Op-Ed: Cyprus' Bailout Hopes All About Petrodollars
While Greek Cypriot citizens are not willing to gamble away their savings on gas futures, Russia and the European Union are certainly less hesitant.
This is both a negotiating point for Cyprus and a convenient tool of blackmail for Russia and the EU. Essentially, the bailout is the prop on a stage that will determine who gets control of these assets.
Theoretically, Cyprus could guarantee Russia exploration rights in return for assistance. As much as this is possible, the EU could ease its bailout negotiations if it becomes clear that a Russian bailout of sorts is imminent.
Gas finds in the Mediterranean and particularly across the Levant Basin—home to Israel's Leviathan and Tamar fields—could be the answer to Russian gas hegemony in Europe. The question is: How much does Cyprus count in this equation? A lot.
Though only half of the estimated resources in the Levant Basin, Cyprus' potential 60 trillion cubic feet of gas could equal 40% of the EU's gas supplies and be worth a whopping $400 billion if commercial viability is proven.
Russia is keen to keep Cyprus and Israel from cooperating too much toward the goal of loosening Russia's grip on Europe before Moscow manages to gain a greater share of the Asian market.
Russia is also not keen on Israel's plan to lay an undersea natural gas pipeline to Turkey's south coast to sell its gas from the Leviathan field to Europe. Turkey hasn't agreed to this deal yet, but it is certainly considering it. This is fraught with all kinds of political problems at home, so for now Ankara is keeping it as low profile as possible.
With all of this in mind, Russia is doing its best to get in on the Levant largesse itself. While it's also courting Lebanon and Syria, dating Israel is already in full force. Gazprom has signed a deal with Israel that would give it control of Tamar's gas and access to the Asian market for its liquefied natural gas (LNG). Tamar will probably begin producing already in April at a 1 billion cubic feet/day capacity.
In accordance with this deal, which Israel has yet to approve, Gazprom will provide financial support for the development of the Tamar Floating LNG Project. In return, Gazprom will get exclusive rights to purchase and export Tamar LNG. It is also significant because Tamar is a US-Israeli joint venture—so essentially the plan is to help Russia diversify from the European market.
What does this mean for Cyprus? The chess pieces are still being put on the board, and both fortunately and unfortunately, Cyprus' gas potential will be intricately linked to its bailout potential.