Strategic Regional and Global Considerations for the Oil and Gas Business Saga in the Levantine Basin

Abstract:

For more than a decade, the East Mediterranean basin has been identified with a high hydrocarbon reserve potential. However, progress in offshore exploration and production is still relatively modest. This monograph treats the feasibility of new fossil-based energy resource exploration and production in the region from various angles. Due to the vast implications of the energy business, diverse factors come into play; climate change is just one of them.  Our study attempts to examine some of the most pertinent elements and proposes few recommendations.

Introduction

Throughout the ages, energy forms evolved from human to animal labor and the extensive use of lumber or crops. Until the first industrial revolution, starting in England in the eighteenth century, the shift from agrarian and handiwork economy to machinery-based industrialization occurred.  That development would not have been possible without discovering an entirely new energy source: fossil fuels. This crucial resource has gone a long way since then and constitutes, in a way, the center of our research. Hereforth, this monograph shall endeavor to treat offshore oil and gas prospects in the East Mediterranean region from various angles. It shall examine the long-term economic viability or essentiality of new oil and gas exploration and production. What are the pros and cons? Is the global energy market still thirsty for new oil and gas supply capacity? with the looming global warming threat, what is the world envisaging in terms of primary energy sources? What stakes are at play? What options are put at the table, and what are the consequences for the East Mediterranean oil and gas opportunity?  What are the relevant happenings in the largest economies of the planet? What innovations or other energy alternatives can threaten the future share of oil and gas in the energy mix and when? Is nuclear energy a competing option?

Furthermore, the paper attempts to expose, among others, why the progress in exploration and production (EP) is still below expectations compared to the potential of the East Mediterranean region. What are the parameters in play? Is it better to leave the potential resources for future generations, or is the time of the essence? i.e., otherwise, the chances of achieving affluence out of these reserves shall dwindle. What are the main hurdles preventing further development in this sector? What can the East Mediterranean basin’s concerned countries do to make the most out of this substantial opportunity to achieve long-term prosperity? What contributory role are the relevant  Intergovernmental Organizations (IGOs) able to perform?

A worthy indication that the arguments are not necessarily placed in their order of importance. Moreover, this monograph does not claim to present all the play factors, but some select ones.

• Background

Seaward exploration in the East Mediterranean region is not a very old practice. In 1969, Egypt initiated the first uncovering of offshore gas 34 km northeast of Alexandria. In 1999-2000 few additional humble gas findings at little depth west of the Gaza strip ignited an interest to accentuate exploration further. Subsequently, more sizeable scattered discoveries ensued between 2009 and 2019. Still, the East Mediterranean has very promising horizons for more gas and maybe oil resources waiting to be tapped. It thus maintains status as one of the most yet unexplored world regions.

Moreover, the US Geological Survey (USGS) performed two resource evaluations for the area in 2010, the first in the Nile Delta and the Mediterranean Sea strips of Egypt, the second in the Levant Basin Province. The results pointed to the presence of 10 Trillion cubic meters of economically extractable gas to be potentially discovered. This quantity makes double the reserves of Algeria,^[1] less than twenty nine percent of Russia’s, Thirty percent of Iran’s, and forty percent of Qatar’s.^[2] Besides, Constantinos Hadjistassou, an oil and gas expert at the engineering department of the University of Nicosia in Cyprus, noted: “That is a lot of gas, but activity in the Eastern Mediterranean, for now, is quite modest compared to the world’s busiest offshore fields, such as those in the Gulf of Mexico, the North Sea, the Persian Gulf and offshore Brazil where hundreds of drilling rigs are busy sucking up oil and gas from thousands of wells. In the Eastern Mediterranean, only about 50 wells have been dug so far in its ultra-deep waters.” ^[3]

