08 August 2019

Energy resources from Cyprus’ territorial waters – a solution or a problem for Europe?

Sergiu Medar

Large-scale exploration works were carried out to the south of Cyprus during the past couple of years, in order to identify hydrocarbon deposits. Cypriot authorities delimited the island’s Exclusive Economic Area and auctioned off exploration and exploitation projects. Taking into account the political aspects of the island’s division between the Republic of Cyprus and the Turkish Republic of Northern Cyprus, internationally recognized only by Turkey, this division brought the Turkish Cyprus Exclusive Economic Area into discussion. Political differences grew and became international, even reaching so far as military threats.

Image source: Mediafax

Cyprus, a former British colony, became independent in 1960. During the period of British sovereignty over the island, the communities of Greek and Turkish Cypriots lived in peace, without tensions in the relations between communities. After Cyprus became a republic, in 1974, following a Greek coup d’état which aimed, among other things, to unite Cyprus with Greece, Turkey invaded the island, which led to its division between Turkish Cyprus in the north and Greek Cyprus in the south. De jure, Cyprus is only one country, but de facto it is split between the Republic of Cyprus (Greek Cyprus) and the Turkish Republic of Northern Cyprus.

In 2004, the Republic of Cyprus joined the European Union, while in 2008 it adopted the euro.

Cyprus is becoming an important economic and geostrategic hub between Europe, Africa and the Middle East, affirming itself through macroeconomic stability, reduced inflation, low interest rates and an accelerated economic growth. The political and legislative system is stable and predictable. With an open market economy, the Cypriot economic system is based on the private economic sector, encouraged by the state.

The discovery of hydrocarbon deposits in Southern and Eastern Cyprus transformed the island into a high-importance economic and geostrategic space for European security. The oil and natural gas resources in this area, as well as the gas found in Egypt’s Exclusive Economic Area, the field of Zohr, can prove to be the alternative to Russian gas which the US and some Western European states intensely searched for.

The discovery of these deposits in Cyprus’ Exclusive Economic Area led to disputes with Turkey, as it only recognizes the Turkish Republic of Northern Cyprus and, implicitly, its exclusive economic area. In this context, Ankara considers that it has the legitimate right to exploit energy resources in this plateau, whose map is somewhat confusing, and with areas which have overlapping jurisdictions. Turkey has two prospecting ships in the area which it uses to delineate the future exploitation zones. In his speech at the NATO North Atlantic Council Mediterranean Dialogue meeting, on June 17, 2019, Turkish President Recep Tayyip Erdogan expressed his hope that NATO will support Turkey’s interests in the Eastern Mediterranean: “Turkey’s legitimate rights and those of northern-Cypriot Turks on the energy resources in the Eastern Mediterranean are non-negotiable. Our country is adamant to protect its rights and those of Cypriot Turks… We expect that NATO will respect Turkey’s rights in the process and support us in preventing tensions”.

With a view towards exploring and, later, exploiting the area, the Cypriot Government split its Exclusive Economic Exploitation area into 13 blocks which, through auctioning, were distributed to national or multinational companies, as well as associations of them. The first auction, for block 12, named Aphrodite, was attributed to Texan company Noble Energy in October 2008. After the exploitation of this block began, in autumn 2018, Noble Energy only kept 35% of the area, the rest being sold to Royal Dutch Shell and Israeli companies Delek and Avner. The exploration and exploitation auction for block 10 was won in 2016 by a mixed society formed out of Exxon Mobile and Qatar Petroleum. ENI won the auction for block 8 in 2017, while the mixed society ENI/TOTAL was handed block 6. Blocks 2,3 and 9 were attributed to ENI, while blocks 10 and 11 were given to TOTAL. In 2017, ENI and TOTAL, in partnership, also won block 11.

Once the exploitation of areas to the south-east of Cyprus began 10 years ago, other states in proximity of the “treasure”, alongside Tukey, began off-shore geological prospecting in search of the black gold and natural gas. This also started diplomatic disputes such as those on delineating Exclusive Economic Areas between Israel and Lebanon, Israel and Egypt or Egypt and Greece. In 2018, Israel signed in 2018, Israel signed an agreement with Egypt on the export of natural gas from the off-shore fields of Tamar and Leviathan. Gas exports from this area will begin this year.

In this way, the Eastern Mediterranean is transforming into an increasingly tense region. The access to underwater hydrocarbon resources reopens old wounds and exacerbates the eternal conflicts between Israel and the Palestinian Territories, or between the Greeks and Turks and in Cyprus. The aggressive language used by the representatives of Turkey and Cyprus, as well as threats with armed intervention are not of any nature to allow for negotiations.

