Turkish geopolitical adventurism in the Eastern Mediterranean, lately perceived as aggressiveness by Greece (and Cyprus) and as an increasingly disturbing factor for major players in the energy game, does not move in otherwise calm waters. The storm caused by the Covid-19 pandemic – and the resulting deep fall in energy demand – is causing ripple effects of a different nature in the region.
The most recent episode: US/California Chevron (one of the oil majors, along Exxon Mobil, BP, Royal Dutch Shell, Conoco Phillips and Total) is acquiring US/Texas Noble Energy, in a 13 billion all-stock and debt assumption deal that represents a rising wave of consolidation in the oil-and-gas sector.
Chevron – one of the successors of legendary Standard Oil – is known for its strong balance sheet: the acquisition of Noble is expected to increase Chevron’s proven oil and gas reserves by almost one-fifth. Noble, active in Texas and in Colorado in the US, is known for its offshore forays in West Africa and – here we are! – in the Eastern Mediterranean, in Israel and Cyprus, “which has become quite a prolific hydrocarbon basin” according to Chevron CEO Mike Wirth. Noble Energy holds important stakes at the Leviathan (40% - with Delek having a 45% and Ratio Oil a 15% stake) and Tamar natural gas fields in Israel. It also holds a 35% stake at Block 12 (to which belongs the Aphrodite gas field) in Cyprus to which it is primary concession holder; 30% belongs to Delek, while a further 35% was recently sold by Noble to Shell.
Some weeks ago, Noble Energy invoked “tumbling commodity prices”, linked to the economic fallout from the Covid-19 pandemic to “reconfigure” its expected work schedule in Cyprus, while stating that “it is in a position to effectively deal with the current situation”. Noble was expected to cut back in capital expenditures -thus causing delays in resource development. The exploitation licence for the Aphrodite field was granted in November 2019; the consortium’s intention was to pipe natural gas to Egypt, either for the local market or for liquefaction.
Now that a further US oil-and-gas major is joining the region renewed interest may be expected: not to forget that ExxonMobil is active in Block 10/Glaucus field, but has hinted at putting drilling plans on hold Total/ENI have been faced with Turkish presence at Block 7 of the Cyprus EEZ, moving over to Blocks 6 and 8 “where more research data are available”.
It remains to be seen how far such resurgence of interest on part of major energy players will put again in motion the overall situation in the EastMed – as Cyprus Energy Minister Natasha Peleidou was prompt to assume, explaining that “there is interest for the wider region and not only for Block 12” in Cyprus. Or, whether Turkish adventurism will make it possible for natural resources in the region to be addressed only in the wider context of a Cyprus issue solution. (As to the Greek dimension, it is becoming clearer by the day that a geopolitical standstill clause has been activated following the recent face-off of Turkish and Greek naval forces over the Oruc Reis attempted seismic survey South-West of Kastellorizo).