On a global level, the world Total Primary Energy Supply (TPES) surged by two and a half folds between 1971 and 2017. It was also subject to alterations in its composition, mainly for oil and gas slices. Strikingly, although conserving its dominant position in 2017, oil dropped from forty-four to thirty-two percent share of TPES. Conversely, the share of natural gas increased from sixteen to twenty-two percent. On the other hand, coal maintained its position with just a one percent increase from twenty-six to twenty-seven percent. However, it has wobbled considerably throughout that time with a marked steady increase from 1999 to 2011, boosted chiefly by China’s growth of consumption. Lastly, nuclear energy share surged significantly, though still humble in comparison, during that period from one percent to five percent of TPES.[4]

• The Upsides

We start our examination by determining some if not most of the major points in favor of oil and gas prospects, both globally and in the East Mediterranean region:

1. Oil and gas will still be a necessity for the coming future. Chevron’s CEO John Watson indicated: “oil and natural gas are indispensable for the foreseeable future: “Although the use of renewables will grow … we see oil and natural gas are forecast to account for 50 percent of global energy demand by 2040.”[5] Mckinsey and Co.’s demand outlook for 2035 further confirmed the possibly doubtful oil demand prospects.[6]
2. In particular, oil from the MENA region would still be indispensable, as confirmed by the US Energy Information Administration (EIA): “The increasing trend of oil and gas demand growth is expected to continue, and thus is not foreseen to peak very soon. Despite the unconventional fossil fuels revolution, especially in the USA, oil from the MENA region will be needed to fuel world economies.”[7]
3. A high probability for the existence of a sizeable reserve in the Levant basin, as indicated by the US Geological Survey. The estimated commercially retrievable quantities are 1.7 billion barrels of oil and 122 trillion cubic feet of gas.[8] This volume of gas represents 76 years of EU’s gas consumption.[9]
4. The significant recent gas discoveries all over the Eastern Mediterranean basin have ignited the interest to more exploration enterprises and have strengthened the region’s energy prospects: Tamar field of Potential Reserve (PR) 10 trillion cubic foot (tcf) producing since 2013, Leviathan[10] (PR 22 tcf) since the end of 2019, the gigantic Zohr[11] field (PR 30 tcf) starting production in 2017, the Aphrodite[12] field (PR 5 tcf) discovered in 2011, Calypso[13] (PR 6-8 tcf) gas discovery early 2018, and Glafcos[14] (PR 5-8 tcf) discovered in 2019.
5. The demonstrated interest of International Oil Companies (IOCs): ExxonMobil, Houston’s Noble Energy, ENI, Total, BP, Novatek, and Qatar Petroleum, among others, are all operating in the East Mediterranean region’s offshore exploration and production (EP) projects as referred to before and hereafter.
6. Positive economic growth and population increase in the East Mediterranean region shall boost energy demand in the coming twenty years or so. Further, this region’s population is expected to increase to between 58 and 62 million in 2030, up from 45.3 million. The region’s current oil and gas reserves are expected to be depleted within few decades. The recent offshore discoveries there, of such ample recoverable resources, natural gas specifically, will bring significant change to the region’s supply-side predictions. With these discoveries, the East Mediterranean region shall potentially meet its growing energy demand and probably even foster exporting.[15]
7. The presence of a vital refining infrastructure in the Mediterranean basin that fosters a significant petrochemical industry, thus creating demand for different end uses of the region’s primary energy resources: “The existence of oil and gas reserves located in Algeria, Cyprus, Egypt, Israel, Italy, Lebanon, Libya, and Syria motivate the presence of more than 40 refineries and petrochemical installations around the Mediterranean that produce ammonia, methanol, urea, ethylene, naphtha, propylene, butane, butadiene, aromatics, and other industrial chemicals.”[16]
8. The significant reserve potential presents a lucrative profit-making opportunity for both IOCs and the concerned country at supposedly favorable terms. : “Geological studies conducted in Lebanon’s Exclusive Economic Zone (EEZ) indicate the likely presence of huge quantities of oil and gas offshore. Estimates are for no less than 100 trillion cubic feet of gas and 865 million barrels of oil.”[17]
