Watching The World: A Mediterranean hotbed

Jan. 10, 2011
The eastern Mediterranean Sea is the scene of stepped-up interest on the part of governments in the region, most of them piqued by recent discoveries of oil and gas off Israel.

Eric Watkins
Oil Diplomacy Editor

The eastern Mediterranean Sea is the scene of stepped-up interest on the part of governments in the region, most of them piqued by recent discoveries of oil and gas off Israel.

Cyprus is the latest to step into the ring, so to speak, saying that it will proceed with a second licensing round for offshore oil and gas exploration later this year—a decision that could heighten tensions with Turkey.

The tensions have little or nothing to do with oil or gas. Turkey last month criticized a maritime border agreement between Cyprus and Israel, saying it disregards the rights and jurisdiction of Turkish Cypriots on the island.

That "disregard" is based on the 1974 division of Cyprus into an internationally recognized Greek Cypriot south opposed by a Turkish Cypriot north following Turkey's invasion of the island after an alleged coup attempt by supporters of a union with Greece.

Sovereign rights

Turkey said countries in the region should not back moves that would have an adverse impact on "the comprehensive settlement negotiations"—a reference to talks aimed at reunifying the island that began over two years ago.

But a spokesman for the Greek Cypriot side, recognized internationally as the island's legitimate government, shrugged off the Turkish criticism saying his country has a sovereign right to search for oil and gas.

In fact, building on the maritime border agreement with Israel, Cyprus has licensed Noble Energy to explore a block bordering Israeli waters where massive gas fields have been found, including one thought to hold up to 16 tcf of gas.

The licensing of Nobel is noteworthy, of course, since the Houston-based firm has taken the lead in the recent discoveries offshore Israel. Altogether, Noble and its partners claim discoveries offshore Israel of 25 tcf of gas.

The Cypriots and Turks are not alone in eyeing the potential revenues offshore Israel. So, too, are the Lebanese.

Israelis 'stealing' gas

Ali Bazzi is a member of the Lebanese parliament who has called on the government to pass the draft law on exploration of Lebanon's oil reserves believed to be off Lebanon.

"What happened to the governmental decree regarding the law passed by the Parliament on the exploration of Lebanon's oil and gas off shore?" asked Bazzi. "While our government has been absent from passing laws, the Israelis have been continuously stealing from our oil resources," Bazzi said.

Meanwhile, an Israeli energy committee last week recommended that the government nearly double tax rates on natural gas discoveries after Noble's new, sizable gas discoveries, a measure that could bring billions of dollars in revenues for the government. Oh, that shark bites.

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