Cyprus and Israel are soon to become new gas Eldorado. The discovery of natural gas in the Israeli and Cypriot exclusive economic zone (EEZ) waters, some 50km west of Haifa, as well as the discovery of world’s second biggest reserve in of oil shale in Israel and Jordan can bring a huge cash flow to these countries and permanently change the geopolitics of the Levant. Cyprus and Israel are already working on unitization of gas extraction in Aphrodite deposit, which lies on the border between the Israeli and Cypriot EEZ. Extraction at Israel’s Tamar and Leviathan gas deposits are planned to be fully operational by 2020. Israelis intend to use the FLNG technology – a floating extraction plant – or simply put a ship, which extracts, liquefies and pumps gas onto tank ships, which then sail off to ports.
Russia and South East Asian countries are already interested in buying, but the EU might also be keen to get the goods, since now, more than ever, it seeks to diversify from its main energy source (yes, I mean Russia). Cyprus also plans to build a pipeline, starting at Aphrodite deposit, going to the Cypriot coast, then to Crete and finishing in Greece. Nicosia hopes the revenue will stabilize its economy and free it from all future economic shakedowns in Greece, to which it is currently dangerously tied.
There is, as always, a dark side to these new discoveries. History teaches us that there is a well-documented proportionate correlation between rivers of cash and rivers of blood. It would be far-fetched to claim the new gas and oil deposits will precipitate a major war, but conflicts, so far only diplomatic, have already started. Lebanon unilaterally announced that Israel’s water border should be moved 22m (!) south. Moving the border south gets Lebanon roughly 500 square kilometers extra sea territory for their exclusive exploration, and the sole rights to profits from any resources, live or fossilized. Cypriot activities are already causing irritation in Ankara, which claims that by signing EEZ agreements, Cyprus opens Pandora’s box with regard to its northern neighbours’ claims. Turkey sees no good in Cyprus bathing in gas dollars and might step up its diplomacy to limit Greek Cypriot profits.
Shale oil is a different story. Luckily enough, most of Israel’s shale oil reserves lay in Israel proper, not in the West Bank, hence no need to launch another campaign to “explain” her actions in the Palestinian territories. Israel and Jordan are in an early stage of negotiations (read: declarations were made and everybody went home) with Jordan regarding potential cooperation in oil extraction in order to increase profits. Israel is blessed in that matter, as natural gas is necessary to vaporize oil trapped in shale stones and having both resources, it makes the future Israeli industry self-sustainable and insulated from global market’s price fluctuations.
Altogether, Israel’s combined oil and gas resources are worth a striking $717 billion, and Cypriot Aphrodite $129 billion. This fortune will undoubtedly have an impact on the Middle East for at least the rest of this century.
