No energy projects are likely to be financed by international financial institutions amid the current political conflict in the Eastern Mediterranean, according to experts on Friday who spoke at the virtual launch of a new report by the Atlantic Council.
Former Permanent Representative of Turkey to the OECD, Mithat Rende, said that it is quite difficult for the international institutions to engage in a major energy and infrastructure project in the Eastern Mediterranean.
'These institutions study the project and decide whether it is economically viable and environmentally sustainable, what is the political risk in the region. And, probably, they will not be able to convince their partners to finance such risky projects. So, I do not see any opportunity at this point especially with regard to the gas discoveries in the Eastern Mediterranean,' he noted.
Rende also stated that major energy companies might use their own financial resources to realize such a project if they could convince their shareholders despite the political situation.
Richard Morningstar, founding chairman of the Global Energy Center in Atlantic Council, said that even the major companies will avoid making any major investments if there is considerable political risk.
'I do not see a major project going forward with a huge amount of political risk. That is why right now it seems to me the only viable project and the only one that we could even closer and more likely category is gas going from Zohr field to Turkey to Egypt and then maybe back to Europe as LNG for example,' he said.
The report by Olgu Okumus, a non-resident fellow of the Atlantic Council, entitled 'Value Beyond Price: Prioritizing Political Stability and Regional Integration When Financing Eastern Mediterranean Gas,' also suggested that international financial institutions must ensure that any East Mediterranean gas-related projects include provisions on how these projects can strengthen overall regional integration, along with requirements needed for environmental and social-risk feasibility studies.
- Greece and Greek Cypriots need to give up 'maximalist' positions
Pointing out that European Union (EU) and the US could take part in some constructive contributions to the process, Rende said that the EU already made a big mistake by accepting full membership of the Greek Cypriots to the EU.
'Now they are repeating their mistakes by also siding with Greece and the Greek Cypriots and keeping Turkey under pressure. They should really act with restraint and try to encourage Greece and the Greek Cypriots to roll back from their maximalist positions,' he said.
Rende reminded that Turkey has always expressed readiness to start a dialogue and enter into negotiations.
'The Turkish side has emphasized on various occasions that they are for an equitable solution. This is the overriding principle in international law. But, Turkey can not recognize Greek Cypriots as the sole owner and representative of the island as a whole. Turkey is not in a position to negotiate with the Greek Cypriots until a comprehensive settlement has been reached,' he detailed.
Rende stressed that Turkey has the longest continental coast in the Eastern Mediterranean and it is not an inclusive approach to exclude Turkey from the platforms like Eastern Mediterranean Gas Forum (EMGF) in the region.
'Thus, Turkey should be one of the major players in the region and needs to be invited to the forum as well as other states,' he said adding that Turkey's activities are in line with international law.
Morningstar asserted that the US and the EU should push for political negotiation with respect to the issues to hopefully 'get each side off the position'.
He said that the US and the EU can certainly play a role in facilitating negotiations involving all the parties, including Turkey, and added 'You can't have political negotiations, without one major party. Turkey obviously has to be involved.'
He also stated that all parties should avoid military conflict and conduct real political negotiations.
- Tensions in Eastern Mediterranean
The tension in the Eastern Mediterranean was first ignited when the Greek Cypriots made international agreements to explore energy resources around the island, ignoring the legitimate rights of the Turkish side on the north of the divided island. Western companies, with the support of their governments, embarked on a wide range of natural gas exploration and drilling in the region with the support of the Greek side.
For years Turkey and the Turkish Republic of Northern Cyprus (TRNC) have warned the parties involved that the natural resources around the Cyprus island should be offered for the benefit of all people on the island.
Greece has disputed Turkey’s energy exploration in the region, trying to box in Turkish maritime territory based on small islands near the Turkish coast.
Turkey -- the country with the longest coastline in the Mediterranean -- has sent out drill ships to explore for energy reserves on its continental shelf, saying that both Turkey and the Turkish Republic of Northern Cyprus (TRNC) have rights in the region.
By Firdevs Yuksel and Nuran Erkul Kaya