The Leviathan Gas Basin and Geopolitics

In November, TAG President Jack Devine spoke at the Marfin Popular Bank’s 4th International Conference in Cyprus.  The topic was Commodities, Environment, and Climate Change, and the discussion focused on the discovery and exploration of the Leviathan natural gas basin in the Eastern Mediterranean.  This development is likely to be of increasing interest as global energy needs grow and tensions in the Middle East increase.

Based on information from TAG sources and analysts, we believe the Leviathan basin is an economic boon and represents a possible alternative to existing Russian supply lines to Europe.  At the same time, it has the potential to exacerbate tensions between a roughly aligned coalition composed of Turkey, Iran, Lebanon, and Egypt, and an increasingly allied Israel, Cyprus, and Greece.  Economic and geopolitical incentives will likely override these fissures, but growing tension among the U.S, Europe, Israel, and Iran, and the uncertainty surrounding the Arab Spring could lead to miscalculations or override current incentives for cooperation.

The proposed exploration of Leviathan under Israeli and Cypriot auspices quickly caused unease in the region, with Turkey sending ships to the area during exploratory drilling in September 2011.  But barring an outbreak of regional conflict, these divisions are likely to be less stark as exploration continues.  In particular, as tensions between Iran and the U.S. and Europe increase, Turkey will become an increasingly critical U.S. and NATO ally. The Turkish government’s recent agreement to host NATO antimissile radars and their continued calls for the resignation of President Assad underscore Turkey’s mutual interest in maintaining strong ties to the West.

Russia could view the development of Leviathan as a geopolitical threat, but more likely it will treat is as an opportunity to protect and enhance its ability to supply gas to Europe.  The basin offers a potential Southern alternative to the northern gas pipelines from Russia, but unlike the planned (and apparently defunct) Nabucco pipeline, its development is unlikely to be free of Russian interests.  While Russian involvement could limit the extent to which Europe is eager to rely on Leviathan-sourced gas supplies, prices will be the more significant factor as European economies continue to falter.

Ultimately, Leviathan is a chance for regional actors to collaborate on a project of mutual interest, for mutual benefit.  Economic incentives would ensure this, were it not for existing tensions and the potential for those to spin out of control based on miscalculations.  A reduced overt U.S. role in the region as a result of draw-downs in Iraq and Afghanistan could increase the likelihood of conflict, particularly if not replaced by robust intelligence architecture to maintain awareness and protect U.S. and allied interests.