Econostrum | Economic News in the Mediterranean

The Eastern Mediterranean becomes a new gas province

Written by Frédéric Dubessy on Tuesday, April 5th 2022 à 18:10 | Read 398 times

MEDITERRANEAN. The will of the European Union to limit, then to stop within five years, Russian gas exports (150 billion cubic meters per year to Europe, i.e. 45% of its needs today) after the invasion of Ukraine, will seriously impact the supplies. In particular in the South in Serbia, Slovenia, Greece and Italy, countries which respectively import 88%, 79%, 40% and 33% of this energy from Russia.

At the end of March 2022, the European Commission proposed to legislate on the obligation for Member States to have at least 80% of their gas reserve capacity in storage, as of 1 November 2022, to guarantee energy supply. This rate will be increased to 90% in subsequent years with intermediate targets set between February and October.
The EU even says it is "ready to create a task force on joint gas purchases at EU level". Its role: "to improve resilience" and the pooling of demand, which would "strengthen the EU's international profile with suppliers in order to secure imports at attractive prices for the coming winter", says the European Commission.

High gas potential in Mediterranean waters

The Eastern Mediterranean is becoming a new gas province
The Eastern Mediterranean is becoming a new gas province
This crisis should benefit producers. Algeria, the only Mediterranean country along with Syria not to have voted in favour of the UN resolution against the Russian invasion of Ukraine on 2 March 2022, announced on 27 February 2022 that it would be able to substitute itself, in part, for Russian exports. That is to say, just three days after the start of the conflict. "Sonatrach is a reliable supplier of gas to the European market and is ready to support its long-term partners in case of difficult situations," stressed Toufik Hakkar, CEO of the Algerian state-owned hydrocarbon company. Its Transmed gas pipeline links Algeria to Italy with capacities (32 billion cubic metres per year) that have not yet been reached. Algiers also has Medgaz (GZ4) which supplies Spain (60% for domestic consumption and 40% for export). On the other hand, the Maghreb-Europe Gas Pipeline (GME) closed its valves at the end of October 2021. It was sacrificed, and the EU is a collateral victim, on the altar of the diplomatic crisis between Algeria and Morocco, through which it had been transiting since 1996, before supplying 13 billion m3 per year to Spain for the entire Iberian Peninsula.

Other solutions exist, in particular with the Greenstream gas pipeline connecting western Libya to Sicily and the TAP (Trans-Adriatic Pipeline) linking Azerbaijan to Europe and delivering to Turkey, Italy and Greece.

Tomorrow, in addition to the gas near the Libyan coast, we will also have to take into account the promising potential of offshore Moroccan gas, the Algerian gas explored offshore by ENI and TotalEnergy (it remains to be seen whether Algeria has maritime potential in addition to its onshore potential), as well as the major discoveries of gas deposits off Cyprus, Israel, Gaza and Egypt.

"The Eastern Mediterranean could be useful"

"While everyone is looking for gas all over the world to replace Russian gas, some people think that the Eastern Mediterranean could be useful," Francis Perrin, a specialist in energy issues, pointed out. Speaking at the 11th International Meeting of Cybèle (Marseille, 31 March and 1 April 2022) organised by the Euromed-IHEDN association, the director of research at the Institute of International and Strategic Relations (IRIS - Paris), and associate researcher at the Policy Center for the New South (PCNS - Rabat), described the Eastern Mediterranean as "a new gas province.

The fact remains that the delimitation of maritime zones in this sector - and therefore the underlying question of who owns the resources - is still highly contested between states (Israel/Lebanon, Turkey/Cyprus, Turkey/Greece). It often prevents the immense potential of offshore deposits from being explored or even exploited. During the 11th Cybele Meeting, Elie Jarmache, director of the French delegation to the United Nations on the continental shelf, rightly recalled the phrase of the French geographer and geopolitologist Yves Lacoste: "geography is first and foremost used to wage war". He added, "this could be applied to maritime geography." He distinguishes between the "wise western Mediterranean" which would include France, Italy, Spain, Croatia and Slovenia, and the "more agitated, unstabilised eastern Mediterranean with a long history of delimitations."

