The energy ministers of Egypt, Cyprus, Greece, Israel, Italy, Jordan, and Palestine gathered in Cairo on January 14 to inaugurate the Eastern Mediterranean Gas Forum (EMGF).
The energy ministers of Egypt, Cyprus, Greece, Israel, Italy, Jordan, and Palestine gathered in Cairo on January 14 to inaugurate the Eastern Mediterranean Gas Forum (EMGF). The newly formed entity strives to “create a regional gas market that serves the interests of its members by ensuring supply and demand, optimizing resource development, rationalizing the cost of infrastructure, offering competitive prices, and improving trade relations,” among other things.
It also strives to provide a platform for improved cooperation between the gas exporters (Cyprus, Egypt, and Israel), countries of transit (Greece and Italy), and gas importers. “The forum will support producing countries by enhancing their cooperation with consumer and transitory parties in the region,” according to a statement by Egypt’s Ministry of Petroleum. The EMGF will “take advantage of existing infrastructure and develop further infrastructure options to accommodate current and future discoveries.”
The statement also stipulated that in addition to its founding members, “other Eastern Mediterranean countries may join the forum later,” indicating the possibility that Lebanon might join the forum. The EMGF marks the first time that Arab states have included Israel in a regional alliance. It also highlights the increasing normalization of relations between Tel Aviv and other capitals in the Arab world, which could be heralding a new age of regional cooperation.
A New Spirit of Cooperation
As more of the recently developed undersea gas production comes online, Egypt, Israel, Cyprus, Greece, Jordan, and Italy are increasingly inclined to coordinate their efforts to optimize the potential of this energy source. The members of the EMGF hope to transform the region into a major energy hub.
For Israel, however, the forum represents more than just another body governing economic cooperation. Tel Aviv’s membership in the EMGF is a landmark development because it is an overt collaboration between Israel and several Arab countries, in stark contrast to past history. For the past 70 years, Israel has been isolated in the Middle East, making its membership in the newly-formed body a major geopolitical win.
Yuval Steinitz, Israel’s energy minister, was the first Israeli minister to visit Egypt since the fall of President Hosni Mubarak and the Arab Spring uprisings in 2011. “Israel exporting natural gas to the Arab world and also to Europe—this is something that sounded like a dream or a fantasy just 10 or 15 years ago,” Steinitz told Reuters.
The improving relations between Cairo and Tel Aviv are without a doubt one of the highlights of the meeting: “I think [the EMGF] is the most significant economic cooperation between Egypt and Israel since the signing of the peace treaty 40 years ago,” said Steinitz.
Egypt was the first Arab country to make peace with Israel in 1979. While the two countries have frequently cooperated on matters of security since that time, they have been discreet about it to avoid infuriating Palestinian supporters in Egypt. Nevertheless, warmer ties are creating new economic opportunities for the former enemies.
The Tides of Change
Since the early 2000s, Israel has discovered abundant amounts of gas and signed various deals to export it to Egypt and Jordan.
Since the early 2000s, Israel has discovered abundant amounts of gas and signed various deals to export it to Egypt and Jordan. Israel’s current production is around 10.5 billion cubic meters, or roughly 371 billion cubic feet, and it is expected to increase by more than double that amount in 2020, reaching approximately 27 billion cubic meters by 2021.
Steinitz announced that Israel will begin exporting natural gas to Egypt within months. Although the Israeli minister did not specify the initial level of exports, he indicated that shipments would double after Israel’s “huge Leviathan field in the eastern Mediterranean comes fully online.”
Israel is expected to export 64 billion cubic meters of gas to Egypt over the next ten years. While approximately half of these exports will be destined for Egypt’s domestic market, the other half will be liquefied and re-exported as LNG. These exports will be made under the landmark $15 billion natural gas export deal.
While Egypt has also made a series of important energy discoveries, including al Zohr, the largest gas field in the Mediterranean, it still needs more gas to meet its rapidly growing domestic demand. By leveraging its strategic location and its well-developed infrastructure, Cairo hopes to become a key trading and distribution center for gas in the region.
To reduce its dependence on Russian gas, the European Union is encouraging the formation of new delivery routes, such as the East Med gas pipeline. The $7 billion project, expected to be ready in six to seven years, is poised to transform the region into a crucial energy hub. This could decrease Moscow’s influence over the European energy market and thwart Tehran’s ambitions to use Syria as a gateway to the eastern Mediterranean.
Fueling Future Cooperation vs. Fueling Future Conflict
However, while the EMGF has the potential to become an important energy competitor, it could also turn into another tool for regional players to execute, mitigate, or counter each other’s strategies to exploit the region’s emerging gas trade.
The following three factors are just a few of the many realities that could limit the future success of the forum.
First, the natural gas reserves in the Eastern Mediterranean region (which are estimated to constitute less than 1 percent of the world’s total reserves) cannot compete with traditional gas powers such as Russia, Norway, and Qatar.
Second, the prohibitive cost of transporting gas could motivate Eastern Mediterranean countries to limit their trading to each other or other countries in the region.
Last, the founding members chose to call the EMGF a “forum,” denoting a more flexible structure, instead of an “organization” to retain the ability to change their trading or market strategies whenever necessary.
The EMGF could be a “transformational” project for the region in 2019.
The EMGF could be a “transformational” project for the region in 2019. Its success could change the dynamics of the region in profound ways even as old and new tensions persist. However, the forum will require efficient management as well as significant political compromises and cooperation to succeed. Otherwise, it may be in danger of becoming yet another one of the Middle East’s many “pipe dreams.”