What’s new? Over a decade of gas discoveries in the Eastern Mediterranean raised hopes that “gas diplomacy” could dramatically reshape relations among countries in the basin – and even farther afield. The creation of a regional gas forum contributed to this line of thinking. But the prospects for gas diplomacy face significant limits.

Why does it matter? The region is beset with armed conflicts and political disputes, including those involving Israel and Palestine; Israel and Lebanon; Cyprus, Türkiye and Greece; and more. The false promise of significant gas exports to Europe has intensified competition, while gas diplomacy has failed to address the conflicts’ underlying causes.

What should be done? With the collapse of European Union plans for a pipeline to carry the region’s gas, it is time to reboot expectations for gas diplomacy. Eastern Mediterranean governments should focus on regional markets and cooperation. Actors pursuing conflict resolution should focus on political dynamics, with gas diplomacy playing a subsidiary role.

Recent gas discoveries in the eastern Mediterranean have transformed the region’s Energy market and economic relationships, raising hopes for geopolitical change as well. The U.S. pioneered what it called “gas diplomacy”, aspiring to use the region’s new energy wealth to bring its countries in conflict to the negotiating table. Israel and Egypt, the new finds’ main beneficiaries, co-founded a regional gas forum. The European Union (EU) launched a study for a pipeline that would carry Israeli and possibly Cypriot gas to Europe – a project that appeared timely indeed after Moscow’s all-out invasion of Ukraine in February 2022 choked off access to Russian gas. But the pipeline project now seems to be dead, due to commercial and environmental concerns. In this and other respects, the great expectations for gas discoveries in the eastern Mediterranean have proven outsized. All actors should now focus on a more modest objective – cultivating an inclusive approach to exploitation to promote regional integration and stability – and continue the move toward renewable energy sources.

Following major finds just over a decade ago – the Tamar and Leviathan fields near Israel, the Aphrodite field off Cyprus and Zohr close to Egypt – U.S. and European diplomats were optimistic that the new gas reserves would catalyse greater regional economic cooperation and stability by altering political realities in a strategic part of the world. The U.S. spearheaded “gas diplomacy” to advance separate gas deals between Israel and Jordan, Israel and Egypt, and Israel and Lebanon. It also hoped that economically driven actions on gas exports could motivate regional players to make breakthroughs toward conflict resolution in non-energy-related matters.

But even the gas deals that marked the high ebb of gas diplomacy tend to be less meaningful on inspection than they might appear at first glance. Deals between Israel, on one hand, and Egypt and Jordan, on the other, added a positive dimension to bilateral cooperation, but Israel had signed peace treaties with these two countries long since. Israel’s deal with Lebanon – with which it remains formally at war – was arguably more significant, leading as it did to a boundary delimitation agreement between the two countries. Yet Israel’s gas deals with Egypt and Jordan did little to warm what is best characterised as a “cold peace”, and the boundary accord between Israel and Lebanon shows no real sign of overcoming decades of enmity between the two.

Elsewhere in the eastern Mediterranean basin, the advent of gas diplomacy has delivered even less promising results, and indeed energy discoveries have done more to exacerbate than mitigate tensions. Against the backdrop of failing diplomatic efforts, discoveries off the coast of Cyprus have done nothing to bring Greek and Turkish Cypriots together. If anything, they are a source of added friction on the divided island. Meanwhile, the Gaza Marine gas field, which British Gas discovered off the coast of Gaza in 1999-2000, a full decade before Israel hit the gas jackpot with Tamar and Leviathan, remains inaccessible due to Israeli restrictions, and thus offers no relief to the people in Gaza suffering under a stifling Israeli siege.

The assumption that greater cooperation on gas exploitation and exports can pave the way to closer ties between states, and subsequently greater regional stability, helped create some excitement around the establishment, in January 2020, of the East Mediterranean Gas Forum. Co-founded by Egypt and Israel with EU and U.S. backing, the forum has over time also brought together the Republic of Cyprus, Jordan, the Palestinian Authority, Greece, Italy and France. Forum members envision that it will be a platform for economic cooperation and greater regional integration. Yet, even with the Forum up and running, prospects that it will serve as a mechanism for expanding regional cooperation on energy matters remain low. A key obstacle is the absence from the forum (for a range of reasons) of major regional actors on gas-related issues – including Türkiye, Lebanon, the de facto Turkish Cypriot authorities controlling territory in northern Cyprus and Hamas, the Palestinian faction that rules the Gaza Strip but, under Israeli occupation, has no control over its offshore gas field.

