Roughneck Mag

Tectonic Shift in Middle East Energy Politics?

By Heather Douglas

“If anything offers a litmus test for trends in hard-nosed realpolitik, it’s the cutting of strategic international energy deals.  While the Western media persists in warning of apocalyptic consequences should Iran’s nuclear ambitions lead to outright conflict with Israel – a conflict drawing in Russia et al – an entirely different scenario is developing as Moscow is quietly buying long-term into the Israeli-Cypriot gas and oil energy bonanza.”  Peter C. Glover and Michael J. Economides, Russia’s New Middle East Energy Game (2017).

As the tensions intensify between Iran and Israel, especially since American President Donald Trump announced he was relocating the U.S. embassy to Jerusalem, an intriguing sub-text is emerging over Russia’s traditional backing of Iran.
While President Vladimir Putin remains publicly committed to his traditional Middle East partners – Iran and Syria – he appears to be quietly playing a geopolitical chess game that represents nothing less than a paradigm shift to that region’s power base.  Russia’s checkmate appears to be strategically and methodically locking up both Mediterranean natural gas and global LNG (liquefied natural gas).
Putin, the energy chess grandmaster, is often likened to Garry Kasparov (1963 –), former Soviet grandmaster and former world chess champion whom many consider to be the greatest chess player of all time.  From 1986 to his retirement in 2005, Kasparov was ranked world No. 1 for 225 out of 228 months and holds records for consecutive professional tournament victories and chess Oscars.
Like Kasparov, Putin is a shrewd, often ruthless player on the global stage. After all, the Kremlin’s coffers are filled from its energy profits.  It needs to gather more reserves into Gazprom’s sphere of influence – whether through direct investments, strategic contracts, or muscling its way into newly discovered fields.

Europe Gets Russian Gas

Putin’s first move was to ensure Europe’s on-going dependence on Russian natural gas.  He’s correctly realized that Israel’s prolific Mediterranean gas discoveries could easily be pipelined from Cyrus to Europe, and destabilize his consumer base.
According to the U.S. Geological Survey estimates, the Mediterranean Levant Basin contains 123 tcf (trillion cubic feet) of gas and 1.7 billion barrels of oil.  The Israeli Tamar and Dalit offshore fields contain an estimated nine tcf of natural gas with Tamar adding three mtpa production (million tonnes per annum).  The Leviathan field is one of the world’s largest offshore gas finds in the past decade, containing reserves of approximately 25 tcf.
Obviously 20 -30 mtpa of natural gas heading north to Europe would cut about one-third of Putin’s share of Russian gas to the continent.
Israel and Cyrus plan to build a multi-billion dollar floating LNG terminal near Cyprus to handle the LNG conversion from the Tamar, Dalit, Leviathan, and Aphrodite (Cyprus) fields.  Naturally, Russia signed a $3.5 billion loan to Cyprus to help pay its share of the costs.  Then Gazprom signed a 20-year contract with Trading Switzerland and Levant LNG Marketing Corporation, to sell Israeli-Cypriot LNG.

Asia Gets Mediterranean LNG

Not only does this strengthen Gazprom’s position in the global LNG market, it’s a strategic move in the booming Asian LNG market with the biggest buyers today being China, India, and Japan.  It rewrites the geopolitical rules for energy security.
Glover and Economides writing in Russia’s New Middle East Energy Game, “At a stroke Russia has now achieved a major role, and a serious piece of the eastern Mediterranean energy action, whether the energy is exported north to Europe or east to Asia. And Gazprom is not likely to leave things there.  It has also been granted the exclusive right to purchase the LNG produced by the Cypriot terminal.  Thus, the Tamar deal greatly strengthens Gazprom’s hand in fulfilling commitments made in a raft of medium and long-term deals with India and northeast Asia.”

Furthermore, the authors add, “Russia’s state-backed Gazprom is being used to extend and secure Russia’s global energy hegemony … It sends a clear message to Turkey, should the Ankara government consider military intervention in an attempt to stop the Greek Cypriot gas and oil exploration and infrastructure development.  Second, for all its apparent support of Syria’s Assad regime, Russia’s energy partnership with Israel is clearly meant for the long-haul … But most significantly, Russia’s re-alignment delivers a powerful retort to the hand-wringing angst of Western intellectuals and media ‘experts’ who persist in invoking the fear-laden question:  what would Russia do if Israel decides military intervention is the only way to end Iran’s nuclear ambitions?  Moscow won’t jeopardize its new deeply strategic energy partnership with its Israeli-Cypriot partners.”

Putin is definitely playing a masterful game of hard-nosed realpolitik energy chess to win.

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