9. Substitution of coal-fired plants to reduce emissions. An analysis by the IEA confirms that more than twenty percent of the significant increase in global gas demand in 2018 is attributed to the transition from coal to gas. The main demand growth drivers were the US in the first place, followed by China.^[18] For instance, from 2011 till 2019, 121 power plants utilizing coal were adapted for use with different fuels in the US. Plants switched to or wholly changed to natural gas amounted to 103. The main motive behind switching to natural gas was the stricter emission norms, the depressed natural gas prices, and the availability of a more effective new gas turbine technology.^[19] In the last decade, the share of coal in US power generation has been reduced by about a half to less than twenty percent. Conversely, the share from natural gas hit twofold to around forty percent. [20]
10. Central geographic location of the East Mediterranean basin at the proximity of the vast European market with close access to Africa and Asia, plus the critical artery of Suez Canal. An advantage in the transportation cost to export markets. A policy paper of the Lebanese Center for Policy Studies (Lcps) supports this inference for one country. However, this applies to the whole basin. The Lcps holds: “Lebanon’s location in the Eastern Mediterranean, with good coastal and land access, provides it with a natural advantage for gas exports. Lebanon has a number of regional trading options.”[21]
11. First mover’s advantage. For example, Lebanon’s offshore potential fortunes are still unexplored. : “Compared to other countries in the region, Lebanon is still a virgin energy market and can offer the potential of first mover’s advantage,” said Carole Nakhle, founder, and chief executive of Crystol ­Energy.[22]
12. No significant effect on future oil demand is expected from the booming electric car market, nor the US unconventional oil: “In particular, the growth of the electric car market, though curbing oil demand in the transport sector, still is not replacing global oil demand and thus not challenging the export potential of oil-producing countries. Moreover, the price of US unconventional oil is not yet competitive with the MENA supply.”[23]
13. Availability of abundant, relatively low-cost well educated, and qualified human resources (HR). For instance, based upon different statistics of UNESCO, UNICEF, and the World Bank, one of the basin’s nations, Lebanon, in general, has high literacy rates: 90% for adults and 98% for youth.^[24] Its schools and university graduates, in general, have an excellent academic and skill acquisition level, as confirmed by the World Economic Forum Global Competitiveness Index that ranked 137 countries. The country came 18^th in the overall quality of education system.[25] Moreover, the recent devaluation of the Lebanese currency has further strengthened its HR cost competitiveness.[26]
14. Being a new source of gas exports, the Levant Basin is attracting international attention from large companies in the sector, in addition to states, and the EU in particular with their new imports diversification centered energy security strategy: “The recent energy conference and Ministerial meeting organized by the EC and hosted by Malta and Cyprus, confirmed the importance of the Eastern Mediterranean region, including Lebanon, as a strategic partner to the European Union that may help achieve the diversification objective set out in the energy strategy.”[27]
15. Good prospects regionally for gas demand in particular: “Gas demand in countries in the region will continuously increase due to the high population growth, growing consumption patterns, and environmental policies. Moreover, discussions have been initiated with regards to creating a regional gas pricing hub.”[28]
16. As mentioned earlier, the East Mediterranean’s strategic geographic position and prospective hydrocarbons production potential may allow it to play a key role in supplying a portion of the regional demand and contribute to the diversification of gas supplies. Depending on the volume of gas that may be produced, the East Mediterranean producing countries may be able to access the global market through LNG As such, new venues and market options shall open up.[29] Noticeably, the export potential will be critical for securing the initial interest of foreign investors. Eventual export strategies will largely depend on the price range it can secure that is determined by the eventual size of reserves, the production targets, the cost of gas production, and the timing of gas exports, given surrounding gas market dynamics. Other external factors include gas price levels in potential export markets by the time production begins.[30]
