Escalating tensions in the Eastern Mediterranean between Turkey and Greece in their respective pursuit of energy resources will not adversely impact gas prices.
Present-day and near future increased development of Egypt’s Zohr and Israel’s Leviathan gas fields will provide more than sufficient gas supplies in the region.
Turkey’s pursuit to extract even a modicum of gas resources will blunt political and economic blackmail from Russia who provides most of Turkey’s gas needs.
Savings from gas development slows foreign reserve expenditures, lowers the account deficit and supports food subsidies the latter which is critical to prevent social unrest.
A confluence of events is contributing to the intensifying geopolitical tensions in the Eastern Mediterranean between Turkey and Greece in their pursuit for energy self-sufficiency and dominance.
The mainstream media is supporting western governments’ contention portraying Turkey as the aggressor in their attempt at an energy power grab through naval intimidation.
Although Turkey has the largest economy in the region and the second largest military in NATO, they have been deliberately excluded from critical agreements which would make them equal partners with respect to dispute resolutions and access to resources in the region.
The legal discriminatory agreements that are politically isolating Turkey are the following:
· The United Nations Convention on the Law of the Sea which Turkey is not a signatory. This body is called upon to resolve maritime disputes.
· The newly formed EastMed Gas Forum, referred to as the Opec of Mediterranean gas, includes as members Egypt, Israel, the Palestinian Authority, Jordan, Greece, Cyprus and Italy, an oddball membership all of whom have compatible economic interests in gas exploration in this region, not necessarily compatible political interests amongst themselves.
· Turkey is a NATO member, the second largest, but is not an EU member.
For this reason any discussions with respect to disputed maritime zones is hotly adversarial rather than diplomatic member-to-member conversations towards a mutually satisfying resolution.
Because Turkey justifiably refuses to be politically neutered it is unilaterally pursuing gas exploration in disputed maritime areas in the Eastern Mediterranean. Most notably Turkish drilling has not resulted in discovery of gas reserves.
Germany is the leading EU representative in an attempt to mediate the dispute followed by an offer by Russia who has high credibility with both Istanbul and Nicosia. The EU has already decided to meet on 24-25 September to review the dispute and decide what measures will follow.
Gas market prices are depressed and will continue for at least several more years as the global economy recovers unevenly in fits & starts. Furthermore, with respect to gas development in the Mediterranean, Egypt’s Zohr and Israel’s Leviathan gas fields are yielding copious quantities which will contribute to low global gas prices.
Despite low prices the priorities for countries in this region a reduction of gas import dependency reduces the risk of political/economic blackmail from their current suppliers (namely Russia and to a lesser extent, Iran), tremendous foreign reserve savings and ultimately internal social stability.
Food and energy supplies are heavily subsidized by governments in the region. Any reduction of subsidies because of an economic downturn can easily trigger internal social unrest. Less expenditures on energy through their own exploration provides greater social stability regardless of global commodity prices.
Because of Turkey’s ever-growing precarious economic situation, development of gas fields in the nearby Mediterranean is a form of economic salvation regardless of the leadership.
Furthermore I had a Zoom interview entitled The Latest in Energy and the Eastern Mediterranean with Savannah Lane, Executive Director of the Turkish Heritage Organization, on 15 September 2020. I provided deep-dive perspectives and dynamics not discussed by western media on the increasing geopolitical tensions in the Eastern Mediterranean with respect to energy resources in disputed marine territories.
The Mediterranean is producing ever increasing amount of gas from various newly developed fields and will continue to do so with the development of newly discovered to satisfy global demand at pre-pandemic levels.
For this reason I believe that any increases in gas prices will be modest in the near future as a result of global post-pandemic economic recovery which I project will be uneven.
[Originally published 12 September 2020].
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