The Cyprus crisis is about geopolitics not energy profits
It is another hot summer in the Eastern Mediterranean. Turkey has despatched two drilling ships and one seismic research vessel, Barbaros Hayrettin Paşa, to the coast of Cyprus. The Cypriot government, which Ankara does not recognise, sees this as an incursion into its exclusive economic zone (EEZ).
The European Union, of which Cyprus is a member, takes the same view. On 15 July, a meeting of EU foreign ministers decided to cut some financial assistance to Turley, suspend talks on an air transport agreement, and cancel bilateral dialogue, in response.
Turkey maintains that is acting on a mandate of the breakaway self-declared Turkish Republic of Northern Cyprus and that Turkish Cypriots deserve their fair share of the hydrocarbon deposits. Ankara also has competing claims over parts of the EEZ. Turkey is digging in and indicating it is in no mood for concessions.
Right after the EU move, Turkish Foreign Minister Mevlüt Çavuşoğlu threatened to send a fourth ship, the seismic research vessel Oruç Reis, into Cypriot waters. The Turkish Naval Forces Command announced last week that it was providing air cover, with unmanned aerial vehicles and helicopters, in addition to the frigates, corvettes and assault ships escorting the ongoing mission.
Cyprus and its ally Greece are circling the wagons too. Newly elected Greek Prime Minister Kyriakos Mitsotakis paid a two-day visit to Nicosia. The two countries are looking for support beyond the EU. At a meeting in Athens, Greek Foreign Minister Nikos Dendias and his Egpyptian counterpart Sameh Shoukry urged Turkey to back down.
As serious and concerning the crisis is, it may leave someone not versed in the ins and outs of Greek-Turkish disputes and the Cyprus issue in bewilderment. Turkey’s two drill ships, the freshly arrived Yavuz, and especially the Fatih that has been in the area since October, have failed to make a significant discovery of oil and gas. Even if they do so in the future, which is not unlikely, prospects for turning the finds into a profitable venture are not necessarily upbeat. Turkish companies do not have the technology to extract hydrocarbons from a deep underwater in sufficient volumes.
The threat of current and potential EU sanctions as well as the legal uncertainty as to the status of the EEZ would dissuade international energy companies from coming on board. Transporting the oil and especially the natural gas to Turkey, presumably the main consumer, would be an issue as well. The Turkish market is already benefitting from plentiful gas supplies from Russia and Iran. Another pipeline is bringing in volumes from the Caspian.
There has also been an uptick in purchases of liquefied natural gas due to lower prices charged by exporters such as Algeria, Nigeria, Qatar and, of course, the United States, which is keen to capture a greater share of global markets. Several weeks ago, a new floating regasification and storage unit was commissioned at Izmir’s Aliağa port, replacing a lower-capacity facility that had been in service for three years. In short, eastern Mediterranean gas might prove a tough sell.
The escalation around Cyprus’ shores is of a purely political nature. Turkey is asserting its role as the dominant power in the area and also making a point to the budding alliance between Greece, Cyprus, Israel and Egypt. Ankara is building up leverage in case Cypriot reunification talks, which collapsed in July 2017, are resumed. Cypriot President Nikos Anastasiades is set to meet Turkish Cypriot leader Mustafa Akıncı, head of the unrecognised northern Cyprus, on Aug. 9.
Anastasiades’ stance is that no substantive discussions are to follow, unless Turkey pulls out its ships. But if EU sanctions fail to make a difference and member states do not ratchet up pressure on Erdoğan with additional penalties, he may go a step further and launch some form of dialogue to defuse tensions. Mitsotakis is less likely to soften given the nationalist constituency in his own party, the conservative New Democracy. His U-turn of sorts regarding North Macedonia, another “national issue” for the Greeks, leaves little room for manoeuvre on ever-sensitive relations with Turkey.
It is notable that Russia, a long-standing partner of the Greek Cypriots, has this time taken Turkey’s side. The Ministry of Foreign Affairs in Moscow criticised the EU’s sanctions on Ankara. Russian Energy Minister Alexander Novak said Russia could help Turks develop offshore gas and oil in the eastern Mediterranean. Though Moscow will cooperate with Ankara’s regional rivals – the state-owned Rosneft has a contract in Egypt’s Zohr field - it would do its best to reap commercial and geopolitical dividends. Frictions on NATO’s southern flank serve Russian interest.
The United States is a wild card. Though it has a stake in the crisis, not least because of ExxonMobil and Noble’s involvement, it is keeping a low profile. Relations with Turkey are already strained as it is, because of the S-400 dispute and Syria. Yet in case of escalation the United States could easily be drawn in. In 2018, when tensions ran high, the U.S. navy escorted ExxonMobil’s drill ships. There has also been a take-off in the 3+1 partnership between the United States, Greece, Cyprus and Israel covering both security and energy.