ATHENS – Meeting in Athens, the energy ministers of Greece, Cyprus, and Israel – Kostas Hatzidakis, Georgios Lakkotrypis, and Yuval Steinitz, as well as US Assistant Secretary of State for Energy Resources Frank Fannon – have discussed their cooperation in the field of energy, while affirming their shared commitment to promoting peace, security, and prosperity in the Eastern Mediterranean region.

The four met in Athens on 7 August and agreed to establish a High-Level Working Group (HLWG) that will highlight specific energy projects and propose ways of promoting their implementation.

“The ministers and the United States agreed to support their countries’ energy independence and the establishment of an Energy Corridor of the Eastern Mediterranean, contributing thus to the energy security of the European Union by actively promoting the diversification of import sources and routes,” the US Department of State said in a statement.

Asked if US commitment to Eastern Med energy cooperation – in partnership with Greece, Cyprus, and Israel – will move regional projects forward, Constantinos Filis, the director of research at Institute of International Relations, told New Europe, “Not necessarily, although it is helpful. The geopolitical/security perspective is crucial, but at the end of the day it is up to the market to define which project is preferable based on its needs.”

He noted that given the emerging competition and the drop, or at least, the stabilisation of oil and natural gas prices, is another defining factor in the cost, saying, “It is encouraging that the involved companies in the wider Eastern Mediterranean seem to be coordinating their actions while attempting to find common ground,” he said.

This does not mean that the interests of states and companies converge in all cases. In the case of Egypt, for example, it seems to be against the East Med undersea pipeline, but the creation of mechanisms such as the East Med Gas Forum shows each party’s level of dedication, including that of external powers like the US, France, and Italy when it comes to reaching a point of mutually acceptable and beneficial agreements.

“The support of Washington adds value to regional developments as long as it does not exclude other players from the energy equation. Although Ankara seems defiant and assertive, its revisionist agenda is effectively stalled by the ongoing and developing regional synergies under the US umbrella,” Filis said.

Commenting on the meeting in Athens on 7 August, Hydrocarbons Company CEO Charles Ellinas told New Europe that is certainly important in terms of political support, encouraging regional cooperation. But, he reiterated, projects need to be commercially viable to move forward.

“This depends on markets that control demand and prices so that companies can provide the required investment and technology to enter into purchase, sales, and construction contracts. Political will alone will not move projects forward. Therein lies the challenge. East Med gas is expensive to develop and global gas prices are and will remain low, making exports difficult,” Ellinas said while noting that the meeting provided useful US support to the participating countries, but has made only general declarations and repeated earlier US positions regarding the problems between Cyprus and Greece with Turkey.

“The agreed statement at the end of the meeting had no impact on a resolution to these problems. If anything Turkey reasserted its position through the presence of its energy and defence ministers in northern Cyprus this week, on the occasion of the drilling rig Yavuz starting operations south of Karpasia,” Ellinas said.

Solidarity for Cyprus

The four ministers and the US also reiterated their full support for and solidarity with Cyprus in exploring and developing its resources in its Exclusive Economic Zone and said they were deeply concerned by the recent provocative steps taken by Turkey’s Recep Tayyip Erdogan in the Eastern Mediterranean.

Washington also reaffirmed its own position that the Cyrpus’ oil and gas resources should be shared equitably between both of its Greek and Turkish communities in the context of an overall settlement.

Asked if the “solidarity with Cyprus” statement may deter Turkey’s behaviour in the region, Ellinas quipped, “No. Turkey has not even reacted to the statement. Much more is needed to achieve this. The key is a solution to the Cyprus problem, to allow direct negotiations to take place,” he said.

The meeting between Cyprus’ president, Nicos Anastasiades, and Turkish Cypriot leader Mustafa Akinci on 9 August was a precursor to talks as both ended up agreeing that there is a basis for further discussions, which hopefully will lead to negotiations in New York in September under the auspices of the UN.

Support for the EastMed pipeline

During their meeting in Athens, the Energy Ministers of Greece, Cyprus, and Israel reaffirmed the support of their countries for the implementation of the EastMed gas pipeline, a project of major significance for the energy security of the EU that also establishes a strategic link between Europe and Israel.

Filis noted that the EastMed project is still not the most likely, but it is gaining ground as time goes on. “It now has the support of the EU and, to a degree, the US. It has a personal commitment from (Israeli Prime Minister Benjamin) Netanyahu – his political fate will be decided in the upcoming elections- and serious companies are exploring the prospects, with feasibility studies showing its viability. Italy is a question mark, as the 5-star movement has raised objections just as Italy heads towards new elections. The Italians may clarify their position in favour of the project after the vote, however, (Deputy Prime Minister Matteo) Salvini’s anti-Brussels orientation and his alleged good relations with Russia mean that we can’t take Italy’s degree of commitment as a given, and we don’t know how catalytically its view will be impacted by Brussels’ support for the project,” Filis argued, adding  “The good news is that quantities have really started to accumulate in the region, and this means we can start thinking about a combination of projects for supplying the European market.”

This becomes more feasible as the liquefied natural gas (LNG) supplies that use Egyptian facilities, and on the other via a pipeline, circumvent the complications and problems that using Turkish territory would involve.

Ellinas reminded that the East Med energy corridor includes the EastMed gas pipeline, but also potential LNG exports from the region to Europe. Eventually, it may also include exports from Greece – from newly awarded offshore blocks southwest of Crete and in the Ionian – should hydrocarbon discoveries be made.

According to Ellinas, LNG from Egypt’s existing liquefaction plant at Idku is already been exported to Europe based on existing contracts and exports from Damietta may follow later in the year. Low liquefaction costs make LNG from both plants competitive. “But, like the EastMed gas pipeline, potential future LNG exports to Europe from new greenfield liquefaction plants – onshore or offshore – will be challenged commercially. They cannot compete with prevailing low gas prices in Europe,” Ellinas said.

Asked if the “energy” agenda include renewable sources and what’s the potential for cooperation, Ellinas said, “It does, and Israel can support such projects through technology. Greece is progressing well with the implementation of renewables projects, but sadly Cyprus is lacking behind. Much more needs to be done in Cyprus to achieve the new EU targets to 2030, requiring government and policy support.”