Natural gas deposits off the coast of Cyprus are not worth fighting over as the world energy market is turning towards cleaner and greener solutions, energy expert Charles Ellinas told a Turkish Cypriot newspaper in an interview.
In his comments published by the daily YeniDuzen, Ellinas added that the cost of exploiting the natural gas reserves is high due to tensions in the region, while prices remain depressed at low levels.
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He told the newspaper that fighting over the natural gas reserves in the Mediterranean is not in the interest of Greek Cypriots nor the Turkish Cypriots.
While tensions in the region also push exploitation costs higher, the gas carried to Europe by the EastMed pipeline will have to be sold at very competitive prices, as prices are already low.
“In a nutshell, problems in the region increases costs, making profit margins very narrow. Which means it is not worth fighting over,” said Ellinas.
He also stressed that the only way any of the sides will benefit from the natural gas resources in the Cyprus exclusive economic zone (EEZ) would be with the agreement of a solution to the Cyprus problem. “Arguing and delaying developments surrounding the Cyprus problem will only worsen the situation and everyone loses out,” he stressed.
The energy expert said that the natural gas reserves in the Cyprus EEZ belong to both communities and that an agreement on how profits will be shared in the future will be in the interest of both sides.
Ellinas explained that time is also running out as the international markets are turning towards greener solutions, making efforts to find buyers for natural gas even harder. He noted that “the earliest Cyprus will be able to export gas is in 2025, which means there is plenty of time to negotiate and find an agreement acceptable by all sides”.
He argued that finding buyers in Europe will be a difficult task as prices from competitive markets are quite low. “The only way to export the gas is to sell it to Asia in the form of liquefied natural gas (LNG). Because Europe has an abundance of gas resources. Even though there will always be a need for more natural gas, Cyprus gas cannot compete with the much cheaper Russian gas”.
Commenting on Turkey’s persistence on claiming and exploring the gas reserves in the Cypriot EEZ, Ellinas said that they are interested in the reserves as they have a number of agreements for importing natural gas with various countries which will end in the next 5-6 years.
“Turkey can legally benefit from the natural gas by buying it,” he noted, stressing once again that the only way out would be the solution to the Cyprus problem. “We must come up with a solution and then everyone will win,” he commented.
Asked to comment on the latest development with Turkish Cypriot leader Mustafa Akinci’s proposal on sharing natural gas resources, Ellinas preferred not to make a political analysis of the latest developments, but rather offer his view as an energy expert. He said that the rejection of Akinci’s proposal for setting up a joint committee means that tensions will continue.
“Turkey has made it clear that they are to continue drilling operations. If they do so, Greek Cypriots may ask the EU for more sanctions on Turkey. From my point of view this is a vicious cycle. Turkey says it will continue to drill, while the Greek Cypriots say that they cannot discuss the issue of natural gas resources while Turkey continues drilling in Cyprus EEZ.”
“For matters to move forward, negotiations will need to resume. Once the Cyprus problem is resolved all other problems will be resolved too,” concluded Ellinas.
