articles | 30 September 2015

Cyprus talks energy on UNGA sidelines

As President Nicos Anastasiades addressed the UN General Assembly in New York on the Cyprus issue, the focus of numerous top-level meetings the president and his delegation were holding on the sidelines were energy-related.

While Anastasiades held meetings with US, Vice President Joe Biden and Greek Prime Minister Alexis Tsipras, the foreign ministers of Cyprus, Greece and Egypt were also meeting, bringing forward by two days their scheduled three-way session, during which they were expected to prepare the ground for a tripartite summit of their respective heads of state.

A trilateral meeting of Anastasiades, Tsipras and Egyptian President Abdel Fattah al-Sisi – who Anastasiades met on Monday – is being planned to take place in Athens, likely sometime next month.

It will be the third such tripartite meeting, the previous two having been held in Cairo late in 2014, and then in Nicosia, in April of this year.

Cyprus and Egypt are in talks exploring the possibility of gas cooperation. Publically, the Egyptians have been assuring Nicosia they are still keen on importing Cypriot gas from the ‘Aphrodite’ field, despite the recent discovery of a massive gas reservoir in Egyptian waters.

Also yesterday, Anastasiades met with a delegation of Noble Energy headed by the company’s CEO David Stover.

The president’s meeting with Biden was also attended by Amos Hochstein, the State Department`s Special Envoy and Coordinator for International Energy Affairs. The importance of Cyprus` role as a US strategic partner, was acknowledged by Biden, the Cyprus News Agency reported.

Immediately after meeting Anastasiades, Tsipras went on to meet the Egyptian president to discuss the upcoming tripartite summit in Athens.

A trilateral summit of Cyprus, Greece and Israel has also been mooted, with earlier reports suggesting it might take place in the autumn.

The rationale behind the twin-track policy appears to be that if Greece and Cyprus collaborate on specific issues, on the one hand with Israel, and on the other with Egypt (for example on maritime issues, Search and Rescue), this effectively creates an indirect agreement or understanding on the same issues between Israel and Egypt, who do not enjoy normalised relations.

For the time being, this – boosting relations and cooperation among the Mediterranean neighbours – seems to be the main thrust of the trilateral arrangements.

By contrast, and as far as it can be gleaned, these meetings are not primarily geared to gas, energy analyst Charles Ellinas told the Cyprus Mail.

That’s because there are too many loose ends, where gas sale deals are concerned. And there, said Ellinas, it is the companies that call the shots.

For instance, last week energy minister Giorgos Lakkotrypis attended a conference of EU energy ministers in Houston, and while there met with Noble Energyreps.

It is likely that Lakkotrypis was looking to clinch an agreement with Noble regarding the commercial development of ‘Aphrodite’. Anastasiades’ meeting with the Noble people in New York was probably a follow-up meeting on that.

It’s understood that last month the government relayed to Noble its comments on the latter’s draft development plan for ‘Aphrodite’ gas field, on which the two sides must agree.

Back in March, the government had said that Noble would be declaring the ‘Aphrodite’ play commercial within a matter of weeks. There has been no news on that front since.

Meantime, and despite growing ties between Cyprus and Israel over the last two years, the two nations have yet to sign a unitisation agreement regulating the exploitation of cross-border gas in their respective Exclusive Economic Zones (EEZs).

A small part of the ‘Aphrodite’ reservoir lies within the Israeli EEZ, and within an offshore bloc licensed to the so-called Pelagic consortium.

It is a crucial point, because without a unitisation agreement Cyprus cannot proceed to sell its ‘Aphrodite’ gas.

The Mail understands that discord between the involved companies – Noble and Delek on the Cypriot end, and the Pelagic consortium on the Israeli side – concerning the distribution of the gas proceeds has prevented a deal from being struck.

By contrast, Cyprus and Egypt reached a unitisation agreement between them relatively quickly.

Christos Iacovou, director of the Cyprus Research Centre, a Nicosia-based think tank, has a broader geo-strategic outlook on the current ‘trilaterals diplomacy’.

In his view, the trilateral summits are in fact quadrilaterals: whereas for political reasons Egypt and Israel are not officially parties to both ‘clubs’, as it were, in practice they are kept in the loop about almost everything discussed in both tracks.

And according to Iacovou, the thing to watch is a possible agreement, down the line, between Greece and Egypt delineating their respective EEZs.

It is a high-stakes gambit, as in one fell swoop the move would automatically box Turkey in, as well as drawing a de facto line on the map – just west of Cyprus – delineating the respective EEZs between Cyprus and Greece, which these countries have refrained from doing.

But for now, says Iacovou, the four countries – Cyprus, Israel, Greece and Egypt – are focusing on low-level cooperation, such as tourism. Gradually, it may morph into security collaboration, joint military drills and so forth.

Naturally Turkey is aware -and wary – of such a situation. “It is a cat-and-mouse game, where on the one hand Turkey keeps track of developments, and on the other the four countries are gauging Ankara’s reaction,” said Iacovou.

Source: Cyprus Mail

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