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Eastern Mediterranean Oil Politics: the Emerging Role of Cyprus

July 5, 2007

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By Ioannis Michaletos in Athens

The issue of oil drilling rights in the eastern Mediterranean Sea has emerged over the past few months, after the initiative enacted by the Cypriot government to proceed in handing out research and drilling rights for expected oil reserves deep under the sea, estimated to be worth some 450 billion USD at current prices (1).

Cyprus proceeded in cooperating with the other interested parties — due to geographical proximity- Egypt and Lebanon, whose exclusive economic zones might also be rich in oil. Furthermore, Israel and Cyprus are also cooperating, and it seems likely that they will also form a consensus on how to share the undersea wealth still to be found.

Naturally, longtime rival Turkey has viewed the developments that unfolded between January and March 2007 with increased attention and alarm, and has made threatening demands against the Cypriot Republic. On the 27th of January, the President of the non-recognized Turkish state of Northern Cyprus, Mehmet Ali-Talat, stated that there is a chance of unexpected and violent developments due to Cypriot actions in relation to the oil issue (2).

Then, on the 30th of January, the Turkish daily Hurriyet reported the demand by Ankara towards the Lebanese and Egyptian governments to withdraw their intention to research for oil in an area where Turkey has interests as well (3).

Moreover, the newspaper noted the willingness of the Turkish administration to react dynamically should its interests not taken into account.The accusations by Turkey that Cyprus does not represent the whole of the Island and the defense by Nicosia that it will continue with its project resulted in the circumnavigation of Cyprus by the Turkish Navy in a “tour de force” in early February (4). By that time the overall situation resulted in a multitude of press releases and op-eds in Turkey, Cyprus and Greece commenting on the possibility of a conflict with oil as the cause.

Even though the international media did not give analytical coverage to the above, it came to the attention of the industry’s decision-makers interested in exploiting the vast amounts of hydrocarbon that rests beneath the Cypriot Sea.

On the 6th of March, Ronald Schilcher, the USA Ambassador in Cyprus, addressed the public via CNNTurk TV and expressed the opinion that it is Cyprus’ sovereign right to decide whether it wishes to exploit oil that is found in its territorial or exclusive economic zone (5). This was a clear indication that the USA is very much interested in securing a strong percentage of influence in order to gain contracts for the extraction of oil in an era where energy security has become the catch phrase, and a political nightmare for many concerned power-brokers and corporations across the world.

Now, despite Turkish opposition, Cyprus has already begun the process of initiating a bidding procedure for the aforementioned oil fields. 11 areas off of southern Cyprus will be the first where the tests for oil will begin. The total surface area is around 70,000 sq. km, and there are also good indications of discovering natural gas as well. French consultants employed by the Cypriot government have already stated that at depths in excess of 3,000 meters there is also a high probability of discovering gas fields as well.

Cyprus has already stated that it will issue three types of permit in relation to the oil fields. The first will be for tests covering a one-year time-frame, the second for three years and lastly a 25-year development license according to which the companies will be able to produce and process oil and gas. As part of its marketing endeavors, from now until mid-July (when the first permits are set to be issued), the Cypriot government plans to organize trips across the major oil capitals of the world in order to market the new riches of the island to prospective investors.

The recent developments regarding Cypriot oil treasure are also related with previous Turkish-Israeli initiatives that started back in 2001, when the Geophysical Institute of Israel, an Israeli research team and the TRAO Company (Turkish Petroleum) conducted explorations in the Alexandretta Gulf close to the Turkish–Syrian border.

The head of the Israeli group, Ephraim Levi, stated in the Turkish press that there are large amounts of gas as well in the wider area and the results from the initial research were positive and satisfactory. However, over the past few years the cooling of Turkish-Israeli relations has put a hold on their joint exploration project, though it has not been abandoned.

The most recent development in energy relations between the two states was the visit of Israeli Prime Minister Ehoud Olmert to Ankara in late February, when the plan for constructing an underwater oil pipeline from the Ceyhan Turkish port to the Israeli one of Aschalon. It is important to note that the first port mentioned is the major oil terminal for the Eastern Mediterranean region and the Baku-Tbilisi-Ceyhan pipeline transferring Caspian oil ends there (6).

Therefore, the oil politics in this periphery are related with the wider geo-economic structure created since the end of the Cold War, and of course it has attracted the interest of all global powers and energy related entities.

Another notable development is the agreement reached between Libya and Turkey in late 2004, concerning the exploitation of probable oil reservoir basins off the coast of the former. The investment by the Turkish companies was estimated at 2 billion USD. However, there is no current information regarding whether the research findings were satisfactory to proceed in commercial exploitation (7).

For the time being, the issue of Cypriot oil is gathering importance and all interested parties are trying to place themselves in a position of advantage. Large oil companies from the USA, Russia, the UK, China, Norway, France and Germany seem to be interested in investing for the assumed hydrocarbon reservoirs off the coast of Cyprus. For their part the government and business officials in Nicosia are touring the world’s oil capitals like London, Houston, New York and Moscow in order to muster support for the plans and advertise their deep sea wealth.

