Energy ministers of the East Med Gas Forum (EMGF) met in Egypt on 25 July, agreeing to access the possible upgrade of the forum to the level of an international organisation, the first of its kind in southeast Mediterranean, and form a committee with the natural gas industry, which would include the participation of state and private companies from the forum member countries.
Egyptian Energy Minister Tariq el-Mulla and his counterparts Greece’s Costis Hatzidakis, Cyprus’ Yiorgos Lakkotrypis, Israel’s Yuval Steinitz, Jordan’s Hala Zawati, and Italy’s Deputy Minister Andrea Cioffi attended the forum, which is supported by the United States and the European Union.
US Energy Secretary Rick Perry and Assistant Secretary of State for Energy Resources Frank Fannon attended the session on 25 July, which follows the joint declaration of the 20 March 2019 summit between Cyprus, Greece, and Israel, with the participation of the Secretary of State Mike Pompeo. At that session, Pompeo underlined Washington’s support for the trilateral mechanism and noted the importance of increased cooperation.
Hydrocarbons Company CEO Charles Ellinas told New Europe on 29 July that the meeting formalised the setting up of the EMGF and agreed to set up committees to take its objectives forward. “However, it was useful in terms of regional politics but vague and lacking on practicalities, especially given the region’s burning problems in need of urgent resolution,” he said. “It is a talking shop and as such it will help improve cooperation among its members, but it will not have a direct effect on the development and export of hydrocarbons from the region,” Ellinas said, adding that is still subject to the commercial challenges of global markets and the effects of the global shift to clean energy.
Greece, Cyprus and Israel to meet in Athens on 7 August
The European Commission announced in Egypt on 25 July that the EC would support the Forum’s activities with significant financial assistance while the ministers also approved the first study to be conducted on behalf of EMGF in cooperation with the World Bank to examine the potential of the region’s natural gas and possibilities for natural gas development and export, the Greek Energy Ministry said in a statement.
Hatzidakis also has a bilateral meeting with Perry and Fannon in Egypt where they discussed US-Greek energy relations and their geopolitical significance. The Greek Energy Minister highlighted the importance of the EastMed gas pipeline for Europe’s energy security and called for the need to overcome the current delay due to the pending signing of the intergovernmental pipeline agreement between Greece, Cyprus, Israel and Italy, the Greek Energy Ministry said, adding that Fannon will lead the US delegation to the trilateral meeting of the energy ministers of Greece, Cyprus and Israel in Athens on 7 August. That meeting, according to Ellinas, is a continuation of previous tri-partite meetings between these countries with US support. “It will probably concentrate on the East Med gas pipeline, but the project can progress only if it can provide gas to Europe at prices that can compete with existing gas prices. This is where the challenge lies,” he said.
Ellinas noted that Washington would like to see East Med gas exported to Europe to lessen dependence on Russian gas. But this can happen only if East Med gas can compete with prices prevalent in Europe, which is a challenge. However, LNG from Egypt’s existing LNG plants at Idku and Damietta may be exported to Europe because very low liquefaction costs make it commercially viable, but other potential gas exports from the region cannot benefit from this advantage. This does not need the cooperation of Turkey,” Ellinas said.
Turkey’s role in the East Med
He noted that Turkey’s impact is on what happens with exploration and export of gas from Cyprus’ Exclusive Economic Zone (EEZ). “The EMGF cannot help with such problems, especially as Turkey is not a member of EMGF,” Ellinas argued. “The EU and US might have been able to use their influence, but pressure and sanctions so far have not had any impact. It anything, it would appear that they have lessened their ability to influence Turkey, which says that it no longer sees the EU as an independent arbiter,” he said.
At the Forum on 25 July in Egypt, Hatzidakis also discussed Greek-Egyptian energy cooperation with el-Mulla, focusing on marketing, exploration and production of hydrocarbons, regional cooperation in the gas sector as wells as investments in renewables and electricity.
El-Molla and Perry also met in Egypt with the latter reportedly stressing the role of Egypt as a reliable source of energy, pointing out the US readiness to provide all the expertise and technologies to Egypt to enhance its natural position as an important energy hub in the region, and highlighting Egypt’s role as a cornerstone of energy cooperation in the eastern Mediterranean.
El-Molla said that the fact that Cairo is the permanent host for the newly found forum, confirms its centrality as a regional centre for trading of gas and oil.
Ellinas noted that Egypt is becoming a major player in its own right. “Not only it has become self-sufficient in gas, but it is fast promoting renewables and by removing subsidies it is containing its growing domestic energy demand. This has freed gas for exports from its existing liquefaction facilities. With increasing gas discoveries and production, it expects these to reach full utilisation be next year,” he said, adding that some gas from its neighbours, Israel and Cyprus, may reach Egypt if prices make it commercially viable.
Russia, Turkey mull joint exploration in Mediterranean
Meanwhile, Russian oil companies could roll out exploration in offshore Mediterranean in cooperation with Turkey, Anadolu news agency quoted Russian Energy Minister Alexander Novak as saying in an interview on 26 July. Russian state oil giant Rosneft is working at Zohr gas field in Egypt.
Asked if Moscow is trying to involve Ankara in order to get a foothold in the region, Ellinas said at present such cooperation is for exploration in Turkish waters. “It is difficult to see how this can provide Russia with a foothold in the region, if indeed it wants to. Russian companies had chances to complete for blocks in Cyprus EEZ but did not use them,” he said, adding “And (Russian gas producer) Novatek is in Lebanon already.”