The Eastern Mediterranean becomes a new gas province
The Eastern Mediterranean becomes a new gas province

The symbolic case of Cyprus

"The gas discoveries have only intensified the already existing tensions and have made attempts at negotiations between these countries even more difficult," notes Francis Perrin. The case of Cyprus, a future gas producer and exporter, and its partition between the Republic of Cyprus and the self-proclaimed Turkish Republic of Northern Cyprus (TRNC) (recognised only by Ankara), remains the most difficult to resolve. "Cyprus is a member of the European Union, which is not without geopolitical importance," notes Francis Perrin.

Elie Jarmache points to "a hybrid situation in the Mediterranean with the coexistence of bilateralism and unilateralism" symbolised on this island by a retroactive EEZ (Exclusive Economic Zone) law and an agreement with Egypt. According to him, maritime zone law "seeks the equitable solution with the primacy of negotiation and the emphasis on provisional arrangements. Once you have said that, you have said nothing. Diplomacy is privileged and everything ends up in a dialogue of the deaf. So the states make the rule," he concedes. Of the 309 articles in UNCLOS (United Nations Convention on the Law of the Sea), only two deal with delimitation. "Some countries, most notably Turkey, have tried to create a specific regime for the Mediterranean, but the Conference has refused to apply universal rules," says Elie Jarmache.

There are also two exploration zones covering Lebanon's territorial waters, one of which is disputed by Israel. "So only one is being explored," says Francis Perrin. The same is true of the field off the coast of Gaza, with a confrontation between Israel and Hamas blocking exploration. As for Syria, "it is out of the game because of the war and the sanctions, which do not encourage oil companies to come and invest," says the director of research at IRIS.

For Francis Perrin, countries must pool their projects and seize the "opportunity" of the war in Ukraine (photo: F.Dubessy)
For Francis Perrin, countries must pool their projects and seize the "opportunity" of the war in Ukraine (photo: F.Dubessy)

"No short-term solutions"

Hopes could come from the EastMed project. Since January 2020, Greece, Cyprus and Israel have joined Albania, Italy and Greece, the promoters since September 2012, as partners in this future submarine gas pipeline. With a length of 1,872 km, it should be operational between 2025 and 2027 to transport between 9 and 12 billion cubic metres of gas annually from the sea off Cyprus and Israel to Europe via Greece, Cyprus and Italy. But this installation has not had the consent of the United States since January 2022, as Washington considers the project to be economically unviable and not part of the American green agenda. And especially not from Turkey since its launch in 2013. Ankara even tried to short-circuit EastMed by signing an agreement with Libya to delimit their respective maritime spaces in 2019. It has been declared illegal by three countries: Cyprus, Greece and Egypt. While France, followed by the European Union, denounced in 2020 the presence of Turkish exploration vessels, including the Oruç Reis, in these controversial waters. Nicosia had even accused Ankara of wanting to "undermine regional security".

EastMed, gas pipelines from Algeria - "the EU is looking for gas at a time when a pipeline is closed", regrets Francis Perrin - and Libya, LNG tankers, construction of LNG terminals in Cyprus or Israel, exploitation of new fields... "In any case, the Mediterranean cannot be a short-term solution for the European Union," warns the energy specialist. "The gas industry is governed by long contracts, because the projects are expensive and have a long life span," he continues. "It is in the interest of several countries to pool projects. This is perfectly rational, but it has not led to cooperation. It remains to be seen whether the war in Ukraine, an exceptional situation, will allow them to put aside some of their differences and seize this perhaps unique opportunity. The misfortune of some makes the misfortune of others, even in geopolitics," Francis Perrin acknowledges.

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