Geopolitics bound to determine Cyprus’s energy future

Geopolitics bound to determine Cyprus’s energy future


By Thanasis Gavos – London

The intense activity over the Cyprus natural gas reserves in the last few days has provided a silver lining in the also intense gloom of the last three months or so.

While the confirmatory drilling at Block 12 has begun and is expected to produce results in three to four months from now, the focus turns to how this valuable natural wealth will be better exploited.

Officials in Cyprus have made up their mind. Even before the minister in charge provided unambiguous confirmation of the intention to build a Liquefied Natural Gas plant at the southern coast, hardly anyone thought that Cyprus wouldn’t fancy its chances of becoming a real energy hub in the region. The facility would allow Nicosia to become a gas exporter, whichever route the product will take to be delivered abroad.

A major player in the new gas game in the area, the Israeli company Delek, has expressed its interest – if not sealed a deal with Nicosia – in participating in the LNG plant. This prospect seems to be sealing the close cooperation with Israel that Cyprus wished for. Officials in Nicosia hope that such a link would consolidate the island’s position as an up-and-coming regional actor, and also stave off any serious Turkish molestation.

Everyone agrees that there is a geopolitical shift in the making in the south-eastern Mediterranean. Not everyone agrees how it will play out though. How could it be any different given the simultaneous developments in so many countries: the economic crisis, the gas prospect and the autumn resumption of bicommunal talks in Cyprus, the enhanced economic prowess of Israel, the deadly stalemate in Syria, the popular uprising in Turkey – not to mention the ongoing if a bit shaky consolidation of changes in Egypt and Greece.

With specific regard to the energy aspect of it all, a consultant involved in the initial stages of the development of the enormous gas field off the coast of Azerbaijan in the Caspian Sea which is to be brought into Europe in around 2019, notes that Cyprus’s role will also be determined by the decision of the route the Azeri gas will follow on its trip to Europe.

By the end of June the BP-led consortium running the project will have to make a choice. Will the gas be delivered to Europe through the Nabucco West pipes ending in Austria or through the Trans-Adriatic Pipeline crossing Turkey, Greece and ending in Italy? Some analysts say that theoretically Nabucco would suit Cyprus’s interests better as its own export network would be met with even more demand in the south of Europe if TAP does not go ahead. That is while latest reports seem to agree that the old favourite Nabucco is currently dropping in preference against TAP. But as the same consultant remarks, all this is just an exercise in vanity, as no one knows how the energy landscape and the geopolitical balances will have developed in six years’ time.