Gas remains divisive issue in Mediterranean region

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Article Summary
As conflicts persist in the Middle East, disputes revolving around natural gas continue to be a cause for controversy among regional states.

In 2012, the Damietta gas field sparked a public debate in the region. The regime of former Egyptian President Hosni Mubarak, however, kept its silence and did not claim Egypt's right to this field that was piled up historically due to a large submerged seamount off the coast of Alexandria. Afterward, the subject was strongly highlighted by the Egyptian media, but ousted President Mohammed Morsi’s regime kept denying the existence of this field, a true national treasure.

Events in the Mediterranean drew attention to the issue of gas fields in this sea, especially with the war in Syria, described by the Western media as the “first gas war in the Middle East,” and in light of the Lebanese-Israeli dispute over the demarcation of the two gas fields located between them.

Currently, on the international Mediterranean gas scene, there is more focus on gas pipelines and extensions rather than on the fields’ boundaries and ownership. In this article, we shall go through the four Mediterranean gas scenes making up the regional and international picture.

Maritime border between Egypt and Greece

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Geographically, it appears that the shortest distance between Egypt and Turkey is the 274 nautical mile-long (507.5 km) line connecting the Egyptian Baltim Beach to the Çavuşköy Archipelago. That distance is nearly 32 nautical miles (59.3 km) less than the shortest distance between Cyprus and Greece.

In the fall of 2013, Egypt and Greece agreed to set up a bilateral committee for the delineation of the maritime border, despite the predicted possible objection by Turkey, which opposes Greece’s unilateral delineation of its exclusive economic zone (EEZ) in the Mediterranean. Egypt’s position is somewhat inconsistent. In the east of the Delta, Turkish trucks unjustifiably pass almost free of charge, causing the Suez Canal an annual loss of a billion dollars. To the west, Egypt seeks to delineate its borders with Greece in an act of defiance against Turkey, even if this leads to a waste of water and oil wealth in Egypt. With respect to the gas field east of Damietta, it is worth mentioning that Israel’s drilling of the Leviathan and Aphrodite fields means that the conflict is now about securing gas export routes. Building a gas export pipeline through Cyprus and Greece requires expropriation of the Egyptian territorial waters adjacent to Turkey, in addition to building a gas extraction pipeline in waters 4,000 to 6,000 meters deep, which is an engineering problem of epic proportions.

Assignment of Egyptian waters

At the end of 2012, the European Commission (EC) listed on its agenda five projects to transport Eastern Mediterranean gas. They include building lines crossing Cyprus and Israel and passing from Cyprus to Crete and from there to Europe, transforming a large part of the Mediterranean gas into electrical energy in Cyprus, installing an electrical cable (for exporting Cypriot gas-generated electricity) that stretches all the way to Crete, Greece and Italy, and installing an electrical grid linking Crete and Egypt to export electricity to Egypt. The commission's agenda also included 10 other projects for storing Cypriot and Israeli gas in Greece and connecting Greece with the rest of Europe through gas export pipelines and electrical cables.

In the summer of 2013, the EC announced that it would soon finance two out of the 15 above-mentioned projects, i.e., to build a Cyprus-Crete gas pipeline and construct a gas liquefaction plant in Cyprus. The commission never indicated that the Cyprus-Greece pipelines would pass through Egyptian territorial waters (in the sense that they fall within borders of the Egyptian economic territorial water) which required Egypt’s agreement to assign its economic waters to allow the borders between Cyprus and Greece to meet, or (the worst-case scenario) that the commission had received undeclared Egyptian approval for such assigning.

In the fall of 2013, the chairwoman of the Subcommittee on the Middle East in Congress announced that the US favored the plan to export Israeli and Cypriot gas to Europe via Greece. Some may have thought that the declaration shed light on a possible motive urging Egypt and Greece to delineate their economic territorial waters in a way that guarantees Egypt’s assigning a surface of its economic waters exceeding twice that of the Delta surface, and denies Egypt water borders with Turkey’s right across the Egyptian coast in the north. This remains a matter to be tackled. Perhaps this matter should be publicly debated in Egypt as it relates to Egyptian historical claims from Greece — in particular, the island of Crete. The Egyptian Historical Studies Association has documents on Egyptian rule over Crete between 1820 and 1882 and the Egyptian navy has additional documents that may be useful in this respect.

Gas imported from Israel

In 2005, Egypt’s natural gas production registered a large surplus. In addition to the non-liquefied gas exported to Israel and Jordan, Egypt opened two plants for the liquefaction of natural gas intended for export. The first is the $1.3 billion Spanish Egyptian Gas Company (SEGAS) liquefied natural gas (LNG) plant in Damietta and the second is the $2 billion Idku LNG plant built by the Egyptian Liquefied Natural Gas Company. At the end of 2005, Egypt was ranked 13th among the largest LNG producers in the world, with proven reserves estimated by the Ministry of Petroleum at 1,931 billion cubic meters.

