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MEHMET ÖĞÜTÇÜ

MEHMET ÖĞÜTÇÜ >Proposal to create the East Mediterranean Energy Community

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After several weeks of consultations in various capitals from Ankara to Tel Aviv, Washington D.C. and Brussels, I believe that it is high time to propose a regional champion to advocate integration, partnerships, dispute settlement, data sharing, analysis and engagement with key stakeholders in a dynamic and informal setting, free from political animosities and tensions.

The strategic objective of the proposed new dynamic, informal, regional umbrella is to create the East Mediterranean Energy Community (EMEC). While hydrocarbon development and exports will constitute one immediate element of the EMEC partnership, it will also encompass other areas of energy, diplomacy and investment as required. 

The initiative should initially remain informal and free of bureaucracy because we feel there is a considerable risk for governments to quickly poison the atmosphere by rehearsing their well-known clichés and rigid positions. However, the ground should be prepared for their eventual engagement, which is of course critical for its success.

The EMEC membership should include key, respected and influential figures - businessmen, former ministers, think-tank chief executives, bankers, journalists and former generals - from Cyprus (both Greek and Turkish Cypriots), Egypt, Greece, Israel, Jordan, Lebanon and Turkey. The EU and the U.S., as well as several development banks and official development assistance (ODA) agencies, can also be represented as honest brokers and facilitators.

The EMEC can have a small secretariat of six staff, seconded by countries in the region working under an executive director, as well as a small office and budget, and a rotating political chairmanship. The EMEC can convene at the ministerial level once a year, as such a need arises. 

The region is rich in energy resources but cannot yet use them to create wealth and peace for the resource holders and beyond. There have been a series of large-scale natural gas discoveries since 2009 off Israel, Cyprus and Egypt. So far, only a fraction of these resources have been developed, namely the first phase of the Tamar field in Israel at a cost of $3.3 billion. The Leviathan (Israel), Aphrodite (Cyprus) and Zohr (Egypt) fields have yet to be developed. Turkey, Lebanon and Syria have promising exploration prospects but face political and commercial constraints. 

Several large-scale projects are under consideration to bring gas from the Eastern Mediterranean to market, including the proposed pipelines from Israel and Cyprus to Egypt, Jordan and the West Bank and Egypt’s export infrastructure to send gas to more distant markets. Other options - such as building liquefied natural gas export facilities in Israel or Cyprus, or building a sub-sea pipeline to Greece or Turkey, particularly for the Leviathan Phase 2 - are possible, although their technical, political and commercial viability remains to be demonstrated. 

In any event, the region needs to attract several billion dollars of new investment to monetize this resource - a hard job, particularly in the current environment of reduced demand, lower prices and heightened geopolitical risks. 

European gas consumption has fallen sharply in the past two years. Turkish gas demand may not increase as much as hoped, as Ankara tries to cut back natural gas for power from 44 percent today to 30 percent by 2030. There is currently a large surplus in the global gas market, and more is on its way in faraway places. 

Given historic enmities and a serious divergence of positions on political, security and commercial matters in the region, it is imperative to find ways to promote mutual understanding and develop working relationships, preparing the ground for decision-makers and identifying common interests that bind these nations for collaborative work. 

Though we do not have many precedents in this area, energy development can still be made an instrument for peace and confidence-building measures in the region, setting a good example for Turks, Israelis, Egyptians, Jordanians, Cypriots and Lebanese to work together. They share not only a geographic position and deep-seated disputes, but also cuisine, certain customs and a very long intertwined history.

The EMEC cannot be built solely on the individual interests of each country in the region, hence the need for a regional champion or advocacy that can work on the mutual fulfilment of obligations, the unimpeded transit of energy across national territories for the benefit of other countries, the development of long-term gas contracts and, ultimately, signing an investment securitization treaty.  It goes without saying that all these things should be done without reinventing the wheel.

Companies, eminent persons and international organizations should be at the heart of this new initiative. I have already discussed the concept with major governments and businesses in the region as well as in Brussels and Washington D.C. The time seems to be ripe to launch the EMEC at the earliest and unlocking the great potential for regional energy development that can also hopefully ease some protracted political disputes.

November/24/2015

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