The exclusion of Türkiye in particular has in some cases aggravated tensions between the forum’s members and those who make opposing claims on the Mediterranean’s gas reserves. Rather than a neutral entity that manages a regional resource in a manner that could help states overcome their political differences, the forum is more a strategic partnership for states with shared energy interests.

Hopes that the gas discoveries might help forge deeper bonds between the region and European governments eager to diversify their energy supply – especially as relations with Russia have been strained to the breaking point by the war in Ukraine – have also been disappointed. The problem is one of both supply and demand. On the supply side, the eastern Mediterranean has only limited export potential: existing gas reserves are barely sufficient to cover domestic needs in regional countries, while existing infrastructure is inadequate to export what little is left over. Higher gas prices might make a pipeline from Israel and Cyprus to Greece, or a much shorter Israeli pipeline to Türkiye, commercially viable, but it would take years to complete such projects, a disincentive for would-be investors.

On the demand side, the growing consensus around the need to cut emissions by eliminating the use of fossil fuel altogether is dampening Europe’s long-term appetite for gas, militating against over-the-horizon investments in gas infrastructure, especially pipelines. The EU’s proposal for a pipeline from Israel and Cyprus to Greece and the rest of Europe faltered primarily for this reason.

It is time for a rethink of gas diplomacy, to reflect three key elements. First, commercial realities dictate that EU states will look elsewhere to meet the bulk of their near-term energy needs. Conversely, from their side, gas-rich countries in the eastern Mediterranean, rather than seeking to export to Europe or Asia, would do better to turn toward easily accessible markets in the region itself. A concerted effort to meet the region’s own energy needs with the eastern Mediterranean’s undersea bounty could be good for local economies and provide benefits in terms of broader economic integration, provided that it is pursued in an inclusive manner.

Secondly, pivoting to this goal will require certain key states that either sit or are active in the region to work more closely with states that they have tried to keep at arm’s length in energy dealings. Perhaps most prominently, the East Mediterranean Gas Forum should aim to broaden its membership – working, incrementally if need be, toward the inclusion of Türkiye. Only in this way can the Forum truly become a force for integration and stability, rather than recreating and exacerbating the fault lines that are already too prevalent in the region.

Finally, even if there is substantial progress toward regional economic integration, outside actors with an interest in the region’s stability should not assume that resource wealth can be the engine of efforts to end political and territorial disputes. Those will continue to require focusing on political dynamics. In short, part of any successful gas diplomacy strategy will be to understand its limits, and to ensure that it is paired with a political agenda for resolving the region’s conflicts.

Brussels, 26 April 2023

Gas discoveries in the eastern Mediterranean over the past decade have transformed the area’s energy market. With the discovery of Tamar, a 10 trillion cubic foot (tcf) natural gas field, in 2009, and Leviathan, at 17.6tcf then the largest in the region, a year later, Israel secured prospects for fully supplying its domestic market and becoming a net gas exporter.[1] The find allowed Israel to end its dependence on unreliable, politically fraught gas supplies from Egypt, which it had long brought through pipelines across the Sinai Peninsula. It had so much gas of its own, in fact, that it promptly began looking for outside buyers.[2]

Then, in 2011, Noble Energy discovered the Aphrodite gas field in Block 12, off the coast of Cyprus. Aphrodite is a medium-size field with reserves initially estimated at between 3.6 and 6.0tcf (or 101.94 to 169.9 billion cubic metres or bcm).[3] Aphrodite has yet to produce gas, mainly because the Cypriot market is not large enough to guarantee steady purchases that would make drilling commercially viable.[4] In the absence of a pipeline to Europe, the government is considering exporting gas by pipeline to Egypt and/or through liquefied natural gas (LNG) terminals it would construct.

Production at Leviathan faced challenges similar to those at Aphrodite: both fields lacked export infrastructure and buyers prepared to commit to long-term supply. In its search for such buyers, Israel was mainly eyeing the European continent. It hoped to reach Europe through the projected EastMed pipeline, which was to carry Israeli and Cypriot gas 1,900km under the sea to Europe via Greece. Israel saw the opportunity to be geostrategic as well as commercial: the pipeline would not only deliver profits but also bring it more closely into the European orbit.[5] In 2015, the European Union (EU) launched a feasibility study for the project, which was expected to wrap up by the end of 2022 (but instead, as discussed below, seemed to die a quiet death).

