“The global energy market is heading in a different direction. Eastern Mediterranean gas must be competitive in order to find a place in the global energy market because prices are low”, says Dr. Charles Ellinas.
Dr. Ellinas, who has 40 years of experience in the energy sector says that the problems in the region makes the cost of developing the gas industry even higher. Costs to develop the market are high and profit margins are low, therefore it’s not worth the fight.
“We are in 2019, the earliest date when gas can be exported is 2025, so there is plenty of time to negotiate for a solution to the Cyprus problem and reach an agreement that will be accepted by all parties. We must focus on the solution of the Cyprus problem. Fighting and delaying these developments will make the situation more difficult in the future. Because the global energy market is turning to clean energy, it will become gradually more difficult for oil and gas to find buyers”, he said.
In an interview with Turkish Cypriot daily ‘Yeni Duzen’, Dr. Ellinas also note that given the 2025 export date for the gas, there is ample time to solve the Cyprus problem and reach an agreement acceptable to all parties. This must be achieved otherwise, given the changing tides in energy markets, everyone, in particular Cypriots on both sides, will lose out in the end.
Ellinas said, “That gas belongs to Greek Cypriots and Turkish Cypriots and if they agree on how to share in the future, they both win. Turkey may be interested in some of these gases because of Turkey’s natural gas import agreements for several years, will end 2021-2025. Turkey may buy this gas, by purchasing it legally”, he argued.
Asked about the political aspect to this issue, he replied that his field of expertise was energy. However, he did observe that there was a vicious circle created by Greek Cypriot refusal to co-manage energy assets with the Turkish Cypriots, by Turkey refusing to stop its gas exploration activities offshore Cyprus and the EU’s threat of sanctions on Turkey. This is a hard cycle to break, he said. Ellinas stressed that solving the Cyprus problem would put an end to all the disagreements over local energy resources.
“I think the biggest problem, as I just said, is that international markets are getting harder and harder. Prices are very competitive, it’s hard to sell gas. As the process of making the gas to be sold increases, the probability of selling it decreases, both Greek Cypriots and Turkish Cypriots lose. The way forward is through negotiations. The amount of gas at the end of the day may not be that much. Between gas fields Calypso, Aphrodite and Glafkos, the Greek Cypriots found about 10 tcf natural gas, with 90% probability. More drilling could double that. This is a reasonable amount of gas, the island can certainly benefit from it. Some of them can be exported to Egypt. However, most of them are not exported and remain under the sea, where it is. Because this amount of natural gas is very small when looking at the global market. Nobody would be too eager to spend too much time, money or effort to develop this amount of gas. This amount is not enough to excite companies. Europe has a lot of gas and the price is low. Asia has a lot of natural gas resources, 20 tcf natural gas does not change anything in the world. I would like to point out that the gas found in the entire Eastern Mediterranean is only 2% of the global reserves” Dr Ellinas pointed out.
Dr. Charles Ellinas is Non Resident Senior Fellow at Global Energy Center