17. One notable environmental advantage for natural gas plants is that they require much less material to construct than leading renewables. A graph showing materials needed to install various energy systems indicates that natural gas combined cycle plants and nuclear plants require the least of material for their construction by far compared to solar and wind which require the most. This upholds further that wind and solar cannot be relied upon alone to meet the needs to curb climate change in the coming 10-20 years.[31]
18. Complementarity between Natural gas and renewables. In a National Bureau for Economic Research (NBER) working paper, the findings confirm that the fast-reacting fossil technologies, of which natural gas, aid in disseminating renewable energy. They indicated that the growing expansion of power generation from solar and wind could raise the need for the quick response fossil fuel-based capacity that can be rapidly started or turned off. They even highlighted that as the diffusion of these renewables rises, quick response backup systems shall become a necessity and a burden as well. Hence their costs shall need to be taken into account to calculate the overall cost of shifting to RE accurately. The NBER researchers analyzed data from 26 OECD countries. They found a correlation between the development of fossil-based generation and that of RE: “All other things equal, more renewable sources were installed in those countries with fast-reacting fossil fuel plants available to compensate for supply variability. A one percentage point increase in the share of fast-reacting fossil generation capacity in a country is associated, on average, with a 0.88 percentage point increase in the long-run share of renewable energy.” ^[32] Moreover, a white paper released by the National Renewable Energy laboratory and Joint Institute for Strategic Energy Analysis further elaborates on the potential synergies between natural gas and RE. They suggest nine ways in which these two energy sources can cooperate instead of competing. ^[33]
19. The forecasted growth in energy consumption in the electric generation and the industrial sector. In September 2019, the EIA anticipated the rise in world energy demand in the reference case to reach fifty percent by 2050, driven mainly by Asia’s development. The industrial sector is the most significant end-user with more than fifty percent of worldwide energy usage.[34] In terms of natural gas, consumption is predicted to increase above forty percent between 2018 and 2050. Gas consumption shall increase in both power generation and the industrial sector: “Chemical and primary metals manufacturing, as well as oil and natural gas extraction, account for most of the growing industrial demand.”^[35] Notably, non-OECD nations account for seventy percent of the growth in global gas consumption.
20. Signaling strategic economic interest, the award of contract in January 2019 to Russia’s Rosneft for oil storage facilities redevelopment and management in the north of Lebanon.[36] The facilities are connected to key oilfields where the company has stakes via the old inoperative Kirkuk-Iraq pipeline linking the northern Iraqi city of Kirkuk, where large old gushers exist.[37]
21. Existence of a notable local market for both oil and gas. Imports of energy have been a long-standing tradition in the region.[38]
22. From a geographic viewpoint, Lebanon is well-positioned to make the most out of natural gas export alternatives both from present and intended regional gas pipelines and LNG schemes. Being already linked to the Arab Gas Pipeline, the country can supply Syria, Jordan, and Egypt. Other export destinations exist like the Asian and European countries. A worthy option is to export to Turkey via an offshore pipeline, thus enabling natural gas to reach the European grid. Nevertheless, the scope of Lebanon’s hydrocarbon discoveries and the quantities and associated costs of natural gas production shall determine the adequate export market policy for feeding the European and Asian marketplaces, be it through building LNG plants in the country or using those available or planned in the region.[39]
23. The readiness of the regulatory regime. Most concerned nations have done their homework in this regard.[40]
24. The availability of an all set functional LNG basic physical structure in Egypt that could serve all players’ interests, as the center of a gas market in the region. Bruegel, the European think tank specializing in economics, endorses:

