• Natural Gas News

    Can Israel Export its Gas Through Both Cyprus and Turkey?



Cyprus is hoping to attract Israeli gas and become a regional energy hub while Turkey is offering to build a pipeline connecting the Leviathan to its coast.

by: Karen Ayat

Posted in:

Natural Gas & LNG News, News By Country, , Cyprus, Israel, Turkey, Top Stories

Can Israel Export its Gas Through Both Cyprus and Turkey?

Cyprus and Turkey hope to fulfill their energy hub ambitions

Israel’s indecisiveness regarding export quotas and routes is making both Cyprus and Turkey anxious. Cyprus insists it can go ahead with its LNG plans without pooling costs with Israel. However, it has not hidden its ambition to become a regional energy hub that would welcome and process natural gas from its Eastern Mediterranean neighbours then ship it to export markets. Given that the island has not yet confirmed that its Aphrodite field in Block 12 of its exclusive economic zone is as fertile as originally thought, an Israeli cooperation is highly welcome. Turkey too is hoping to get something out of Israel’s riches. The resumed political ties between the two countries following Israel’s apology to Turkey earlier this year led most to believe that an energy cooperation was on its way. Turkish companies rushed to express their interest in building a pipeline from Israel’s giant Leviathan to the Turkish coast. Not only is Turkey energy hungry and importing the vast majority of its energy supplies to meet its domestic needs, but it is also desperate to diversify its supply portfolio and loosen its dependency on Russia.

Both export routes could be of interest for Israel

But what’s in it for Israel? Using Cyprus’ services could be interesting. Israel does not seem to have found a coastal site to build its own LNG and sending its natural gas to Cyprus would be a simple endeavour given the proximity of the two countries and their amicable ties. The Cyprus LNG option would also mean that Israel could reach both Europe and East Asian markets where natural gas prices are higher than everywhere else. The pipeline option to Turkey is also quite attractive: although pipelines offer less flexibility, they cost less than LNG and Turkey is blessed with centrality connecting an energy-rich East to an energy-hungry West. While there is still a possibility that Israel will choose to go solo - by finding a coastal site for its own LNG or even going for a floating LNG - there is also the undeniable possibility that Israel will choose not to choose; or in other words, working with both Cyprus and Turkey. By diversifying its routes, Israel will be avoiding putting all its eggs in one basket.

Can Israel work with both Turkey and Cyprus?

The problem is, of course, that a pipeline to Turkey would have to go through Cyprus’ EEZ. Cyprus has been divided since 1974 when Turkey invaded the north of the island in response to a military coup on the island. Its northern third is inhabited by Turkish Cypriots and the southern two-thirds by Greek Cypriots. Without a settlement to the dispute, it is very unlikely that Cyprus will allow a Turkish pipeline to pass through its EEZ to reach Turkey. It is uncertain however if Cyprus’ objection will be enough to deter Israel from working with Turkey. It is also uncertain how Cyprus will react if Israel leaves it with an ultimatum, threatening it will only use Cyprus’ LNG facility if the island agrees that an Israeli-Turkish pipeline passes through its EEZ. Can Israel work with both Cyprus and Turkey when Cyprus and Turkey won’t work together?

Karen Ayat is an analyst focused on energy geopolitics in the Eastern Mediterranean.  Follow Karen on Twitter: @karenayat