Cyprus-Egypt-Greece energy cooperation deepens but also complicates matters

In the first half of October, Dönmez announced that the drilling by Fatih would begin on Oct. 29, and other reports said that this will take place near Antalya in Turkey's undisputed Exclusive Economic Zone (EEZ).

In mid-October came a report by U.N. Secretary General Antonio Gutteres to the Security Council, in which he unexpectedly stated that "[t]he natural resources found in and around Cyprus should benefit both communities." Cypriot commentators widely interpreted this as less than a full endorsement of Cyprus's right to exploit resources in its EEZ.

A U.S. State Department official is reported to have stated that the U.S. "discourage[s] any actions or rhetoric that increase tensions in the area" and "still believe[s] that the oil and gas resources of the island...should be shared equitably between the two communities within the framework of a comprehensive settlement."

As the Cyprus Mail On-line put it, "In short, unless there is a settlement or an agreement on joint exploration, extracting natural gas will be very difficult and could threaten regional stability." Significantly, President Anastasiades has for some time been using language no longer entirely excluding a two-state solution.

What has emerged in recent days, however, is that even the project of a natural gas pipeline to Egypt for liquefaction and re-export now requires some kind of agreement with Turkey and with the Turkish community on Cyprus. The "comprehensive settlement" sought by the international community might likely still require either federative or confederative form.

Of course, these developments also further complicate the East Med pipeline project that foresees an undersea pipeline to Greece and then continuing to Italy, and has been talked about for so long. The EU-sponsored feasibility study for East Med is still going on, but Sefcovic added that "the construction of such a pipeline takes some time and has to be very well calculated." He suggested, instead, liquefaction in Egypt for export as "the best and most reasonable approach right now."

One thing that this means is that Israeli gas may be more likely to reach Egypti for liquefaction than Cypriot gas in the near future. After an arbitration ruling by the World Bank's International Center for Settlement in September, Egypt will have next to no gas of its own to export for the foreseeable future.