Page 7 - DMEA Week 36

DMEA COMMENTARY DMEA

between by Union Fenosa Gas, a joint venture Tensions have risen in the region since last
between Naturgy (Spain) and Eni (Italy), with year, when Turkey and Libya signed a maritime
80%; EGAS, with 10%, and EGPC, with 10%. agreement outlining their territorial claims in
Egypt and Cyprus have said they see the pipe- the Eastern Mediterranean. The document has
line project as part of a wider effort to promote drawn a sharply negative response from Greece,
bilateral and regional energy co-operation. Dur- which has very different ideas about where the
ing a virtual meeting last week, Egyptian Petro- boundary lines should be drawn. It has also exac-
leum and Mineral Resources Minister Tariq erbated long-standing disputes between Cyprus
El Mulla and Cypriot Energy Minister Natasa and Turkey, especially now that the latter has
Pilides noted that their countries were also begun shooting a new seismic survey in waters
working together within the framework of the near the former.
EastMed Gas Forum (EMGF). Additionally, it has inspired Greece and Egypt
to draw up their own maritime accord. That doc-
Jordan and Iraq ument, which was signed in early August, pits
The talks between Egypt and Cyprus followed both countries against Turkey, as it outlines ter-
closely on the heels of a tripartite meeting ritorial claims that contradict the 2019 maritime
between Egypt, Jordan and Iraq. At that meeting, agreement.
the parties agreed to work together on intercon- At the same time, Egypt is already at odds
nectivity in the fields of oil and electricity as well with Turkey in Libya, which remains mired in
as education, agricultural greenhouses and seed civil conflict. Ankara has supported Libya’s Gov-
production. ernment of National Accord (GNA), based in
Following discussions in Amman, Egyptian Tripoli and recognised by the UN, and has pro-
Electricity Minister Mohamed Shaker that the vided military support in the form of both troops
three countries had proposed establishing a 1,000- and materiel. Meanwhile, Cairo is backing the
MW interconnector “to support the exchange of rival Libyan National Army (LNA), headed by
electrical power and take advantage of the different Khalifa Haftar, and has said it may send some of
peak times.” For his part, El Mulla said that Egypt its own soldiers into the country.
was interested in opening up a route to transport If these conflicts heat up, Egypt will be
Iraqi crude oil to Egypt and Jordan. hard-pressed to achieve its aims. It may have
Details on the latter proposal are scarce, but to delay work on planned undersea pipelines
it can be assumed that the pipeline under dis- and transmission cables if Turkey actively
cussion would be an extension of the planned contests its right to operate in disputed ter-
Basra-Aqaba pipeline, which would have a ritory. Likewise, it may have to divert funds
throughput capacity of 1mn barrels per day and resources to Libya if the conflict in the
(bpd). Preliminary work on the $5bn conduit country heats up.
is thought to be nearing completion, and Iraq’s Meanwhile, there are other factors at work,
Ministry of Oil (MoO) is expected to announce according to Ian Simm, principal advisor at
contract winners by the end of the year. consultancy IGM Energy. Speaking to AfrOil
If all of these projects come to fruition, Egypt about the planned pipeline for gas from the
will truly become a regional energy hub. It will be Aphrodite field, Simm commented: “The tim-
in a position to export electricity to both Europe ing of the pipeline announcement is curious,
and Africa, and it will give Cyprus a means of given that construction work began in July on
converting its as-yet undeveloped gas resources Cyprus’ Cynergy FSRU [floating storage and
into LNG that can be sold anywhere in the world. regasification unit] and LNG terminal. How-
It will also be able to provide Iraq with another ever, it supports Cairo’s ambitions of becoming
means of delivering its oil to the Mediterranean an energy hub and would provide Cyprus with
market. At the same time, it can continue to push access to the Egyptian market and beyond. Per-
forward with the development of its own energy haps the thinking in Nicosia is that the two pro-
resources, including offshore gas fields such as jects offer diversified sales opportunities, with
Zohr and solar farms such as the 1,650-MW Cynergy also capable of receiving LNG cargoes.
Benban facility. While the pipeline is expected to take gas solely
from Aphrodite, Cyprus also has 3-5tn cubic
Greece, Libya and other hazards feet [85-142bn cubic metres] of gas reserves at
Nevertheless, the country will be operating in a Calypso and another 5-8 tcf [142-227 bcm] at
complex geopolitical environment. Glaucus.”™

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