So, all in all the plan of creating an eastern Mediterranean gas market based on the existing LNG infrastructure in Egypt does look like the most logical course, as it would present economic and commercial benefits for all regional players involved – and as it would also avoid unnecessary geopolitical tensions. Such an approach would also offer eastern Mediterranean gas suppliers flexibility in terms of destination markets in the future, a key element considering the uncertain role of gas in the decarbonising EU energy system.[41]

Here is one of the collaboration opportunities that await initiatives.

25. Production of Grey, Blue and Turquoise Hydrogen from natural gas. To face the critical global warming challenge, systems of energy are transitioning towards strategies and technologies that permit the reduction of GHG emissions. Here is where hydrogen’s potential role is being actively considered part of strategies on the national and global level. Different sectors are targeted, from industry to transportation. Grey or brown/black hydrogen production is derived from fossil fuels, with the majority from NG and coal. The process generates carbon dioxide emissions. Carbon Capture and Storage (CCS) is combined with grey hydrogen to generate the cleaner decarbonized blue hydrogen. Another method of generating hydrogen from fossil fuels is the molten metal pyrolysis with solid carbon as a byproduct. It is tagged Turquoise hydrogen. It has two advantages. It does not require CCS, and it produces a critical raw material, the natural graphite. Though still in the beginnings, Turquoise hydrogen has attracted the attention of large corporations such as Russia’s gas giant Gazprom and the German BASF.^[42] All of these three hydrogen production technologies utilize NG, oil, and coal as they are the cheapest. Worth mention that the worldwide demand for pure hydrogen has grown from 20 Mt in 1975 to 70 Mt in 2018.[43] Further, the west and its Asian allies have 2019 declared a commitment to developing hydrogen as one of the components in the energy transformation, besides renewables.^[44]

Some decline factors

In this section, we expose several essential factors acting against oil and gas prospects, again both globally and in the East Mediterranean region:

1. The unsteady business climate due to negative political and geopolitical influences. Such a situation does not contribute to nurturing the conditions that boost investment. Watson, energy mammoth Chevron’s CEO, holds: “Even the best of energy companies can perform only as well as the legal and regulatory environment allows. What will it take to draw out investment capital on the massive scale that is needed? The answer is access to resources, rational regulatory and tax regimes, and a stable business climate.”^[45] For example, one of the East Mediterranean countries, Lebanon, ranks 180^th out of 195 countries in political stability based on the index of the GlobalEconomy.com.[46]
2. The expansive global economic decline caused by the COVID-19 has placed many companies in a risky position and has negatively impacted the global petroleum demand for an extended period.[47]
3. The pervasive disputes over Exclusive Economic Zones (EEZ) delimitation. Maritime border issues surrounding the Levant were best summarized as follows:

The situation with Syria is silent, postponed for a while. The Cypriot problem between Turkey, on behalf of the Turkish Cypriot State, and Greek Cyprus means negotiations are problematic and Lebanon has no interest in intervening. Lebanon and Greek Cyprus need to conduct informal negotiations with the Turkish side taking into consideration its interests. However, Israel remains the central issue in this complicated international negotiation over oil and gas rights.[48]

4. Lack of significant Oil and Gas infrastructure in the region and tense political relations between East Mediterranean states’ majorities.[49]
5. Turkey, Syria, and Lebanon did not participate in the east Mediterranean forum to create a regional gas market which also aimed to reduce infrastructure costs and ensure competitive prices.[50]
6. The Lebanon-Israel borderline delimitation dispute[51] in the southern side of the territorial waters. The issue affects both countries’ aptitude to press ahead with offshore oil and gas exploration and production. The argued area is quite large, centrally placed in the Levant Basin, and could comprise considerable hydrocarbon reserves.[52]
7. The potential dispute between Lebanon and Syria on the northern maritime border demarcation of the Exclusive Economic Zone (EEZ).[53]
8. The spillover from the Syrian war and the recurrent tensions between Israel and Syria.[54]
9. Methane emissions from natural gas exploration to distribution: View the climate change threat; recently, there have been studies assessing the effects of methane gas released from massive conversion from coal to gas in power generation. Methane (CH4) is a hydrocarbon and the main constituent of natural gas. It is more harmful as a GHG than carbon dioxide, which makes it a vital climate change subscriber, especially in the coming decade or two. Research findings emphasize the need to control methane emissions from natural gas exploration, extraction, conveyance, and distribution. If those emissions are not properly contained, the gains from coal to gas switching become doubtful, particularly in the short term.^[55]
10. Lateness of Lebanon in deriving benefit from offshore natural resources. The other east Mediterranean nations, namely Egypt, Cyprus, Turkey, and Israel, have reached a much more advanced stage in their oil and gas exploration and production activities.[56]
11. A high level of political and endemic corruption in some concerned nations.[57] Lebanon, for instance ranks 136^th in corruption perception based on the GlobalEconomy.com. index.[58]  In particular, within the oil and gas sector, there has been some transparency and conflict of interest issues.[59]

