As the Crimea crisis rolls on, a gasfield conflict looms large

The gasfields of the eastern Mediterranean are expected to be a flashpoint between the West and Russia, with Israel playing both sides, writes Joseph Dana.

The European Union, with the urging of the United States, is accelerating efforts to reduce dependence on Russian natural gas as a result of the crisis in Crimea. European Union leaders are anxious to establish a “road map” to diversify energy sources away from Russia. The plan is designed to cripple Russia’s most successful industry and will focus on solidifying fresh gas resources from the United States and the Arabian Gulf. It will also propose a deeper European commitment to natural gas resources that are under the murky political waters of the eastern Mediterranean.

Since Israel’s discovery of massive natural gas deposits off the coast of Haifa, the eastern Mediterranean basin is said to be one of the largest natural-gas fields in the world.

With close proximity to Europe’s southern borders, natural gas development in the eastern Mediterranean is an ideal solution to the EU’s Russian energy dependence problem. American companies such as Texas-based Noble Energy have taken a front seat in the development of Israel’s gas industry. However, politics above the sea pose serious challenges to the creation of an international network of pipelines required to transport the gas to European soil.

Israel’s continued occupation of Palestinian land and reticence to sign any US-brokered peace framework is complicated by its natural gas discovery, conservatively estimated to be worth more than $50 billion (Dh184bn) by 2030.

As European civil society has increased its boycott of Israel as a means of non-violent pressure, the European Union has quietly but consistently sought to upgrade economic ties with Israel, driven by a desire to secure a steady supply of natural gas. The flood of cash from natural gas profits heading Israel’s way doesn’t bode well for a peaceful resolution to the Palestinian question.

Yet, the problems are much deeper than Israel’s political intransigence with the Palestinians.

The Lebanese are at odds with the Israelis, and contest the boundaries of Israel’s natural gasfields. Egypt and Gaza are in a state of near collapse with little independent ability to explore their own gasfields. Turkey will not tolerate any activity which suggests that Cyprus is an independent sovereign state, and remains in a situation of cold peace with Israel. Syria is in a state of civil war.

In order for the EU to see eastern Mediterranean natural gas as a viable alternative to the Russian product, there will have to be some sort of network of cooperation in the region, and that has never looked more distant. The Russians are keenly aware of this fact and are taking their own measures in the eastern Mediterranean.

In the last half of 2013, Russia joined the race for gas in the region.

Currently, more than 75 per cent of Russia’s massive natural gas exports are to Western Europe and more than half of it travels through a network of pipes in Ukrainian territory. Russia is keen to protect this lucrative relationship with the EU.

For the past 200 years, Russia has tried, often in vain, to gain a foothold in the eastern Mediterranean, the only warm body of water accessible from the Black Sea. Moscow sees instability, especially in Syria, as an opportunity to realise a long-standing foreign policy goal. Last December, Russia signed far-reaching energy deals with Syria and the Palestinian Authority to explore and export natural gas reserves in the eastern Mediterranean.

On Christmas Day last year, the Russian company Soyuzneftegaz quietly signed a $90 million deal with Bashar Al Assad’s Syria, which gave it exclusive exploration rights over 2,200 square kilometres of Syrian territorial waters for 25 years. Russia has also secured a $1 billion energy deal with the Palestinian Authority to explore limited natural-gas fields off the coast of the besieged Gaza Strip. The Gaza field is tiny but has considerable importance for the Palestinians, because it would provide enough gas for Gaza for a couple of decades.

In its first serious diplomatic push in 10 years on the issue of Cyprus, the United States has taken a leading role in brokering a reunification deal for the divided island as an attempt to keep Russia at bay in the region.

The logic behind the increasing participation is clear: a lasting peace agreement in Cyprus would allow for the creation of pipelines linking Cyprus, Turkey and Israel to Europe. By all accounts, the resolution of the Cypriot crisis will provide the EU and the US with their best chances to ensure energy dominance in the eastern Mediterranean.

The other important player is Turkey, and they have responded to Russian moves in the eastern Mediterranean by changing the complexion of their naval forces in the region.

With the construction last December of a multipurpose amphibious assault ship that can also function as an aircraft carrier, Turkey is attempting to underline its sea control ahead of any prospective pipelines. A peace deal between Turkey and Israel, which is a prerequisite for a natural gas pipeline into the EU, remains elusive.

A new cold war is taking shape in the eastern Mediterranean and it is being fought over natural gas.

The country with the most to gain from this standoff, Israel, is also the one playing both sides.

Within the next year, Israel is expected to sign a free-trade agreement with the Russian Federation and form an offshoot of Gazprom, the energy giant in which Moscow holds a majority stake. If signed, the European Union could find itself increasingly squeezed.

Joseph Dana is a correspondent for Monocle magazine and a regular contributor to The National