Tuesday,25 September, 2018
Current issue | Issue 1122, 15 - 21 November 2012
Tuesday,25 September, 2018
Issue 1122, 15 - 21 November 2012

Ahram Weekly

Gas alert

Experts are warning that Egypt may lose out on major oil and gas reserves in the East Mediterranean if it does not protect its offshore economic borders, writes Niveen Wahish

Al-Ahram Weekly

This week, the Shura Council discussed a report prepared by its Arab Affairs and National Security Committee that showed that Israel has trespassed into Egypt’s offshore zone in the East Mediterranean and is claiming its right to oil and gas wells in the area.
The Shura Council’s report, which has been six months in the making, was triggered by a warning by several Egyptian scientists that Israel is prospecting for oil and gas in Egypt’s Exclusive Economic Zone (EEZ).
The EEZ is a sea zone prescribed by the UN Convention on the Law of the Sea over which a state has special rights in the exploration of all natural resources and use of marine resources. It stretches from the edge of the state’s territorial sea baseline, out 200 nautical miles from its coast.
The Shura committee called for redrawing the borders of the economic zone in the Mediterranean with Israel, the Gaza Strip, Turkey, Greece, Turkish Cyprus as well as Greek Cyprus.
The problem emanates from the fact that existing economic borders used by the Ministry of Petroleum are considered erroneous, according to several Egyptian scientists. Accordingly, Cyprus and Israel are claiming their ownership of major oil and gas wells, including Aphrodite, Leviathan and Tamar.
Ibrahim Zahran, petroleum expert, explains that EEZs of the countries overlooking the east of the Mediterranean Sea should be specified according to the UN Convention on the Law of the Sea — the agreement that sets the EEZ at 200 nautical miles (around 370 kilometres) from the coast.
But that is not currently the case. Egypt has an agreement signed only with the Republic of Cyprus in 2003 whereby both countries specified their EEZ at 176 kilometres. In the meantime, Cyprus has signed with Israel a similar agreement setting the distance of the EEZ of Israel at an equal distance.
Zahran said this agreement was erroneous because the agreement should have been signed by all nine countries overlooking the area. The problem is that neither Turkey nor Israel are signatories to the UN convention. He believes that the countries that have not signed the UN convention have the intention of malpractice, which is why they do not want to set boundaries for themselves.
But the petroleum minister has said on television that the UN convention stipulates that should the distance between any two countries be less than 400 nautical miles, the distance is divided in half, which is the case with Cyprus. He said that the borders for Egypt’s EEZ are well defined based on the agreement with Cyprus and the latter’s agreement with Israel.
Nonetheless, the minister organised a large scale meeting Monday to get to the bottom of the issue under dispute. The meeting brought together representatives of the various ministries and authorities concerned, as well as scientists. The minister said Monday night that a statement was yet to be issued with conclusions once discussions came to an end.
However, Nayel Al-Sahfei, visiting professor at the Massachusetts Institute of Technology, who was among the scientists who first drew attention to this issue, has said that the division adopted by the ministry can work only if none of the two countries has historical claims to the area. In an article published on Marefa website, Al-Sahfei said that Egypt has historical claims on the Eratosthenes mountain. The mountain was named after the Alexandria Library’s third library keeper. According to maps used by the Ministry of Petroleum, this mountain is within the borders of Cyprus.
What is needed, said Zahran — who also attended the Ministry of Petroleum meeting — is to annul the agreement with Cyprus. Two lawsuits have currently been filed for that purpose and the prosecutor-general is investigating the matter. He stressed that Egypt has the right to annul the agreement because the agreement stipulates that Cyprus would not sign with a third party without consulting Egypt. “This clause has been infracted.”
“Once we establish our borders and announce them, should anyone object we will revert to the court for the International Tribunal for the Law of the Sea,” Zahran said.
Another scientist who drew light to the dispute, Ramadan Abul-Ela, professor of petroleum engineering at Pharos University, said that in the meantime Egypt should present an objection to the UN through its UN representative. It should also officially warn oil companies working in the disputed areas in Cyprus and Israel of the existing dispute, so that they put on hold their operations until the issue is settled.
With these steps, Abul-Ela said, even should the operations of these companies continue, Egypt could track any oil and gas extracted from the region.
“Failure to resolve this issue could cost the country between $200-400 billion,” said Ibrahim Zahran. He stressed that drawing out boundaries is not a matter to be left to the Ministry of Petroleum.
The New York Times reports that “the US Geological Survey estimated that the Levant Basin, in eastern Mediterranean waters shared mainly by Israel, Cyprus and Lebanon, contains 3.45 trillion cubic metres, or 122 trillion cubic feet, of recoverable natural gas, more than the world consumes in a year. It also estimates that about 1.7 billion barrels of oil are recoverable.”
The story goes back to 1999 when Shell, the petroleum company, received a concession from Egypt to drill for oil and gas in the deep sea field called North East Mediterranean Deepwater Block, better known as NEMED. But 10 years later, in 2011, Shell decided after spending around $620 million that it was not worth developing.
Soon after, Shell took on an Israeli field very close to NEMED, an act that spurred some observers to believe that Shell pulled out because of US and Israeli political pressure. However, according to a Shell spokesperson quoted by Reuters in 2011, “Although Shell made two gas discoveries, we have decided not to pursue these further due to the challenging economics of the project.”
The current minister of petroleum said that Shell pulled out because the price the government was going to pay for the extracted gas might have rendered the whole operation unfeasible for the company. He said: “We have learnt that we could revisit this price in future agreements with companies.” He pointed out that neighbouring countries [meaning mainly Israel] might be offering a higher price because they want to find gas at any cost.
The ministry had made a call for bids for several blocks in the area. The bidding was supposed to close this month but was extended to February. Amr Hammouda, an energy consultant, said that it is possible that the current debate has put off companies from bidding for the plots that Egypt put up recently.
Hammouda believes that the issue is not just a matter of oil and gas but of politics. “It is a way for Israel to pressure countries of the region, such as Lebanon, into signing a peace agreement with it, or to agree to split the available oil and gas for fear of losing it all.”
Hammouda called for the establishment of a National Security Council that operates like a think tank where information from all sectors is collected. It should manage Egypt’s resources as well. “The country’s natural resources are owned by the people, not the government,” he said.

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