Windows of Opportunities

1. To become a reliable supplier/exporter of natural gas to the large EU market seeking to diversify its sources of supply in line with his energy security strategy. Presently, the EU is highly dependent on Russian natural gas: “The European Union currently imports most of the natural gas it uses. According to Eurostat data, for the first semester of 2018, 6 percent of this imported gas came from Russia, followed by Norway and Algeria.”[60]
2. Regional collaboration through the Euro-Mediterranean framework. Since the mid-1990s, energy has been the focus of several EU initiatives. On the other hand, the industry’s collaboration strategies, particularly in the natural gas field, have been evolving for decennaries allowing the development of expansive global infrastructures. In 2011, three energy platforms were initiated under the sponsorship of the union for the Mediterranean (UfM) and the definition of a new neighborhood policy. Further, at the two conferences held in 2014, European Commission, EU energy ministers, and ministers from the southern and Eastern Mediterranean countries corroborated the significance of regional collaboration in the energy sector to assure a stable, economic, and tenable energy supply both regionally and far off. [61]
3. Decisive factors ultimately affecting concerned nations and Lebanon’s gas export likelihood and possible scenarios. Assuming a fortunate consequence to upcoming exploration, if and when it happens, these factors are the magnitude of the recoverable resources, the time of their exploitation, and the weighing of whether to export gas or to use it for satisfying national demand.[62] The two prospective eventualities are:
4. To supply explored gas mainly to the local market if limited commercial volumes are discovered. Also, Lebanon in particular, could envisage scaled-down exports to nearby states (Turkey, Syria, Egypt, and Jordan). [63]
5. To adopt an LNG export approach that is attractive to both IOCs and the state, in the case discovered volumes were more favorable and in line with primary government appraisals. Such an eventuality should account for the different occasions and restrictions that LNG may encounter due to the nation’s entry to the mart.[64]
6. Expedited gas demand growth in Asia, the world’s largest market for energy consumption. As the global market’s higher price of gas nears that of coal, and with the confirmation of the favored position of gas over coal in terms of emissions, markets, particularly in Asia, become capable of rebalancing their energy blend towards gas. Asia is still heavily dependent on coal (47 percent), while gas provides only 12 percent of primary energy consumption. The worldwide average is more than twenty percent. Hence, ample room exists for readjusting Asia’s energy mix in favor of gas, thus creating substantial additional global demand. : “Increasing Asia’s share of gas energy consumption to 20 percent would add the equivalent of more than 400 million tonnes of LNG to annual gas demand, doubling the size of the LNG market.”^[65] However, to capture LNG growth’s largest potential, IOCs need to change the way they do business. Mckinzey’s analysis stipulates five requirements for companies to abide by 1- Realize capital efficiency, 2- Optimize the supply chain, 3- Invest in downstream market development, 4- Decarbonize supply, 5- Build digital and advanced analytics capabilities.[66]
7. Taking part in the regional pipeline projects:
8. One option is the Iran–Iraq–Syria natural gas pipeline extending from Iran’s South Pars/North Dome Gas-Condensate field to Europe via Iraq, Syria, and Lebanon and supplying gas to each of these countries. It has replaced a former suggestion tagged the Persian pipeline, whose routing spans from Iran’s South Pars to Europe via Turkey. The project came to a halt following the US sanctions against Iran in 2010.[67]
9. The participation in the East Mediterranean pipeline to supply gas to Europe. Cyprus, Egypt, Greece, Italy, Israel, Jordan, and the Palestinian Authority have formed an East Mediterranean Gas Forum based in Cairo and tagged “Club Med” to realize the East Mediterranean 1900km undersea pipeline.  The most significant expected gas buyer is Italy. However, several other south European countries shall benefit as well. Conversely, according to Alex Lagakos, deputy director of the Athens-based think tank Greek Energy Forum, skepticism exists about this project’s profitability. Geopolitical motives primarily underpin its significance and not profitability, mainly because of the enormous cost involved, estimated initially at around $6.7 Billion. Moreover, Lagakos cautioned that Cyprus, Israel, and Greece might not have the funds to finance the project. Further, the EU is unlikely to fund it because it has abandoned all fossil fuels investments to the benefit of green sources.[68] Lagakos concludes in favor of abandoning the pipeline against the flexibility and cost competitiveness of LNG:

