Mediterranean Energy Theater and Its Stakes
Over 850 billion cubic meters-worth of oil have recently been discovered in the Eastern Mediterranean Sea. This is the largest oil finding registered in the history of the Mediterranean Region. The company responsible for this discovery is the Ente Nazionale Idrocarburi (ENI), a 30% state-owned Italian company, and one of the major actors in the oil and gas industry around the world.
What will be the economic and political implications of this discovery? This is one of the key questions that the speakers tried to answer at the panel discussion titled “Mediterranean Energy Theater and Its Stakes,” which took place at Webster University Geneva, on October 3. The round-table, organized and moderated by Dr. Susanne Peters, Senior Research Fellow and Lecturer of Energy Security at Webster University Geneva, benefited from the participation of Mr. Lapo Pistelli, ENI’s Executive Vice President in charge of International Relations, Mr. Giacomo Luciani, Adjunct Professor of Energy Studies at the Graduate Institute of International & Developments Studies and Sciences Po’s Paris School of International Affairs, and Mr. Pierre Bécard, CEO of Quantum Energy & Processes S.A. and member of the Geneva Petroleum Club.
The new finding in the Levant Basin of the Mediterranean has not been called a “world game changer,” but certainly a regional one.
Luciani highlighted during his intervention that the region has historically been characterized by conflict and general instability, including unclear marine borders. Consequently, conditions for a strong economic interaction in the oil sector have never been favorable but rather competitive. This discovery could perhaps provide the conditions for better market integration but will certainly also spark some geopolitical tensions.
Pistelli added to the context of this finding, pointing out that another reason why the Eastern Mediterranean Sea has never been considered a major energy hub is linked to the fact that the regional market for oil and gas looks quite diverse. First of all, countries show significant differences in the level of maturity of their oil market; at present, there are four mature hydrocarbon countries, namely, Egypt, the oldest, Israel, Lebanon and Cyprus, the youngest market in the group.
There are also large differences in market size and demand for oil and gas. Egypt is currently the largest market in the region, although it is also the country with the highest registered demographic growth. This implies that domestic demand is expected to increase rapidly, thus justifying new drilling operations to satisfy this higher request for oil. The new discovery in the East-Med could transform Egypt from an importing country, mainly from Qatar, to a self-sufficient and potentially exporting economy. This new position of influence could add a new level of competition in the Egyptian-Turkish fight for hegemony, pushing Erdogan to increase his grip on Northern Cyprus to ensure Turkey a share of the new-found oil.
Despite these differences and the competition, the discovery has also prompted the three main oil markets in the region, Israel, Jordan and Egypt, to start sharing resources and could promote further cohesion among countries in the region.
This cooperation however currently excludes two key actors—Lebanon and Turkey. The latter, in particular, has the potential to become a major export market for the oil found in the Levant. Given its almost total dependency on Russian gas, this alternative would surely provide a way to diversify its supply and decrease its reliance on the East.
Another actor that is going to benefit from this discovery, although to a smaller scale, is the EU. This will allow European countries to diversity their energy supply, adding to the pipeline connecting them to the instable North Africa.
During the Q&A session, following the panel, the theme of increasing public awareness about the environmental risks of fossil fuels was brought up. In particular, the panelists acknowledged the current general resistance to increase reliance on oil and gas although they also confirmed that countries won’t be able to give up hydrocarbons anytime soon.
Is the European goal of turning “green” by 2050 a dream, then? Not a dream, but probably overly optimistic as Pierre Bécard meant to suggest. A real transition to a carbon-free economy will require all actors involved to come together and agree on a collective change of behavior.
(text by Martina Castiglioni)