With the collapse of the negotiations over Cyprus, prospects for the EastMed pipeline have also visibly collapsed. This was the undersea pipeline project that would have taken gas from Israel's Leviathan deposit to Cyprus, where it would be joined by Cypriot production and then transferred to the Greek mainland.
In fact, prospects for the project had been invisibly collapsing for some time. Despite the political strivings to make such a pipeline possible, economic realities created doubts that had only been whispered. Not least of these was the fact that it would have been the longest undersea natural gas pipeline ever constructed, and would have to have been laid also crossing a very deep trench. These and other doubts accumulated over time, and they never dissipated.
The international gas market is being transformed and the EastMed project was just becoming more and more clearly uncompetitive economically and financially. Not only was the EastMed pipeline project extremely long and ambitious, but cost estimates also kept rising and timetables kept being extended. It is precisely those developments that now threaten the Turkish-Israeli gas pipeline project.
Of course there are other general, non-economic obstacles to a Turkish-Israeli pipeline agreement that are not involved in the particulars of the project.
First, dialogue is slower despite the resumption of regular diplomatic ties between the two countries, simply because many of the people in Turkey with whom the Israelis used to speak no longer have the political and economic authority that they did at that time.
Second, although Turkey's recent attempt at tactical Realpolitik rapprochement with Iran should not in principle affect the details of practical Turkish-Israeli business discussions over the pipeline, inevitably it will make more acute the political atmosphere in which those talks take place.
Third, the pipeline from Israel to Turkey would have to pass through Cyprus's exclusive economic zone, which Turkey does not recognize. The absence of a common view about this creates every possibility for misunderstanding, not excluding threats of the use of force. It is not clear who would finance or insure the project in view of such unknowns.
It had been hoped that the significant discoveries in the East Mediterranean energy province, in the Cypriot and Israeli offshore fields, might give political incentives for decreased international tensions in the region in general.
There was even a pipeline once envisioned that would have connected Turkey, Cyprus, and Israel, which was even touted (yet another "peace pipeline") and it was thought would be able to help with a comprehensive settlement of the Cyprus situation.
That clearly turned out not to be the case.
Projects bearing this "peace pipeline" sobriquet seem to be cursed. Others projects known in this way include Iran-Pakistan-India and Turkmenistan-Afghanistan-Pakistan-India, neither of which was even built, because they likewise ran up against intractable security concerns.
But even if a simpler and "merely bilateral" Turkey-Israel pipeline were economically justifiable, there would still be minefields to negotiate among the business lobbies and political opposition in all three countries.
In early 2014, press reports suggested that two Turkish companies had looked into constructing a gas pipeline from the Leviathan deposit to Turkey near Ceyhan, for a volume of between seven and 10 billion cubic meters per year.
The pipeline would have cost a little less than $4 billion and run 500 kilometers. However, little has been heard about this particular implementation of the pipeline idea in the more than three years since then.
And the visit of Turkey's energy minister Berat Albayrak to Israel to sign such a deal seems to keep being put off. In spring of this year his Israeli counterpart Yuval Steinitz expressed the hope that the visit would take place in summer. When that did not happen, Steinitz renewed that hope publicly in mid-July speaking at the World Petroleum Congress in Istanbul.
But reading between the lines, the prospects did not seem very auspicious.
"Hopefully," said Steinitz, "Mr. Albayrak will pay a visit to Israel this year in 2017." Then he continued: "This would help us accelerate and try to conclude this agreement." All the hesitations and conditionalities--"hopefully," "would help," "try to conclude"--give clues that this was not thought to be a sure thing.
Even today, the visit is still said to be occurring "later this year," but it has not been definitely scheduled. Clearly there are arrangements that still remain to be made. Clearly any "agreement" will not be the signing of a binding commercial contract. There is not even a Memorandum of Understanding yet. Whatever the reason, other matters seem to be occupying the political and economic agenda.
The pipeline from Israel's Leviathan deposit in the eastern Mediterranean Sea would presumably go to Ceyhan for domestic Turkish consumption. It is Israel's hope that gas delivered to Turkey might eventually be transmitted to European markets, but that would require the construction of yet another pipeline to take Israeli gas somewhere from where it could be transmitted to Europe.
And that, in turn, would represent yet another important capital expenditure, at a time when the international gas market is more and more flooded with supply, and likely for the long-term future. Industry specialists estimate that the average cost of natural gas over the next 20 years will be slightly under $200 per thousand cubic meters.
That figure is for Europe-to-Europe gas transmission. Europe-to-Asia would be higher because of the transportation costs. Recovering the costs of developing and transmitting Israeli gas to Europe are reliably estimated to be at least half again as much as that 20-year estimate.
Israel seems to be losing chances for its once-promising international gas market. The Zohr discovery in Egypt's offshore will decrease Egyptian demand, although Israel will still be able to sell some quantities in the short and intermediate term. Gas sales to Lebanon have become problematic. Europe seems increasingly out of reach.
But Turkey, situated at the geographical crossroads of Asia and Europe, has many other potential international gas suppliers and seems to be in the process of deciding that it can afford to wait.
The one strategic decision that still presents itself to Ankara is how to diminish its overdependence on natural gas imports from Russia.
