cypriotic banks would be compensated by being given shares in banks guaranteed by the future natural gas revenues.
Today, Cyprus is paying a very heavy price for its membership of the E.U.’s common currency, the euro. When by 2019 the gas proceeds are expected to start flowing, the tables will be turned. Then Cyprus will be in a position to leave the euro without facing the prospect of national bankruptcy.
To begin extracting the gas from the Aphrodite field by 2019, however, the virtually bankrupt Cypriot government will in the coming years need to make enormous investments. The Russian state-owned gas company Gazprom, the largest extractor of natural gas in the world, seems keen to get involved. So far, however, the Cypriots have kept the Russians at bay.
Europe is already to a large extent dependent on Russian gas, supplied by Gazprom, a company controlled by the Russian oligarchy around President Putin. A quarter of Europe’s of Europe’s entire gas consumption comes from Gazprom. As a new player in the market of gas exporters, Cyprus could reduce the European dependency on Russian gas.
What applies to Cyprus, obviously, applies to Israel as well. It, too, could use its gas exports to a political end. Bat Ye’or has argued that the pro-Palestinian positions of the European governments since the 1970s were to a large extent the result of Europe’s dependency on Arab oil. Israel has a unique chance of also using the Cypriot gas to its own geostrategic benefit. The Cypriot gas fields are located halfway between the Cypriot and Israeli coast. Israel, Cyprus and Greece are already collaborating in the EuroAsia Interconnector project, which is an undersea power cable linking Israel with Cyprus and Cyprus with Greece. A gas pipeline following the same route would balance the current pipeline on the Baltic seabed linking Russia with Germany.
Another opportunity for Israel might be the fact that some international gas companies are reluctant to get involved in the exploitation of Cypriot gas fields because they also operate in Turkey and do not want to upset the Turkish authorities who oppose the Cypriot gas extraction. Though the Aphrodite gas field lies in waters across Southern Cyprus, Turkey is demanding that all gas revenues be shared with Turkish occupied Northern Cyprus.Peter Martino
About the Author: Peter Martino is a European affairs columnist for the Gatestone Institute.
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