The delineation of Cyprus’ territorial waters was made through an agreement signed in 2011 between the Turkish Cypriots and Turkey. According to this agreement, blocks 1,2,3,8,9,12 and 13 would belong to Turkey. Based on it, in February 2019, Turkish battleships blocked the entrance of the Saipem 12000 drilling ship, belonging to Italian company ENI, in order to explore block 3. As a result, the exploration of this block was suspended, and Nicosia accused Turkey of violating international law. In these actions, Turkey denies any guilt by arguing that it never ratified the Law of the Sea Convention signed in 1982, and considers that the Exclusive Economic Areas extends up to 200 nautical miles, which means that these blocks are also within Turkey’s Exclusive Economic Area. Based on this interpretation, Ankara sent its Conqueror naval drilling ship in the area, which began exploiting block 3, taking part in these actions alongside another ship, Fatih, which had already been deployed in the operational area.

After the exploitation of gas in south-eastern Cyprus will begin, there will also be the problem of transporting these resources to Central Europe. There are several options for this: the constructions of underwater pipelines, the construction of gas liquefaction plants and the transport of liquid gases, the construction of electricity plants and the transport of electric energy, or the transport of hydrocarbon gases to Turkey and, from there, to Europe. The last option requires, however, a solution to the Cypriot problem, which is very unlikely in the short term.

The beginning of the exploitation of Cyprus’ continental platform will serve both as competition to the gas imported from Russia, as well as competition to gas reaching Central Europe through Turkey. In these conditions, it is obvious that the two states will not encourage the platform’s exploitation in order to ensure European energy needs, and will seek geopolitical arguments to slow down or block the process. As a matter of fact, the surveillance of Cyprus’ Exclusive Economic Area is, undoubtably, one of the missions that Russian military ships are currently carrying out in the Eastern Mediterranean.

The conflict between Greek Cypriots and Turkish Cypriots had entered, before the beginning of exploitation projects to the south of Cyprus, a phase of continued, small-scale tension. This situation amplified differences and led to their exacerbation, therefore creating a conflictual situation which is nearing a military conflict between Turkey and Cyprus. This would obviously mean a conflict between Turkey and Greece, both NATO member states.

The Turkish government clearly and firmly expressed its stance on drilling in the Eastern Mediterranean. In a letter addressed to the UN Security Council and the European Union, Turkish Foreign Minister Mevlut Cavusoglu stated that the Fatih drilling ship was operating 75km away from the coast of Cyprus without affecting the areas subjected to the auction process. He added that sea borders must be established following a negotiation process and warned the EU to not take a stance in favour of any side.

Turkish Deputy President Fuat Oktay stated on May 15, 2019 that “Turkey and Turkish Cyprus must be included in the region’s energy equation”. At the same time, the foreign minister of Greek Cyprus, Nikos Christodoulides, requested the US National Security Council to support Cyprus’ rights within the country’s Exclusive Economic Area. It is a known fact that the US has always supported Cyprus in its relations with Turkey.

Consistent with this stance, a bill titled “Eastern Mediterranean Security and Energy Partnership Act of 2019” was filed in the US House of Representatives, as resolution H.R.2913, on June 25, 2019. This act was already passed by the Senate, and will be transformed into law and sent to the US president for enactment. The document was passed several days after Turkey deployed a second drilling ship in the incriminated area.

H.R.2913 opposes Turkey’s attitude on the matter, through its provisions and the opinions it expresses. In this way, the US is furthering its tensions with Turkey over the latter’s purchase of S-400 missile systems from Russia, and the consequential refusal of the US to deliver Turkey F-35 aircrafts.

Through the new legislation, the weapons embargo imposed by the US on Cyprus in 1987 is lifted. This measure did not have the desired effect of preventing the militarization of Cyprus, as Cyprus purchased weapons from Russia instead. 

The proposed measures refer to cooperation in exploring and exporting energy resources between Greece, Cyprus and Israel.

Without explicitly mentioning Turkey, the new bill requests the US Department of State to report any foreign interference which could affect Cypriot efforts to drill within its Exclusive Economic Area to the US Congress, as well as eventual violations of the island’s airspace.

H.R. 2913 is the fifth US Congress bill which bans the delivery of F-35 aircrafts to Turkey, in case this country does not give up on the purchase of Russian S-400 anti-air systems.

In order to consolidate the support the US is giving Greece and Cyprus, the bill includes security assistance worth USD2 mllion for Cyprus and USD5 million for Greece, so as to allow the US entry into the energy cooperation process.

As they do in other situations, the US is combining its security interests with its economic ones. The efforts to prevent the militarization of the Eastern Mediterranean are combined with the development of energy cooperation, through involving US private companies in the off-shore exploration and exploitation of hydrocarbon gases.

Translated by Ionut Preda