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In recent times, the discovery of natural gas off the Israeli coast in the Eastern Mediterranean Sea (the Levant basin) has added a new dimension to the Israel-Palestine conflict zone. Significantly this has transformed the region into a potential energy source, not only for domestic use, but also for the European and Asian markets. However, the other political conflicts in the region, —Syrian Civil War, Israel-Gaza Conflict, and the maritime dispute between Israel and Lebanon—cast a shadow on this economic opportunity. Moreover, the overall development of these fields is at a nascent stage. Both EU and Russia are ready to exploit this opportunity to maximise their strategic objectives.

In 2010, the US Geological Survey (USGS) estimated that the Levant Basin, one of the eight basins in the Eastern Mediterranean Sea region, may contain 3455 billion cubic meters (bcm) of natural gas. Within the Levant basin, the natural gas reserves were discovered in the Tamar and the Leviathan areas in 2009 and 2010 respectively, which have transformed the Levant basin into a potential energy hub in the region.

However, the prospect of increased production continues to be hampered by the ongoing political instability. Long-standing disputes such as Israel-Arab conflict also represent a major challenge for the prospective development of these gas fields. Further, the maritime disputes in the area have aggravated the existing regional rivalries.

Israel is one of the largest consumers of natural gas in the East Mediterranean region, with an average annual consumption rate of 5 bcm (2011). This is expected to grow to 9.7 bcm by 2015 and to 13.3 bcm by 2020. To meet its energy demands, Israel is largely dependent on natural gas imports from Egypt, and imports nearly 40 percent of its requirements (2010). The Israel-Egypt gas pipeline is vulnerable to repeated attacks in the Sinai region of Egypt, and has been closed since 2011 post Arab Spring regime change in Egypt. The discoveries in Tamar gas fields and its operationalization in 2013 has given Israel an opportunity to diversify its sources of energy requirements, and the discovery of the Leviathan gas fields has revitalised the energy outlook of Israel. With these gas fields, Israel can consider exporting natural gas to other countries in the region, as well as to the European and Asian markets.

In 2012, Israel signed an agreement with the Palestinian Authority to supply natural gas to the latter for a period of 20 years. Under this agreement, the gas will be provided only to the West Bank. Israel has also signed an agreement with Jordan for the sale of natural gas over the next 15 years.

The hindrances created by the territorial conflicts among the regional players have led to the involvement of global actors. Russia maintains good relations with Israel, Syria and Cyprus, and appears to have capitalised on the existing disputes. It seeks to dominate the Eastern Mediterranean gas market in order to safeguard its position as a principle gas supplier to Europe. In 2014, Russia signed an agreement with the Palestinian Authority to invest US$ 1billion to develop the Gaza offshore gas fields. It has also inked a deal with Syria in 2013, which provides for controlling interests for the Russian Central Bank over 850 square-mile area of Syrian Exclusive Economic Zone (EEZ) for a period of 25 years. This will eventually lead to natural gas exploration by Russia in the Syrian EEZ. Furthermore, Russia is in talks with Israel to develop the Leviathan gas fields. Moscow is also offering financial support to Cyprus, while backing Cyprus in its territorial dispute with Turkey.

Thus, through large scale investments, Russia seeks to be in a position to be able to influence all major regional players, who have developed economic interests in the Levant basin. It can be further argued that Russia is trying to fill in the strategic vacuum created by the declining influence of the European Union (EU) and the US. Russia has extensive investments in the region, which raises the stakes for Russia to ensure the political stability of the region, and thereby secure its investments. Russia is also perceived as a more dependable ally in comparison to the EU or the US because of its non-interference in the internal affairs of the regional countries

According to a study conducted by EU’s policy department over “the prospect of Eastern Mediterranean gas production as an alternate energy supplier”, it is evident that the EU is possibly searching for a possible alternate energy source to reduce its energy dependence upon Russia. Russia has often used its position as a primary source of energy supply to EU to its advantage; recent crises in case of Crimea or the crisis in Eastern Ukraine, validating EU’s concerns. It’s in the EU’s interest to encourage the development of East Mediterranean gas fields, so as to reduce its dependence on Russian energy supply, as well as to check Russia’s growing geopolitical influence in this region.

In this setting, it appears that the competition over energy resources between Russia and the EU is shifting to the East Mediterranean region (the Levant Basin), that can potentially complicate the geopolitical predicaments of the region.

Author : Shashwat Tiwari
27 Sep 2014