BICOM

Key points

• Recent reports of tensions between Israeli and Turkish military forces over gas fields in the eastern Mediterranean are an indication of the disturbing potential for friction over disputed maritime energy resources in the area.
• Israel has discovered two significant gas fields off of its Mediterranean coast in recent years. These discoveries constitute a significant boost for the Israeli economy and could enable the country to become an energy exporter.
• The discoveries also have strategic implications. Attempts by both Lebanon and Turkey to dispute the maritime boundaries between Israel, Lebanon and Cyprus are contributing to tensions between states in the area.

Introduction

In the past week, there have been media reports of an incident in which Israeli air force jets flew close to a Turkish ship surveying gas fields near Cyprus (which was accompanied by ships from the Turkish navy), prompting Turkey to scramble its own jets. The veracity of the reports is disputed, but they indicate the disturbing potential for military confrontation over recently discovered gas fields in the region.

Recent gas discoveries in the eastern Mediterranean, including two large fields being developed by Israel, are becoming a new focal point for friction between Israel and both Turkey and Lebanon. This comes alongside heightened tensions between Israel and Turkey following the UN’s Palmer Report into the Mavi Marmara flotilla incident, and an increasingly aggressive Turkish foreign policy.

Israel’s ability to peacefully negotiate areas of exclusive economic activity in the eastern Mediterranean is greatly complicated by its need to interact with Lebanon, today under the effective control of Hezbollah, and Turkey, whose relations with Israel are rapidly deteriorating. As a result, the contested issue of natural gas resources in the eastern Mediterranean is becoming an important arena for the playing out of tensions between states in the region.

Israel’s natural gas discoveries: Tamar and Leviathan

The Tamar natural gas field was discovered 50 miles off of the coast of Haifa in 2009, by a consortium led by the Houston-based Noble Energy company and Israeli firms including Delek Energy. It contains 8.7 trillion cubic feet (tcf) of gas and was the largest natural gas field discovered that year. The larger Leviathan field, discovered in 2010, consists of 16 tcf and is the world’s largest deepwater gas discovery in the last decade. The two sites have an estimated combined value of close to £200 billion, and will likely secure Israeli gas needs for the foreseeable future, saving an estimated £2.5 billion annually on gas import costs. The two sites taken together are around twice the size of the British gas fields in the North Sea.  Tamar could deliver gas by 2012, and Leviathan by 2015-16.

There is also the potential for gas to be exported to markets in Europe or India, which would give an even greater boost to the Israeli economy. Israel’s Knesset approved proposals in March 2011 to increase to 50% the eventual government take from gas sales, creating a future windfall for the Israeli treasury.

Both fields form part of a larger offshore reserve estimated to consist of up to 122 tcf of natural gas, known as the Levant Basin Province. This area constitutes one of the world’s richest deposits of natural gas. It is, however, situated in an area straddling the ill-defined maritime boundaries of Israel, Lebanon, Cyprus and the Turkish Republic of Northern Cyprus (TRNC).

Basis for dispute

The discovery of major gas reserves off of the coast of Israel inevitably contains within it the potential for discord, given the fraught relations between Israel and other countries in the area. Israel’s natural gas discoveries have led to disputes over the delimitation of maritime economic zones.

The United Nations Convention on the Law of the Sea permits countries to extend an ‘exclusive economic zone’ (EEZ) up to 200 nautical miles from their coast. Where countries are separated by less than 400 nautical miles, it is expected that the boundary will be established equidistant from the two coastlines. In December 2010, Israel signed a demarcation agreement with Cyprus on this basis. However, this agreement has been challenged by Turkey and Lebanon.

Turkey

The Republic of Cyprus has signed maritime boundary agreements with both Lebanon and Israel. This has angered Turkey, which sees itself as the defender of the unilaterally declared TRNC. The discovery of natural gas, and the attempts by Cyprus to cooperate with Israel in developing its potential, has caused Ankara to reassert its role as the defender of the TRNC. Turkish Prime Minister Recip Tayyip Erdogan signaled a new Turkish policy in September 2011 when he said, ‘Turkey, as a guarantor of the Turkish Republic of Northern Cyprus, has taken steps in the area [of the offshore resources], and it will decisively pursue its right to monitor international waters in the east Mediterranean.’ Erdogan also specifically referred to Israel, saying it had no right to develop an EEZ in the Mediterranean.

The Republic of Cyprus is considered internationally to represent the entire island. Only Turkey has recognised the sovereignty of the TRNC. Concern that, as a result of this, the TRNC will be excluded from benefiting from the development of natural gas in the area, appears to be motivating Turkish behaviour. Exploratory drilling by Noble Energy in the Cypriot EEZ is due to begin shortly.

The potential to export gas to Europe creates another source of tension. Greece and Cyprus are potential partners for Israel in transporting gas from the Mediterranean to markets in Europe, in competition with Turkey.

The confrontation over the gas fields follows other statements by Erdogan which appear to have escalated tensions with Israel in the wake of the publishing of the UN’s Palmer Report into the Mavi Marmara incident. Turkey’s anti-Israel rhetoric has served its interest in raising its standing in the Arab world. Israeli policymakers have been particularly concerned by Erdogan’s threat to send naval warships to escort future flotillas to the Gaza Strip. Combined, these developments have created a disturbing potential for dangerous standoffs between Israeli and Turkish forces in the area.

Lebanon

Israel enjoys normal relations with Cyprus, and was therefore able to peacefully agree maritime boundaries with it. With Lebanon, on the other hand, Israel has no diplomatic relations. Furthermore, the dominant political force in the current Lebanese government is Hezbollah, which is in a state of war with Israel. This has been reflected in the position taken by Lebanon with regard to the gas fields.

In August 2010, Lebanon submitted a maritime boundary claim to the UN, which is disputed by Israel. In July 2011, the government of Israel submitted its own claim. Israel’s position is that the Lebanese claim encroaches too far south, and contradicts the line agreed between Israel and Cyprus, and the line agreed between Lebanon and Cyprus in 2007. An 850-square-kilometre area remains under dispute.

Nabih Berri, leader of the Shia Amal movement and speaker of the Lebanese parliament, suggested in 2010 that part of the Tamar gas field lies in Lebanese territory. Hezbollah leader Hassan Nasrallah in July 2010 said that his organisation would act to prevent Israel from ‘stealing’ Lebanese resources. In July 2011, Lebanese energy minister Gebran Bassil issued a veiled threat against Israeli offshore gas drilling, saying, ‘For Israel to be able to exploit its oil resources, the companies must work in an atmosphere of stability and calm. Israel will not enjoy stability, calm, and tranquility unless Lebanon enjoys them too. Lebanon will not experience volatility and instability, while Israel enjoys stability. Absolutely not.’

Israel, meanwhile, has rejected any claims that the gas fields are not entirely in Israel’s EEZ. Israeli National Infrastructure Minister Uzi Landau has stressed that Israel would defend itself against any attempt to encroach on its legitimate development of its resources. These statements indicate the potential of the natural gas finds to create another point of friction in the already very tense relationship between Israel and Lebanon.

Conclusion

Whilst the discovery of natural gas resources promises to bring considerable economic benefits to the Israeli economy, it also complicates Israel’s strategic position in the Mediterranean. The growing tensions in the area will be of concern to both the US, which is keen to calm relations between its two regional allies, Israel and Turkey; and the EU, which will not want to see friction on its borders. It is strongly in the interests of Western powers to see these disputes settled peacefully and without resort to rhetoric on any side which aggravates tensions.