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Turkey could share energy projects with South Cyprus and Israel

12 May 2013

A report by a Turkish daily says that Turkey’s top officials, amid growing speculation over scenarios that include the participation of it becoming a transfer hub for the recently discovered natural gas resources in the east Mediterranean, indicated on Thursday that Ankara is warming to “extensive cooperation” with Israel and South Cyprus.

The issue was discussed by both President Abdullah Gul and Energy Minister Taner Yildiz on Friday at an energy conference in Istanbul. Addressing participants at the 4th Annual Energy Forum, organized by Sabanci University, Gul said Turkey would welcome a new model of cooperation that could see the transfer of resources from the Mediterranean to world markets via Turkey. “I would like to once again underline here that it will benefit all parties to agree on a joint deal on the transportation of gas reserves off the island of Cyprus,” Gul said, adding that the cooperation would “surely facilitate the solution of political problems we face in this region.” The president asserted that Ankara is “ready to contribute to any constructive project,” adding that all parties should start considering a new models to reach a solution.

Estimates say that the eastern Mediterranean basin could hold as much as 3 trillion cubic meters of natural gas reserves. Turkey, however, still remains firmly against any unilateral moves by the Greek Cypriot administration to extract natural gas and oil reserves off of the coast of Cyprus, saying that Turkish Cypriots, running their own state in the north of the island, also have a say on these reserves. In transporting gas drilled from Cyprus to Europe, a pipeline through Turkey seems the lowest-cost opportunity for South Cyprus, which will most likely remain cash-strapped for the near future due to its major economic crisis.

(Only recently subjected to a 10 billion euro bailout, South Cyprus has declared that it intends to build a processing plant to liquefy natural gas on the island. However at a cost of 6 billion euros, funding is problematic given that the country’s economy has been devastated.)

Israeli and Greek Cypriot governments began cooperating on energy soon after the American oil company, Noble Energy discovered gas off the south of Cyprus. Turkey expects improvement of ties with Israel, which follow the latter’s apology over the earlier Mavi Marmara raid, will see Turkey find its place at the negotiation table for even larger-scale energy projects soon.

Speaking to reporters during Friday’s conference, Energy Minister Yildiz did not deny that preparations are going on behind closed doors in Ankara for the possible “solution model” to which Gul has referred. Emphasising that the Turkish government is ready for possible cooperation with Nicosia and Tel Aviv to transfer Cyprus gas reserves to world markets, Yildiz said his ministry has already begun research to draw up the anticipated projects. Reiterating Turkey’s stance that Cyprus energy reserves must be shared with the Turkish side, the minister argued that the Greek Cypriots would have difficulty in initiating energy projects in the Mediterranean if the country “continues ignoring our [Turkey’s] calls to abide by international law.”

The minister’s statements signal Turkey’s slightly less militant attitude, particularly following recent remarks from different Cabinet members. Foreign Minister Ahmet Davutoglu said in March that if South Cyprus insists on using hydrocarbon reserves off the island to overcome its debt crisis without the consent of the Turkish Cypriots, Turkey is ready to discuss a two-state solution on the island in order to claim the rights of Turkish Cypriots to the reserves.

One critical detail between the lines of Yildiz’s speech on Friday was that the government expected the state-owned Turkish Petroleum Corporation (TPAO) to play a leading role in the possible Mediterranean projects and that the company could partner with local or foreign private energy firms. Observers have speculated that the TPAO would cooperate with a local energy firm in the case of an energy transfer project in the Mediterranean. The company recently explored for oil and natural gas in the TRNC, without success, however.

The minister also announced, “We are in the process of finalizing our efforts to offer TPAO shares to the public to be traded on the stock market. He added that details on this issue “will be made public shortly.”

 

 

 

 

 

 

 

 

 

 

 

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