As can be easily understood, the importance of energy has as an effect the culmination of various diplomatic and geopolitical schemes. The US administration, which has traditionally gravitated towards a pro-Turkish stance on the perennial Cypriot issue, has moved a bit towards healing the sensitivities of the Greek Cypriots and the relations between the two states can be considered as excellent for the time being.

The US Ambassador to Cyprus said in April that his country continues to value Cyprus as a close partner in the joint effort to combat terrorism, proliferation of WMD and organized crime (8). Addressing a ceremony for the donation of an underwater camera by the US Embassy and the US Customs to Cyprus’ Marine Police, Mr. Schlicher also said that he is pleased “the US and Cyprus continue to work closely together in many areas and that our co-operation with Cypriot law enforcement agencies continues to be excellent.”

Another parallel development is the enhanced French involvement in Cyprus and the wider Mediterranean region. Cyprus and France have signed an agreement for defense cooperation between the two countries in a bid to strengthen bilateral relations – a decision taken during Cyprus President Tassos Papadopoulos’ visit to France in November 2006. The agreement was signed at the Ministry of Foreign Affairs in Nicosia by Cypriot Minister of Foreign Affairs Yiorgos Lillikas and French Minister of Defense Michele Alliot-Marie.

In statements after the signing ceremony, Mr. Lillikas expressed his satisfaction and noted that it is a natural development of everything that was agreed during President Papadopoulos’ meeting with President Jacques Chirac. “France and Cyprus have always had excellent political relations, they have and share a common vision on international issues and now as EU partners have shown that with their approach they can contribute to peace in the Middle East,” Mr. Lillikas added.

“The crisis in Lebanon gave both countries the chance to cooperate in the military field with benefits not only for both countries but mainly for Middle East countries. I wish and hope that just as Cyprus proved to be a factor of stability in the Middle East region, the solution to the Cyprus problem and Cyprus’ reunification will prove that Cyprus can, reunited, with the cooperation of all partners such as France, help in peace and stability in the region,” he also said.

Ms. Alliot-Marie said that it was an agreement which allows relations to strengthen between the two ministries, and added: “It provides for greater exchange in training issues, on the level of joint maneuvers, when analyzing the geo-strategic situation. It is a continuation of the existing relations.” Already, both states train jointly regularly and French Special Operations Forces are backing up the Lebanon UN forces through the use of Cypriot bases, assorted with an aeronautical French team (9).

Recent information that surfaced in a Greek defense journal reveals that during the military parade on the 14th of July in Paris, a Cypriot unit will participate- the first time an EU Army corps has been invited for the French national day, a sure indication of the warming in relations between these countries (10).

Overall, the island of Cyprus has upgraded its political, economic and military value and apart from the three guarantee forces of the 1959 Zurich treaty (Greece, Turkey and the UK), the USA and France, as well as Russia and the surrounding Middle Eastern states, are entangled in the regional political developments that amongst other include energy security.

Cyprus is already a well-developed state and a recent report that was published by the European Commission last month describes future economic prospects as “excellent.” The production of hydrocarbon will further empower this island of 800,000 citizens to become the regional hub of Southeastern Europe, the East Mediterranean, the Black Sea and the Middle East, thus reaching a market of around 1 billion people.

On the other hand, the delicate geopolitical balances should be taken into account since the turbulent recent history of the region has produced conflicts and quagmires mostly related to the control of energy routes and supplies. The aspirations of some of the strongest global interest groups will once dominate the fate of the Eastern Mediterranean centered on Cyprus and based on the “black gold” underneath.

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References:

(1)jamestown.org/publications_details.php?volume_id=420&&issue_id=4024

A paper by the Jamestown Foundation discussing the Cyprus oil issue

(2) www.turkishdailynews.com.tr/article.php?enewsid=64926

Article by the Turkish Daily News newspaper concerning Ali-Talat’s statements

(3)www.iht.com/articles/2007/01/30/news/union.php

Article by the International Herald Tribune on the Turkish threats to Lebanon-Egypt

www.strategypage.com/qnd/balkans/articles/20070208.aspx

Report by the Strategy Page service on the Turkish Navy movements

(4)https://turkishdailynews.com.tr/article.php?enewsid=67677

Article by the Turkish Daily News on the statements by the US Ambassador in Cyprus

(6)

http://www.globalresearch.ca/index.php?context=va&aid=2824

Paper by the Global Research organization on Turkish-Israeli joint energy projects

(7)Hellenic Defense Journal, Vol. 14, April 2007, P. 111

(8) www.mfa.gov.cy/mfa/Embassies/HagueEmbassy.nsf/All/1D63CB4871188EAFC12572BB003957FA?OpenDocument&print

Press release by the Cypriot Ministry of Foreign Affairs on the US Ambassador’s statements

(9) www.mfa.gov.cy/mfa/mfa2006.nsf/All/6AD36B7AD6606DFFC225729100367E73

Press release by the Cypriot Ministry of Foreign Affairs on the signing of the Cyprus-France defense agreement

(10) Strategy Defense Journal, Vol. 152, June 2007, P. 25

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