The East Med pipeline will have to be exclusively financed by private investors, which will be difficult. An eastern Mediterranean pipeline is also unlikely to attract investors due to a gas glut on the international market. Customers are also increasingly importing liquid natural gas via port terminals. Why would they want to lock themselves into long-term pipeline commitments when they can flexibly and cost-effectively turn to LNG when they need to?[69]

Putting geopolitical issues aside, if Lebanon and Syria make new significant discoveries as expected, they will be well placed to join and thus increase this undersea pipeline’s feasibility.[70] Otherwise, this project could constitute tough competition if it materializes. Worth mention is another recently opened pipeline that passes underneath the Black Sea, the Turkish Stream pipeline that may compete with or complement the East Mediterranean conduit.[71]

6. The potential high return on investment in exploration activities due to the drop in startup costs caused by the decrease in demand with the COVID-19 economic impact. According to a publication of the Society of Petroleum Engineers:

With the COVID-19 economic effect, today’s situation might be an excellent opportunity to start new exploration projects, assuming oil and gas prices will rebound in the coming years (at the time of production phase). The decrease in the cost of drilling equipment caused by the decrease in demand can also save startup costs, which comprise up to 40% of the offshore projects’ cost (Sassine 2015). This high return on investment would encourage different companies to risk exploration.[72]

An opportunity of rare occurrence, worth considering by the IOCs and the concerned states.

7. Developing the local power generation market for natural gas by converting the existing electric power plants to natural gas and constructing new gas-operated plants to cover the power shortage.[73] ^[74]
8. Developing the local residential, commercial, and industrial markets for natural gas. For instance, a thorough study by the UNDP and ILF Business Consult GmbH titled “Sustainable Oil and Gas Development in Lebanon” analyses the cost-benefit related to the utilization of natural gas and low carbon fuels. It identifies the main requirements as well as current and expected minimum and maximum natural gas demand.^{[75] [76] [77]}
9. Exploitation of the under-utilized regional gas infrastructure that is considered to be a means to boosting regional trade as well. One relevant possibility is exporting gas via the underutilized LNG terminal in Egypt. A second cost-effective option is the utilization of the Arab pipeline. A report made for the World Bank on the subject corroborates:

Idle or underutilized gas infrastructure, which includes the LNG terminals in Egypt, UAE, and Oman, the gas pipelines from Algeria to Europe, and the Arab pipeline from Egypt to Syria, are solid opportunities for increased trade at low costs. Countries with such idle infrastructure can be used as stepping stones for export outside and within the region and regional trade. The most obvious example is Egypt’s development of a gas hub using the existing idle LNG export terminals and reversing the gas flow in the Arab pipeline by connecting to Iraq. This would require simultaneously importing gas from the East Mediterranean gas fields.^[78]

Cooperation with Cyprus to build joint LNG terminals could be another possibility.[79]