Finally, in 2015, Italy’s ENI corporation discovered Zohr, an Egyptian “super” gas field estimated to hold around 30tcf (roughly 849.50bcm), the basin’s biggest reserve, which dwarfed Leviathan and thus undermined overnight Israel’s hopes of emerging as the region’s gas hub. Having already constructed export infrastructure – the Damietta and Idku LNG terminals on the Egyptian coast, both of which can be used to export either Cypriot or Israeli gas – Egypt quickly became the de facto centre for gas export in the eastern Mediterranean. Given its large domestic market, Egypt also promised to soak up much of the gas it was producing, mainly at Zohr.

The discovery of these resources has inevitably played a role in shaping foreign relations in the eastern Mediterranean basin, but it has been less of a game changer than some outside actors (like the U.S.) might have hoped. Looking forward, calibrated expectations seem appropriate. On one hand, the region’s recent history suggests that prospects for shared interests in the region’s hydrocarbon wealth to bring about transformational change are fairly low.[1] On the other hand, gas finds certainly have the potential to alter the status quo in the eastern Mediterranean, either by encouraging greater regional integration or by acting as a catalyst for destabilising competition.

Against this backdrop, this report offers an initial mapping of the complex interaction between regional politics and the eastern Mediterranean’s natural gas landscape. It describes the aspirations that both local and outside actors have had for “gas diplomacy”, discusses how and why reality has tended to fall short of those ambitions, and offers suggestions for how the region’s resource wealth can most effectively be harnessed to efforts that will promote peace and security. The report is based on more than 70 interviews carried out in 2020-2022 with officials, policymakers, experts, journalists, activists and professionals who are or have been involved in the gas sector during the past decade in Lebanon, Jordan, Palestine, Israel, Cyprus, Türkiye, Egypt, the United Arab Emirates (UAE), Italy, France, Greece, the UK and the U.S., as well as at the EU. It also draws on Crisis Group’s earlier work on dynamics relating to gas exploration in the eastern Mediterranean.[2

Actors in the eastern Mediterranean roughly fall into three overlapping categories. First, there are states that enjoy pre-existing peace agreements, allowing them to expand economic relations to encompass trade in gas, albeit within limits. Secondly, there are those with ongoing conflicts or political disputes – which tend to severely limit or constrain, or even prevent, engagement on economic issues. Thirdly, there are states – Türkiye chief among them – that harbour regional ambitions and treat competition over eastern Mediterranean gas reserves as a means of pressing that agenda. The question of how successfully regional actors have worked and are working together to exploit new gas discoveries tends to hinge on where their relationships sit on this spectrum.

The most successful gas agreements that have been concluded in the eastern Mediterranean over the course of the past decade are those signed between Israel and each of Jordan and Egypt. In both instances, Israel had pre-existing peace agreements with the countries, and also enjoys economic and security ties with them, particularly with Egypt. Yet even with the new agreements, relations between Israel and its counterparties have not warmed appreciably, largely because the Egyptian and Jordanian populations remain opposed to Israel’s treatment of the Palestinians. Any expansion of formal relations with Israel beyond the bounds of what might be described as a “cold peace” remains likely to spark public outcry.

Until 2009, Israel appeared destined to remain a net gas importer. It relied heavily on Egyptian imports transported through a pipeline owned by the Egyptian East Mediterranean Gas Company. The pipeline, which begins in Port Said, traverses the Sinai Peninsula. At an above-ground terminal in al-Arish it forks into a branch running undersea to Israel’s Ashkelon port and another passing overland to Jordan. For Israel, dependence on Egypt for energy security was a point of concern, and its 2009 discovery of the Tamar field offered the welcome prospect of reducing it.[1] The government used Tamar primarily for domestic consumption. Then, the discovery of Leviathan a year later turned Israel into a gas exporter, with significant implications for its role in the region – including for its relations with neighbouring Jordan.

Jordan had struggled to enhance its energy security for years. Its heavy dependence on Egyptian gas exposed it to frequent supply shortages, particularly after 2010, due to attacks on Egypt’s al-Arish terminal.[2] To make up the shortfalls, the country had to burn heavy liquid fuels, rather than gas, to produce electricity, though these are pricier and more polluting. Already in 2007, the Jordanian government energy commission began exploring ways to diversify sources of electricity production in an effort to reduce the country’s reliance on the pipeline gas and its energy bill. The ensuing strategy had three pillars: supply diversification, development of local resources and environmental considerations.[3]

An outcome of this strategy was that Jordan began constructing a terminal in its Red Sea port city of Aqaba to allow it to buy LNG on the open market. Completed in 2015, the terminal provided Jordan with flexibility in terms of supply (the buyer, the National Electricity Producing Company, could purchase gas through both long-term agreements and the spot market). The LNG was a costlier source of electricity than pipeline gas from Egypt but a cheaper one than heavy liquid fuels.[4]

