Netanyahu Visit to Cyprus May Stoke Mediterranean Gas Dispute

Israeli Prime Minister Benjamin Netanyahu visits the divided island of Cyprus tomorrow in a trip that will thrust him directly into a dispute over Mediterranean gas drilling rights.

Both Turkey and Lebanon are demanding pieces of the natural gas bonanza that a group led by Noble Energy Inc. (NBL) discovered off the coasts of Israel and Cyprus, estimated to be worth billions of dollars in exports. Israel’s energy minister has said his nation is willing to use force to protect its gas field from outside claims.

Netanyahu’s trip is the first by an Israeli prime minister to Cyprus, which it has treated gingerly for years out of concern it could rock Israel’s military alliance with Turkey. The growing antipathy of Turkish Prime Minister Recep Tayyip Erdogan as well as the recent gas discoveries have led Netanyahu to cultivate ties with Cyprus, which long focused on tourism and covert intelligence sharing, says Emanuel Gutmann, an emeritus professor of political science at Hebrew University in Jerusalem.

“It really wasn’t important enough for us and there were good reasons not to offend Turkey,” Gutmann, who has studied Cyprus since the 1940s, said in a phone interview. “Now everything has changed.”

Netanyahu leaves tomorrow morning on the 40-minute flight to Nicosia, where he will meet with Cypriot President Demetris Christofias, Foreign Minister Erato Kozakou-Markoulli and other officials.

‘Energize’ Ties

“We’re hopeful that the visit will serve to energize bilateral cooperation,” Netanyahu spokesman Mark Regev said in a phone interview.

Christofias plans to sign a search and rescue agreement with Israel, while discussing joint interests in natural gas and efforts to reunite with the Turkish side of Cyprus, Marios Ieronymides, director of Christofias’s diplomatic office, said in a telephone interview. Netanyahu’s trip follows the Cypriot leader’s visit to Israel in March and Israeli President Shimon Peres’s tour of Cyprus in November.

“All state visits are important, especially this one in the context of recent hydrocarbon findings,” Ieronymides said.

Cyprus has been split since 1974 when Turkey invaded the island in response to a coup by supporters of union with Greece. The European Union, which only recognizes the Greek Cypriot south of Cyprus, has called on Turkey to recognize Cyprus and help resolve the ethnic division on the island, suspending parts of Turkish entry talks with the 27-nation bloc.

Leviathan Field

Houston, Texas-based Noble Energy, which holds the license to explore and exploit gas in Block 12 of the island’s offshore territory, said on Dec. 28 that it discovered as much as 8 trillion cubic feet of gas off the island’s southern coast, Cyprus’s first discovery. Israel’s Leviathan field may hold as much as 20 trillion cubic feet of gas, Noble said in a Dec. 19 statement.

The U.S. Geological survey estimates that the Levant Basin, a triangular slice of the Mediterranean lying between Cyprus and Israel, may hold 122 trillion cubic feet of gas. Noble Energy discovered the Tamar field in 2009 and the Leviathan field in 2010, both off the coast of Israel.

“Strategic cooperation in the energy area makes cooperation in the area of security necessary given the changes which are in progress in the area, such as the Arab Spring and Turkey’s reorientation to the Muslim world,” Christos Iakovou, director of the Cyprus Research Center, a Nicosia-based research group, said. “These force Israel to regard Cyprus in a different way than it did in the past.”

‘Sabotage’

Erdogan said Sept. 28 that the Cypriot government’s decision to explore for oil and gas in the Mediterranean was “sabotage” of efforts to peacefully resolve the division of Cyprus.

Turkish government officials said they would wait to comment until they hear what develops between Netanyahu and Christofias.

Lebanon has asked the UN to adopt measures to prevent a conflict with Israel over energy exploration in areas that may fall within Lebanese territorial waters. Lebanon, which signed an agreement with Cyprus demarcating their respective offshore territories in January 2007, has failed so far to ratify it.

Israeli Energy Minister Uzi Landau said in June 2010 that his government was willing “to use our force and strength” to protect its undersea gas finds.

Lebanon’s militant group Hezbollah, which fought a war with Israel in 2006, has repeatedly pledged to protect the country’s offshore resources. Erdogan sent fighter jets and frigates to escort a Turkish seismic research ship planning east Mediterranean exploration last year.

“We’re seeing a redrawing of the strategic terrain in the eastern Mediterranean at the moment,” James Ker-Lindsay, a United Nations adviser and author of “The Cyprus Problem,” said in a telephone interview from London.

The off-shore energy discoveries, said Ker-Lindsay, a lecturer at the London School of Economics, are “a game changer.”

To contact the reporters on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net; Stelios Orphanides in Nicosia at sorphanides@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net