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Syrian energy deal puts Russia in gas-rich Med

Jan. 16, 2014 at 3:56 PM   |   Comments

BEIRUT, Lebanon, Jan. 16 (UPI) -- Syria's new 25-year energy deal with Russia, a key ally of embattled President Bashar Assad, could open the way for Moscow's eventual move into the gas-rich eastern Mediterranean -- if the Damascus regime survives the civil war that's raged since March 2011.

The Dec. 25 agreement gives Russia's state-controlled Soyuzneftegas exclusive exploration, development and production rights over 850 square miles of Syria's Exclusive Economic Zone in an area known as Block 2 roughly between the coastal cities of Banias and Tartous.

The deal gives the Russians, one of the world's leading energy producers, their first real foothold in the Levant Basin, considered to be rich in natural gas.

Israel, which hit major gas fields in 2009-10, containing an estimated 30 tcf, is the more advanced in terms of developing its gas reserves, which are likely much higher.

Its Tamar field began producing in March 2013 and the much larger Leviathan field is scheduled to go onstream in 2015. Cyprus is still in the early stages of exploratory drilling off its south coast.

There's an undeveloped field off Gaza, which has fallen victim to the Israeli-Palestinian dispute.

Some analysts believe Russia could even be the catalyst for exporting and marketing the region's energy riches.

Securing gas reserves in the east Mediterranean, however substantial they may turn out to be, will also help Moscow safeguard its dominant position as a natural gas supplier to Western Europe that could challenged by new competitors in the region.

The east Mediterranean's gas industry is still in its infancy and the key players at this stage, Israel and Cyprus, still have not been able to coordinate plans for future exports.

Proposals include a joint undersea pipeline from Israel to Turkey to reach energy-hungry Europe or a floating liquefied natural gas plant off Cyprus.

But the region is plagued by conflict and political turmoil -- civil war in Syria that affects Lebanon, Jordan, Israel and Turkey, friction between Lebanon and Israel, the 40-year-old Greece-Turkey rift over Cyprus.

This has scared off major investment and curbed development of the Levant Basin, which covers Syria, Lebanon, Cyprus, Israel and the Gaza Strip and which the U.S. Geological Survey estimated in 2010 contains 122 trillion cubic feet of gas and 1.7 billion barrels of oil.

Exploratory drilling off Lebanon has been delayed because of the political problems there, but Energy Minister Gebran Bassil says seismic surveys of 45 percent of Lebanon's EEZ indicate that alone contains 96 tcf of gas and 850 million barrels of oil.

The Financial Times says the Soyuzneftegaz deal could influence strategic calculations regarding the civil war in Syria by bolstering Assad's beleaguered regime in advance of a highly anticipated peace conference scheduled to be held in Switzerland later this month.

Meantime, Russia's deal with Syria could be a regional game-changer, even if it will take several years to start producing gas or oil in commercial quantities.

"The investment gives Russia the potential to lead the development of the whole region and to manage the use of the gas and the pace and destination of any exports," energy analyst Nick Butler observed.

"There has long been talk of a major LNG facility to take gas from the basin to the world market, but that looks fanciful in the absence of a proper estimate of the resource base.

"No one is likely to invest the $8 billion-$10 billion required to build such a facility before the cost numbers are clear.

"The European market is saturated, and given the lengthy journey times, east Mediterranean gas will have to be cheap if it's going to penetrate the markets in East Asia," Butler said.

"Piping the gas to Turkey or Egypt would be cheaper but to take such an option is to make a bet on the uncertain politics of both countries.

"In the absence of a viable alternative, all the parties involved might settle for allowing Russian companies to manage the development process across the basin," Butler said.

"To many in the region, Russia will seem a more secure, consistent ally than the retreating Americans and Europeans. By moving into the region, President Vladimir Putin is doing no more than filling a vacuum...

"The move into Syria is not just entirely rational -- economically and politically -- it is also a mark of the changing balance of global power."

Topics: Gaza
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