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ENERGY TECH
Israel-Lebanon gas dispute widens
by Staff Writers
Beirut, Lebanon (UPI) Dec 22, 2010


Turkmenistan shuts U.K. investment office
Ashgabat, Turkmenistan (UPI) Dec 22, 2010 - Turkmenistan is shutting a London representation office responsible for drawing investment into its energy sector as part of a cost-cutting and streamlining process. A presidential decree announcing the closure said the measure was necessary "to further improve and enhance the effectiveness" of the State Agency for the Management and Use of Hydrocarbon Resources, the institution responsible for attracting investment, negotiating and issuing licenses for the Central Asian country's growing energy sector. The former Soviet republic is seeking to diversify international markets for its energy exports, especially natural gas, to reduce dependence on Russia.

Analysts said the closure of the London office appeared to be part of a cost-cutting exercise and also seemed driven by the government's need to monitor energy transactions more closely. The importance of the change was indicated by the decree, signed by President Gurbangulu Berdymuhammedov. News of the closure triggered speculation that Turkmenistan might consider alternative locations, including the Middle East, where investor interest in its energy projects was likely to be more concentrated and positive than in cash-strapped Europe. Turkmenistan has 4 percent of the world's proven natural gas reserves and until recently was sending most of its gas to Russia before China offered and built a pipeline and had it operating within a matter of three years. Turkmen gas is likely to figure in planned pipelines to Europe and Iran, including the Nabucco gas pipeline project. Turkmenistan's proven gas reserves are estimated at 869 trillion cubic feet, making it fourth after Russia, Iran and Qatar in terms of gas reserves.

Ashgabat plans to produce and export 6.357 trillion cubic feet of gas by 2030 but is suffering the effect of a downturn in European demand and disruptions caused by an explosion that hit a gas pipeline to Russia in 2009. Timely relief came when China built and commissioned a pipeline -- the world's largest -- that transports up to 423 billion cubic feet of gas. The pipeline stretches from Turkmenistan across Uzbekistan and Kazakhstan to China and is used also to carry gas to Iran. Turkmenistan has campaigned for an international U.N.-sponsored mechanism to ensure stable cross-border energy supplies and security. Turkmen government efforts are aimed at advancing prospects for participation in the planned Nabucco pipeline, that will bypass Russia, and the Turkmenistan-Afghanistan-Pakistan-India gas pipeline. Turkmenistan is already building a pipeline, with an annual capacity of more than 1 trillion cubic feet, connecting the country's northeastern gas deposits with the Caspian Sea.

The dispute over vast natural gas fields in the eastern Mediterranean, centered on Israel and Lebanon, has spread to divided Cyprus, which involves longtime rivals Greece and Turkey.

Israel's discovery of three large fields containing an estimated 25 trillion cubic feet of gas off its northern coast over the last two years has added a whole new energy dimension to the Arab-Israeli conflict.

It has fueled tension between Israel and Lebanon, its northern neighbor, at a time when the Jewish state feels threatened by Iran and its allies, particularly the heavily armed Hezbollah movement in Lebanon.

The Beirut government claims that the biggest of the fields, Leviathan, containing up to 16 trillion cubic feet of gas as well as 4.3 billion barrels of oil, extends into Lebanese territorial waters and has warned Israel not to encroach on its turf.

The Iranian-backed Hezbollah, which runs its own state within a state and has the most powerful forces in Lebanon, has threatened military action if Israel taps into what it deems Lebanese energy resources.

Israel has vowed to retaliate for any attacks on its gas fields and the energy infrastructure that's expected to be developed over the next couple of years.

But the stakes have become much higher. A recent U.S. Geological Survey reported that there's up to 122 trillion cubic feet of recoverable gas off the coasts of Syria, Lebanon, Israel and the Gaza Strip.

Further south, Egypt is already producing gas and selling it to Israel.

On top of all that, the fields extend westward from the Levantine coastline toward Cyprus -- right into another conflict, albeit confined to the diplomatic arena these days, between Greece and Turkey.

Cyprus was dominated by Greek Cypriots until 1974, when Turkey invaded following an Athens-engineered coup aimed at uniting the island with Greece.

Turkey captured the northern one-third of the island. It maintains 40,000 troops in the self-declared Turkish Republic of Northern Cyprus.

Only Ankara recognizes the TRNC. The Greek Cypriot government in Nicosia is recognized internationally.

On Dec. 17, Cyprus, which has been exploring for offshore oil and gas fields for some time, and Israel signed an agreement in Nicosia dividing the 155 miles of water that separates them down the middle.

That defined the maritime border between the island and Israel and delineated their exclusive economic zones, or EEZs, allowing them to move ahead with further exploration in the eastern Mediterranean.

Three days later, the Turkish Foreign Ministry tongue-lashed the Israeli ambassador to Ankara, Gaby Levy, and warned, somewhat spuriously, that the agreement undermined efforts to reunify the divided island.

The spat deepened a rift between Israel and Turkey. They were once strategic allies but the relationship nosedived when Israeli commandos killed nine Turks aboard a ship carrying humanitarian aid to Gaza, blockaded by the Israelis, in international waters May 31.

Ankara fears the Greek Cypriots, the majority on the divided island, won't share any wealth they may accrue from offshore gas fields in their 20,400-square-mile EEZ with the Turks in the TRNC.

The Greek Cypriot government launched its first licensing round in mid-2007, covering a 7,720-square-mile area.

Among the companies were Nobel Energy of Houston and its Israeli partner, Delek Drilling, the outfits that struck it rich off Israel.

Turkey strenuously opposed that and sought to dissuade oil companies from conducting exploration.

Ankara also was planning to start oil and gas exploration in waters between the southeastern Turkish city of Mersin and the northern coast of the TRNC.

That raised the possibility of yet another dispute over eastern Mediterranean gas fields.

In 2008, Nicosia protested to the United Nations and the European Union about what it termed Turkish harassment of survey ships in the Cyprus EEZ.

And there's another wrinkle. Greece has sovereignty over islands close to the Turkish coast. If they all declare maritime EEZs, Turkey will feel even more cut out of the energy bonanza that seems to be emerging on their doorstep.

The Greek Cypriots signed an exclusive-zone agreement with Lebanon to demarcate maritime borders in 2007 that will determine who can drill where.

Nicosia has signed similar pacts with Syria, which has yet to initiate offshore exploration, and Egypt.

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