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If you want to know what’s going on in the Middle East, look at the gas deals

November 24, 2016 at 1:16 pm

President Recep Tayyip Erdogan delivers a speech during the meeting of Standing Committee for Economic and Commercial Cooperation of the Organisation of Islamic Cooperation on 23 November 2016 [ Aytaç Ünal/Anadolu]

President Recep Tayyip Erdogan told reporters at Ankara’s Esenboga Airport before leaving for Pakistan: “They have also appointed their envoy. I believe they start their duty today.” Turkey, he added, is appointing Kemal Okem as ambassador to Tel Aviv.

The exchange of the ambassadors came days after the Turkish Energy Minister Berat Albayrak met his Israeli counterpart Yuval Steinitz. The ministerial summit was the first high-level official meeting since the two countries agreed to normalise diplomatic relations, ending a six-year rift over an Israeli raid on a Gaza-bound flotilla that left ten Turks dead in May 2010.

Steinitz said that both countries will soon embark on building an undersea gas pipeline to pump Israeli gas to Europe through Turkey. Thus, the map of gas-exporting countries will be redrawn. Israel declared recently that it has discovered roughly 900 billion cubic metres (bcm) of natural gas; with further exploration, it’s estimated that its reserves could rise to nearly 3,000 bcm.

Recently, despite massive protests in Jordan, shareholders in Israel’s Leviathan offshore gas field have signed a $10bn deal to supply gas to the Jordanian National Electric Power Company over the coming 15 years. Last year, Israel signed a controversial deal to sell 5 bcm of gas to Egypt over the next seven years. This followed the collapse in 2012 of a 20-year agreement by which Egypt had been selling gas to Israel; the Egyptian gas pipeline was destroyed by militants in the Sinai Peninsula.

Indispensable Turkey

Though Israel has managed to strengthen regional energy ties with Jordan, Egypt, Cyprus and Greece, Turkey remains the most significant option as the gateway to Europe.

How can such a strategic economic relationship between countries like Turkey and Israel be sustained? It’s unlikely that Turkey will simply turn a blind eye to Israeli crimes. Similarly, Israel is not naïve enough to forget Erdogan’s real position, which was evident in his clash with the late Israeli President Shimon Peres at the World Economic Forum in Davos in January 2009.

Though it might be pragmatically immature to link political disputes with economic ties, it’s still plausible that tension between the two countries might intensify if Israel launches another war against the Palestinians in the Gaza Strip.

Moreover, not all energy experts are convinced that an underwater electricity cable to Europe is a practical, valid option. Michael Leigh, a specialist in East Mediterranean gas, believes that “it’s not feasible for commercial and political reasons.”

Is it all about gas in Syria?

It is worth recalling the Sputnik article by Robert F Kennedy Jr, an American attorney and nephew of the assassinated US President John F Kennedy. He argued that the first and foremost reason for the US administration’s endeavours to oust Bashar Al-Assad is a Qatari natural gas pipeline that would cross Syria and pass through Turkey before entering the EU and would thus constitute a key challenge to the Russian Gazprom Company’s current monopoly.

In May 2013, Soyuzneftegaz, a Russian state-owned energy company, undertook a geo-strategic manoeuvre in the Eastern Mediterranean by signing an agreement with the Syrian regime to claim a stake in one of Syria’s colossal oil and gas fields. By virtue of the purported 25-year deal, Russia has become entitled to perform offshore exploration in Syrian territorial waters. The agreement covers 2,190 square kilometres of Mediterranean waters, at an initial cost of some $90 million.

Russian rationale in Libya shouldn’t be nebulous

For the Russians, it’s out of the question that they relinquish their dominance over the European gas market, so they are striving ruthlessly to contain all alternatives and sustain their monopoly. Moscow is fully aware that Libya could possibly supply up to 15 bcm per year to Europe by the mid-2020s. In 2013, Libya produced 12 bcm and was able to save Italy about 5 bcm via Libyan “Green stream”.