Evaporation of Egypt’s reserves

On the other hand, oil expert Dr. Ibrahim Zahran stressed that the two liquefaction plants had been built even though there was no surplus in Egypt's gas production and that the Ministry of Petroleum in 2006 had been forced to reduce the gas consumption of power plants from 98% to 38% in order to supply liquefaction plants with gas.

According to statistics on Egypt’s proven natural gas reserves published by Ministry of Petroleum in 2010 and documented by renowned Ireland-based energy consultancy Wood Mackenzie, the proven reserves in 2008 reached almost 2,152 billion cubic meters. Moreover, statistics from the same Ministry indicated that Egypt’s natural gas consumption rate stood at 56 billion cubic meters in 2008. Furthermore, according to statements made by successive ministers of petroleum, this consumption rate remained almost unchanged until 2013. If the proven reserves were enough to meet Egypt’s needs for about 30 years, why has the country been “begging” for gas since 2012? There is no answer to this question. However, these proven reserves were not proven as much as they were politicized. Should Wood Mackenzie be tried before international courts on charges of disinformation? A precedent in this matter was the case in which the US government sued the world's largest accounting firm, Arthur Andersen, for ratifying misleading figures in the budgets of the bankrupt Enron. Following this lawsuit, Enron was forcibly dissolved in 2002. In fall 2013, the Israeli Minister of Energy announced that Egypt had requested to import gas from Israel; however, engineer Taher Abdul Rahim, chairman of the Holding Company for Natural Gas (EGAS), denied that such a request had been made.

He added that the door was open for the private sector “to import gas from anywhere [in the world]. Our supply in gas will take place by a tender that dictates the presence of vessels facilitating access to LNG. Israel will not be part of it. ... Even if Israel was able to export gas, it only deals through pipelines. We will not consider this method, because vessels facilitate our quick supply of gas.” Abdul Rahim confirmed that gas liquefaction vessels would provide 500 million cubic feet before summer arrives, to meet the power plants’ needs.

Damietta, again

A thorough view shows that there is no contradiction between what officials in Israel and Egypt say. Since the start of 2013, Egyptian officials have publicly said that the only solution for Israel to export gas from the Leviathan gas field was by liquefying it in Damietta, because the region was the nearest and included a gas liquefaction plant, which was out of service given the lack of gas.

According to them, the Leviathan gas has probably saved Egypt from a lawsuit filed by the Spanish Unión Fenosa, the company that owns the plant, because Egypt failed to comply with the contract to supply the plant with gas. The Leviathan gas also prevents Egypt from facing power shortages in summer. However, it has forgotten that Israel will not accept this offer, since it includes an implicit Israeli recognition that the Leviathan field is closer to Damietta than to any other Mediterranean region. This would bring up the undiscussed issue of the Damietta field.

Fossil fuel shortages have continued unabated in Egypt as a result of over-pumping and declining reserves in the fields, and because, ever since 2000, oil companies have refrained from bidding on exploration in Egypt.

It should be noted that during that year Egypt adopted what was called “the contract of the century” with oil exploration companies, without being consulted. The most dangerous [part] of this contract is that the state does not determine in advance gas and oil prices, opening the door wide to suspicions of corruption, according to Zahran.

Despite the lack of exploration activities in Egypt, official efforts to address this issue are almost nonexistent, while everyone rushes to make statements on the gas pipelines, originally a supply issue.

The Sinai and Isthmus of Suez

As the Eastern Mediterranean region has emerged as one of the major gas production centers, following 2005, there have been many talks about the Suez Canal Axis and its expected role in promoting the regional and Egyptian economies.

Gamal Mubarak has leased the canal’s two entrances to the British P&O and Danish Maersk firms, the most important companies in port management. The following are four key elements in the Suez Canal Axis project, as defined by the government:

1. The southern entrance. Its main al-Sukhna port has been leased for 49 years, as of 2008, to British Peninsular and Oriental Steam Navigation Company (P&O) firm, whose name was changed to Dubai Ports World.

2. The northern entrance. Its main port, Port Said’s East Port, has been leased for 49 years, as of 2009, to Maersk, with Qatari brokerage. 

3. The North-West Gulf of Suez. This zone was stillborn, because Egypt has granted large segments of it to Chinese companies that, probably for strategic balances, do not seem interested in taking part in projects in the special zone, despite being largely interested in the site. Egypt cannot recover these lands and China will not do anything there. As for the marginal lands in the project, they have fallen into the hands of the privileged members of the Gamal Mubarak policies committee, who do not seem able to promote the development of this project.

4. The Technology Valley, which has become a synonym for intellectual bankruptcy, particularly since the issue has been raised more than a dozen times since 1985, with no serious steps taken.

Thus, the two leases will increasingly deactivate this zone. There will be no other opportunities for the planners of this axis, as long as they are trapped in the legacy of the “new thought” that had been promoted by Gamal Mubarak.

