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How can Cyprus exploit its gas in a geopolitical minefield?

Stephanie Müller
November 14, 2023

Cyprus boasts vast natural resources. But the Mediterranean island is divided, politically and ideologically, posing problems for its gas exploitation plans.

an aerial view of the industrial complex at the port of Vasiliko, including the liquefied natural gas (LNG) terminal
The industrial complex at the Cypriot port of Vasiliko, where a new LNG terminal is under constructionImage: Amir Makar/AFP/Getty Images

Cyprus is an island in the eastern Mediterranean Sea, not that far from IsraelSyria, Turkey, Lebanon and Egypt. It's a popular tourist destination for Syrian, Israeli and Lebanese tourists and in the past decade, it has enjoyed growing popularity with Russian visitors.

The island is also very important from a geopolitical perspective because of its location between Europe and the Middle East. Much of the island's activity currently revolves around the many offshore gas fields that have been discovered in the past 15 years, most recently in 2022.

Many hope that because of its gas, Cyprus will be able to play a bigger role in the Middle East.

Middle East expert Cosme Ojeda from Spain's CEU University San Pablo believes the gas deposits could pose an opportunity for peace in the region and help deescalate the ongoing conflict between Turkey and Greece over Cyprus.

"The gas fields have the potential to enormously increase the prosperity of everyone involved. This kind of pipeline projects can't be realized alone and force opponents to work together," Ojeda said.

Turkey has taken a stance against Israel in the war against Hamas, while Cyprus has clearly sided with Israel. This shows just how different the positions are, Ojeda said. 

Plans for Gaza Marine gas field on ice

Elai Rettig, head of the Energy Division at Israel's Begin-Sadat Center for Strategic Studies, said Germany's decision to freeze the Nord Stream 2 pipeline project as a result of Russia's war against Ukraine scared off investors.

"However, offshore gas deposits in the Middle East could significantly diminish the importance of other gas suppliers, as well as dependencies on countries such as Qatar," he added.

The Israel-Hamas war came at time when the Middle East was on the brink of a historic event, said Rettig. "There was a tentative agreement between Israel and the Gaza government to jointly develop, finance and drill the Gaza Marine gas field."

"The deal could have changed relations between Israel and the Palestinians in very many positive ways, and thereby had a positive impact on the region," he said.

But following the Hamas terror attacks on Israel on October 7, those plans have been put on hold.

LNG in Cyprus more likely than gas lines to Greece

Cyprus has been divided since 1974. The southern half is a member of the European Union, while the Turkish Republic of Northern Cyprus is only recognized by Turkey. 

There have also been territorial conflicts concerning sea borders. In the past 10 years, a number of deals have been reached between Israel and Lebanon, Israel and Turkey, and between Cyprus and Greece over who can drill for the island's gas and who can sell it. But according to Rettig, none of them were "binding." 

German Chancellor Olaf Scholz, who met Cypriot President Nikos Christodoulides in May, is also interested in Cyprus selling gas to the EU in future. Chevron, TotalEnergies and ENI are just some of the players interested in the gas in the eastern Mediterranean, and are involved in various ways.

Chancellor Olaf Scholz (r) and President Nikos Christodoulides (l) receiving military honors
When German Chancellor Olaf Scholz met Cyprus President Nikos Christodoulides in May, he expressed great interest in Cyprus delivering gas to the EUImage: Sebastian Rau/photothek/IMAGO

In the short term, it will be easier to export liquefied natural gas (LNG) than it will be to build a new pipeline, so the government in Nicosia is looking to construct a LNG terminal as quickly as possible.

However, all negotiations must include Turkey. Ankara has laid claim to the natural resources off the island's coast since 1974.

For Cyprus, the gas deposits are an opportunity to become economically less dependent upon Russia, which offered support in the form of credits and investments after the financial crisis of 2013. Russia was also interested in Cypriot gas at the time, but has since dropped its drilling plans.

Reducing reliance on Russia

Kyriacos Kokkinos, who served as the chief scientist for research and innovation in the previous Cypriot government, had hoped that tightening economic ties with Israel would help reduce Cyprus' reliance on Russia. However, that was before the current war between Israel and Hamas.

"It's a position the Israelis invented and which we adopted because we wanted to be an international tech and science hub like them," he said. He added that the island's gas could be a bridge to more economic cooperation. This situation, he said, had not changed since October 7, but the question was now how to proceed.

Drilling should have begun in 2018, according to original plans hatched by the energy group Noble, which the US multinational Chevron bought in 2020.

In 2022, Lebanon and Israel reached a historic deal on sharing the gas field across their maritime border. But the current conflict with Hamas could put a stop to these plans.

"Various powers are haggling and maneuvering," said Ojeda. "Much patience will be needed."

Energy projects sidesteps Turkey

The Cyprus-based DEH Quantum Energy is currently working on a submarine power cable to connect the power grids of Greece, Cyprus and Israel. Given the current situation, Rettig thinks this project will be easier to realize than a gas pipeline.

Dubbed the EuroAsia Interconnector, the 2,000-megawatt project would be the world's longest submarine power cable.

Once again, Turkey is not involved. "But the government there would probably be less worried by it than by a gas pipeline from Cyprus to Greece," said Rettig.

This article was originally written in German.