In 2014, Jordan also signed a memorandum of understanding with Israel to import $10 billion worth of gas for a period of fifteen years. An official deal followed in 2016, and gas began flowing in January 2020.[5] The agreement was a lifeline for Israel’s gas export potential. Leviathan’s size made it ideal for export, as domestic demand alone would not have made it a viable investment for producers. The signing of a long-term agreement underpinned investor confidence in Leviathan, allowing production’s first phase to begin.[6] A former Jordanian energy minister said “Jordan … gave Israel the ability to commercialise its own gas”.[7]

In Jordan, the deal has had at best a mixed reception. Parliament had voted against the memorandum of understanding in 2014. To pre-empt another possible rejection, the king dissolved the legislature before making the pact official in 2016, so there was no way for it to block the deal.[1] The moment the deal became public, popular protests broke out that were the biggest since the 2011 uprisings roiled the country.[2] Many baulked at the idea of deeper ties to Israel on principle. Others argued that the deal had made Jordan dependent on Israel for its energy security, for questionable benefit. A former energy minister said:

The gas agreement makes no sense. If we have an LNG terminal and are importing gas, why would we need Israeli pipeline gas? People are against any agreement with Israel on human rights grounds. But also, why place yourself at their mercy? They can close the tap [at any time].[3]

The government’s main justification for the deal is its claim that using Israeli pipeline gas is cheaper than burning liquid fuels or buying LNG abroad, saving the country close to $500 million annually.[4] Some industry experts, drawing upon price projections and their own analysis, concur, noting the deal allowed Jordan to reduce both the cost of its energy mix and damage from pollution.[5] The claims are impossible to verify at present, however, as the government has not made the deal’s terms public.[6]

The opacity exposed the deal’s authors in Amman to more criticism. A parliament member said, “I challenge any minister to honestly declare the agreement’s terms”, saying he doubted that Israeli gas was cheaper than LNG.[7] Others also pushed back against the government’s economic rationale.[8] They also argued that the agreement would distract the government from pursuing a better energy security agenda focused on renewables and job creation.[9] Many saw it as a capitulation to Israel. A leading activist said, “This government and its decision-makers are invested in Israeli interests, not Jordanian ones. Any energy agreement should be related to a ‘Jordan first’, not an ‘Israel first’, motto”.[10] Whatever the economic rationale’s merits, critics were convinced that the U.S. government, fixated on advancing Israel’s interests, had pushed the deal through at Jordan’s expense. A former minister said:

There was American pressure to sign the gas deal. We get $1.3 billion in aid from the Americans annually, almost equal to government salaries and retirement benefits for two months. So, we can’t afford to piss them off and lose that money, which was clearly at stake had we refused the deal.[11]

U.S. sources tell a different story. A former U.S. diplomat said Jordan was a “test case” for Washington, which was keen to find out if it could use gas diplomacy in the Middle East. He claimed that energy deals of this type create inter-dependency that can prevent conflict. He also contended that U.S. mediators had not pressured Jordan in the talks leading to the agreement but provided it with a lifeline at the request of senior Jordanian officials who feared the destabilising impact of energy insecurity at a time of unrest in the Arab world.[12]

Thus, even after it had been concluded, the deal continued to face domestic opposition. In 2019, months before the gas was to start flowing, parliament voted unanimously to approve a proposal for the government to draft a law that bans Israeli gas imports. The government apparently did not submit such a law to parliament, however.[13] A former minister, who was a cabinet member at the time, said:

No one [in the government] could do anything about it. And no one could defend it publicly because no one can adopt the narrative of the need to buy gas from Israel. The deal was very unpopular, and it would have been political suicide for any government official to publicly defend it on economic grounds or any other justification.[14]

In the end, the government pushed the deal through by means of a contract with Noble Energy, the U.S. partner firm in Leviathan, rather than Delek, its Israeli counterpart.[15] The ploy did not pacify the critics, however. Parliamentarians and civil society leaders hurled accusations of wrongdoing at officials, submitting papers purporting to document misdeeds to the government’s anti-corruption office, but with no result.[16] When gas began flowing in early 2020, the government imposed a gag order on media outlets seeking to report the story, which activists claimed was an effort to disguise the prices Jordan was paying.[17] While the start of imports did not trigger popular mobilisation like the first news of the deal had, it remains a source of grievance.[18] A Jordanian energy sector executive noted that, “The gas agreement with Israel could be a driver of future unrest, particularly since the agreement has caused acute popular resentment among people who are opposed to any kind of agreement with the Zionist entity”.