Some honor the Suez Canal the same way the sons of Israel worship the golden calf, without trying to understand why the Suez Canal was built.

It is possible to go back to the International Commission for the piercing of the isthmus of Suez’s final report, which consists of eight volumes published in 1855.

Before the Suez Canal was built in 1896, there had been an international economic, strategic and construction interest that had begun in 1820 and promoted “the Isthmus of Suez” term, which was sometimes known as “Egypt’s isthmus.” As [the term] isthmus means a narrow strip of land between two seas, the Isthmus of Suez is a strip of land between Egypt’s Mediterranean Coast and its Red Sea coast. 

In the 19th century, the focus was on how to overcome transportation difficulties between the Mediterranean and Red Seas through the Isthmus of Suez. Prosper Enfantin, along with 20 of his Saint-Simonianism followers and a large number of engineers, traveled to meet Muhammad Ali Pasha, who feared Enfantin’s utopian socialist principles and asked him to proclaim his conversion to Islam. However, Enfantin successfully persuaded French Consul Ferdinand de Lesseps to build a sea canal in Suez, and convinced the British military attaché to lay a railway in the same area.

Enfantin formed La Société d'Études Historiques et Géographiques de l'Isthme de Suez in 1845, then the International Commission for the piercing of the Isthmus of Suez (1854-1857), consisting of military men, engineers and bankers from eight European countries.

Between 1820 and 1857, there was a consensus that piercing the Isthmus of Suez could not be only made by a water canal (the Suez Canal), and that road transport had also an important role and affected navigation in the waterway.

The International Commission also examined the need to lay transoceanic telegraph cables (which began to appear in 1842) through the Isthmus of Suez. Then England, all by itself, dug up Egypt’s Isthmus via Egyptian National Railways (1854) and Posta Europea, even before the commission got the approval of Egypt’s rulers. Once it occupied Egypt, Britain laid a transoceanic telegraph cable from Alexandria to Ain al-Sukhna.

On immigration and death

At the same time, the Egyptian government has taken measures to deprive the Suez Canal of billions of dollars every year, such as allowing Turkish ferry boats to avoid passing in the canal by discharging their cargo in Damietta and Port Said, [where] Turkish trucks move them from Suez to the Persian Gulf.

These measures also include passing international connection cables through Egypt almost free of charge, thus depriving the country from billions of dollars annually. What is more worrisome is that there are projects that compete with the Suez Canal, such as the Northern Sea Route, inaugurated by Russia three years ago in the Arctic but basically operating in summer, the Eilat-Ashkelon railway project, and the Taba-Arish Canal.

A fifth painful scene is of the “boats of death” [used for] illegal immigration, which is addressed in the Euro-Mediterranean Partnership, the Barcelona Process and NATO's Mediterranean Dialogue.

There may also be a sixth scene. This one, however, is a scene of absence, because Egyptian flags disappeared from merchant ships after the Egyptian merchant fleet vanished.

This has resulted in difficulties and disasters in the transport of pilgrims and workers, as well as in a rising cost to Egypt's international trade export and import. However, those scenes are a different story.

Suspicious Turkish trucks

In the summer of 2013, 350 huge trucks piled up to transport containers at Turkish ports. Other trucks of the same number piled up at the ports of Egypt and the Gulf, waiting to be loaded in RORO ferry boats.

After a nightmarish year of Brotherhood reign, characterized by attempts to seek categorical gains at the expense of the homeland and national security, the Egyptian people revolted and overthrew the regime. A week after overthrowing Morsi, there was the crisis of the thousands of Turkish trucks stacked in Turkish ports waiting to be shipped to Egypt or to continue on their way to the Arabian Gulf.

The trucks carry exports estimated at approximately $20 billion. It should be noted that there are more than 100,000 Turkish trucks working on the Egypt-Gulf line. Trucks pay nearly $150 worth of transit fees when they cross Egypt, which means that a ferry carrying 100 trucks worth of goods pays nearly $15,000.

By comparison, the same ferry pays around $600,000 when crossing the Suez Canal back and forth. There are three Turkish companies working on the ferry lines between Turkey and Egypt, with at least six trips a week.

Ahmed Burak Erdogan, the Turkish prime minister’s son, owns two of these companies.

With a simple calculation, we can deduce that when the goods of Turkish ferry boats cross by land in Egypt in return for small fees, the Suez Canal gets deprived of nearly $1 billion annually.

The irony is that the Egyptian government is keen on helping Turkish trucks overcome difficulties they face when crossing by land, despite the huge political dispute with Ankara.

What brought those thousands of Turkish trucks to Egypt? For how long have they been crossing? Who allowed them to? How much are they benefiting from Egypt? And how is Syria’s prevention of those trucks from passing through its territory related to Eastern Mediterranean gas?

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Found in: turkey, mediterranean sea, israel, greece, gas exports, gas, energy, egypt
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