Rush for Mediterranean Gas Pipeline Contracts Draws Big Players. US Holds the Edge
On Monday, January 9, Cyprus Defense Minister Demetris Eliades arrived in Tel Aviv for the signing of two defense pacts with Israeli Defense Minister Ehud Barak covering their joint development of eastern Mediterranean oil and gas fields and measures for their defense.
DEBKA-Net-Weekly’s intelligence sources explain the urgency of those pacts.
Noble Energy, the big Texas-based energy company developing the new Israeli and Cypriot natural gas fields in their respective economic exclusion regions, had just notified Jerusalem and Nicosia that the Israeli Leviathan gas field discovered in 2010 – and estimated at holding as much as 20 trillion cubic feet of gas, and Cyprus A-, which is part of the Cyprus Block 12 gas field – and whose reserves are in the 3-9 TCF range – are actually the same field.
Aside from the thorny technical and economic complications raised by this discovery, new defense pacts had become urgent in the face of the frigate and two missiles ships Turkey has kept stationed opposite the Cyprus Block 12 gas field since mid-December.
The Turkish warships started out by holding daily cannon-fire practice near the narrow naval strip dividing the Israeli and Cypriot gas fields. The shelling stopped after debkafile’s website exposed this dangerous caper on Dec. 24, but the Turkish warships are still there.
Israel, Cyprus, Greece in a gas alliance
Ankara has since announced it won't object to Noble Energy continuing its explorations and testing for gas reserves in Cyprus Block 12, but will absolutely not permit the gas to be exported, because a share belongs to the Turkish Republic of Northern Cyprus-TNRC (which has never won international recognition).
As long as Greek Cyprus and Turkish Cyprus have not reached agreement on the distribution of the rights to the hydrocarbon reserves and the income thereof, Turkish warships will stand ready to forcibly prevent production.
A triangular relationship has developed between Jerusalem, Nicosia and Athens, which too plans to establish an economic exclusion zone for gas exploration. The day after Israel and Cyprus signed their defense pact, the Israeli defense minister was on a plane to Athens. Wednesday, Jan. 11, he signed another set of defense accords with Greek Defense Minister Dimitris Avramopoulos.
DEBKA-Net-Weekly’s military sources report that this finalized the laying of the cornerstone of a strategic, diplomatic and economic alliance binding Jerusalem, Athens and Nicosia.
“We are committed to work together to deepen our relations in defense and security,” said Barak at the signing ceremony. “We have to be prepared for many developments… We must think ahead of time and work together.”
Avramopoulos said: “The two countries are trying to make up for lost time,” stressing Greece’s commitment to deepening the alliance with Israel "… in the name of friendship, peace and stability for all the peoples of the region."
Israeli provides military assets to secure both gas sectors
Under the triple accords, Israel, Greece and Cyprus are to establish a naval and air command and control center for directing military operations arising from Turkey's obstruction of drilling, production or exports from either or both East Mediterranean gas sectors.
Israeli military strength, especially its naval and air forces, is already stretched by standby alerts in case the Syrian conflict and Iranian crises tip over into outright hostilities. The IDF will have to reshuffle units to make the necessary assets available for defending the Israeli and Cypriot gas fields. But it lost no time in doing so.
As soon as both defense pacts were in the bag, the Israeli Navy declared Wednesday night that it assumed responsibility for securing the eastern Mediterranean rigs going up at the Yam Thetis, Tamar and Leviathan drilling sites and patrolling Israel's economic exclusion zone.
The Cypriot field was not mentioned, but our military sources report it was understood that Israeli missile ships would provide the small Cypriot Coast Guard boats with an umbrella against a potential Turkish assault.
On Jan. 3, the Israeli Navy conducted a snap drill at its home base in Haifa, which houses its Dolphin submarine fleet and missile boat flotilla of Sa’ar-5 corvettes and smaller Sa’ar 4.5 ships.
The drill tested the speed of the fleet's responses to calls for action.
“We must maintain a high state of preparedness and be ready at all times to load our ships at top speed for sustained and lengthy operation at sea," said Rear Admiral Eli Sharvit, the Haifa Navy Base commander.
By the end of the year, Israel's Ministry of Defense and the US Army’s Corps of Engineers plan the comprehensive upgrading of Haifa base facilities.
The Israeli Navy Haifa Base undergoes renovation
The estimated $40 million renovation budget will pay for the hardening of structures and the construction of new hangars to accommodate Israeli Dolphin submarines. This outfitting is ostensibly designed to prepare Israel for war with Iran and its allies, Syria and Hizballah. But it will undoubtedly also enhance Israel's naval resources for guarding the new gas facilities (in which Israel is planning to invest $6 billion in the next four years) and support the defensive role Israel has undertaken under its new strategic alliance with Greece and Cyprus.
The nascent gas fields are already regarded by leading international energy players as the next important source of energy, according to DEBKA-Net-Weekly’s sources. The interconnected Israel and Cypriot fields are predicted to be the main source of Europe's natural gas by 2020.
The financial infrastructure is being laid for the future underwater pipeline which will convey gas to Europe. It has already drawn covetous interest from the big boys of the world's energy sector.
Israeli Foreign Minister Avigdor Lieberman has become an extremely popular visitor at Russian Prime Minister Vladimir Putin's Kremlin office. He can hardly keep up with Putin's invitations to Moscow. All the Russian prime minister wants to talk about is the eastern Mediterranean gas bonanza. He doesn't bother to conceal his eagerness for a piece of the action, preferably for the Russian oil and gas giant Gazprom to be awarded the contract for laying the pipeline from the Israeli and Cypriot fields to Europe.
This would give Moscow control over the flow of natural gas to Europe.
Russian, Italian bids for gas pipeline contracts have no chance against America
Moscow has confirmed it has Ankara's permission for Gazprom’s South Stream pipeline to central Europe to transit Turkey's Black Sea exclusive economic zone.
Live on TV on Dec. 30, Putin ordered Gazprom to start construction work in "late 2012" on the pipeline from Russia to Bulgaria via Turkey’s Black Sea EEZ. But once European governments see Mediterranean gas becoming available, Russia's Black Sea pipelines will lose their urgency.
Another bidder for the gas pipeline project is the Italian oil firm ENI, which has in recent weeks sent its salesmen to Tel Aviv and Nicosia.
But according to DEBKA-Net-Weekly’s sources in Washington, the United States holds the edge. The Noble Energy Company currently drilling in both exclusion zones is American, based in Houston, Texas. The US Sxith Fleet rules the waves in the eastern Mediterranean and protects broad US interests.
Jerusalem, Athens and Nicosia all checked in with the Obama administration when developing their natural gas resources.
They gained US blessing for going ahead notwithstanding President Obama's entente cordiale with Turkish Prime Minister Tayyip Erdogan. America has a strong interest in Israel and Cyprus diversifying European Union energy sources. American companies will therefore not only develop the gas fields, but also beat out the competition for contracts to build and operate the pipelines to Europe.