Russia is certainly conscious that Libya has the potential to remain a chief oil exporter regardless of the unrelenting economic and political unrest and the lack of export infrastructure. It’s true that the ongoing war has inflicted enormous damage to Libya’s exporting ability and, given the current political uncertainties, it seems that Libya’s economic recovery is unlikely to materialise any time soon.

Is Moscow deliberately involved in the Libyan conflict to prolong its political and economic uncertainty so that it doesn’t have the capability to provide Europe with an alternative to Russian gas? If so, it would ensure that Europe remains a captive market for the Russians.

Although an arms embargo has been placed on Libya, weapons still appear to circulate unimpeded, for which many believe the thanks should be extended to Russia. Moscow occasionally hosts General Khalifa Haftar, the commander of the armed forces loyal to the Tobruk-based government. He has made frequent trips to Russia and flew to Moscow for an unofficial visit as recently as July to get support.

Russia’s foothold in Libya is unquestionably not for noble reasons. Last May, it printed nearly $3 billion in Libyan currency for the Al-Beida branch of the Central Bank of Libya, despite objections from the central branch in Tripoli and the international community. The move, predictably, didn’t solve Libya’s liquidity problem; it has only inflicted more harm on the ailing banking system, making it even less credible than before.

Thus, we might wonder quite legitimately where Russia fits in in the Libyan picture. One answer is definitely arms deals and the other is undoubtedly the containment of a potential alternative to Russian gas supplies to the European market.

Russia bounces “streams”

In 2014, Russia abandoned the “South Stream” gas pipeline to south-eastern Europe after the project was essentially scuttled by legal and political opposition from the EU because Gazprom would then have a monopoly of control over the gas and the pipeline.

Russia’s deadlock with the Europeans pushed it to revive the existing undersea pipeline to Turkey. However, on 24 November last year, a Turkish Air Force jet shot down a Russian fighter, leading to tension between the two countries.

Earlier this month, though, Russian President Vladimir Putin declared that his country intends to implement the “Turkish Stream” project. The recent Turkey-Russia reconciliation reinvigorated the frozen project, the estimated total cost of which is €11.4 billion.

Israel-Russia modus operandi

Turkey is hugely dependent on Russian gas but has been desperately seeking alternatives to diversify its energy supplies and it appears to have had a close eye on Israel’s recently discovered sources. Interestingly, just three days after Russia and Turkey signed the deal, talks on the proposed Israel-Turkey pipeline emerged. In March, Russian Foreign Minister Sergei Lavrov said that his country is wary of a potential rapprochement between Turkey and Israel as it would jeopardise Russia’s economic influence in Europe.

It’s well-known that Israel and Russia agreed on a Middle East action plan in which Israel pledged not to sell natural gas to Turkey and, in return, Russia won’t supply S-300 anti-aircraft missiles to Iran.

Some Israeli experts believe that Russia’s alliances in the Middle East are ephemeral. Israel doesn’t perceive Russia’s cooperation with Iran as a sign of a promising friendship. Though both governments support Assad’s regime, Iran is keen to maintain its monopoly as the Syrian leader’s main guardian. Moreover, Iran wouldn’t jeopardise its efforts to reconstruct its economic ties with Europe, especially after the nuclear agreement. As for Russia, cooperating with Iran in a larger Middle East strategy would completely abolish its already shattered status among Sunni countries. Thus, it might find itself forced to reshuffle its cards and recalibrate its strategies and alliances.

In the Middle East, it seems that gas will be a decisive variable in the demarcation of not only operational alliances but also strategic treaties. Recently, Turkish pro-government newspaper Yeni Safak published a report heralding a Turkish-Russian agreement in Syria to thwart the US plan for northern Syria. It seems that Turkey will wind down its role in the fight against Assad. In return, Turkey wants Russia’s help in fighting the extensions of the outlawed Kurdistan Workers Party (PKK) among Syrian Kurds, whose nationalist ambitions severely disturb Turkey’s president, who is eager to get them away from the Americans.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.