10. Selling gas to nearby Syria, Turkey, and Iraq where gas is in short supply: “The general shortage of natural gas throughout the Levant region (hence, there are potentially receptive markets)… Lebanon’s stable relations with neighboring countries (such as Turkey, Syria, and Iraq) strengthen its case as a logical gas trade partner with these countries, which will likely remain important growth markets for at least another few decades.[80]
11. Governments’ quick transition towards sustainable energy to exploit their full RE potential in order to maximize gas exports and thus foreign currency inflows/reserves. Noting that the region is well suited for RE, a comprehensive and prompt deployment of the latter can help meet the growing domestic demand for energy, specifically electricity, thus freeing more foreign currency generating gas exports. However, energy subsidies remain a major barrier to the deployment of renewable energy, in addition to the weak grid infrastructure, regulatory barriers, and access to finance.[81] For the concerned country, gradual licensing could be a way of guaranteeing affluence and setting up a sovereign wealth fund (SWF) for existing and upcoming descents. States use SWF as investment mechanisms whose proceeds are generated from natural resources, often oil and gas, that the state owns, is in charge of, or taxes. Another source of revenue for the SWF could be the excess from commercial exchanges.  Seventy-eight SWFs have existed worldwide until 2018, with total assets reaching more than 7.45 trillion US dollars, an amount expected to have doubled by 2020. Moreover, hydrocarbon exports represent seventy-five percent of all SWFs revenues, with the MENA region capturing 49.9 percent.^[82]
12. The state-owned power generating sector budget can save a significant amount of money by switching from oil to gas.[83]
13. Possibility to rehabilitate the decades long inoperative old Kirkuk-Tripoli oil pipeline.[84] The project had become more feasible and likely after the before mentioned Rosneft contract award. If it materializes, then it shall enforce the basin’s role on the regional energy scene.
14. With their potentially weighty recoverable gas reserves, both Lebanon and Syria’s participation in any regional pipeline can be of mutual benefit and effectively contributes to increasing the project’s feasibility and likelihood for implementation.

Some of the Threats

1. The constraining effects of the US shale revolution on global energy prices and the furthering of competition. A 2016 newsletter published by the International Association for Energy Economics (IAEE) explicitly concludes on the implications to the US, to other major exporters, to consumers in main world markets, and Europe’s economic and geopolitical negotiation power:

The shale revolution has made the United States the world’s third-biggest crude oil producer after Russia and Saudi Arabia, and it is projected to make the United States, within 2-3 years, the world’s third-biggest LNG producer and exporter after Qatar and Australia. Whilst the United States does not threaten Russia’s market share in Europe or eventually Qatar’s or Australia’s in Asia, future US LNG exports will have a positive impact on the US economy and will significantly help hold down energy costs for consumers in Europe, Latin America and Asia. They will also improve Europe’s economic and geopolitical leverage when negotiating new deals with Russia. Moreover, US LNG exports will help create an LNG price ceiling and will also provide tough competition for anyone hoping to build rival LNG plants such as the proposed projects in East Africa, the West of Canada or Russia.[85]

Furthermore, on the positive effects of the shale revolution on the LNG value chain, a  report by the US Commodity Futures Trading Commission confirms the radical change it has brought to the LNG value chain through evolution and placement well as efficacy refinements. It holds:

All of these segments have seen development and investment, with notable improvements in efficiency. As discussed below, shale production of natural gas has fundamentally altered the US’s natural gas market, providing LNG exporters a significant competitive advantage. LNG shipping has also seen significant developments and improvements in efficiency: Between 2012 and 2016, charter rates for advanced LNG ships has declined from over $150,000/day to $33,500/day. The global fleet of LNG tankers has expanded rapidly, with 31 new tankers added in 2016, bringing the total fleet to 478 vessels, double the number ten years ago.[86]

A profound repercussion indeed of the shale boom that has had a ripple effect on

energy markets throughout the planet.

2. Competition from the international relatively newcomers – US LNG in particular, as it is exported to markets in the vicinity of the East Mediterranean region such as the EU countries and Turkey.[87] Moreover, the EIA expects the U.S. to become the world’s leading LNG exporter by 2025, thus overtaking Qatar and Australia.[88]
3. A glut of gas on the global markets, ^[89] yielding deficient price levels that would hinder export. The case of Egypt in 2020 is a stark example, as confirmed by Mr. El Molla, their energy minister.[90] Noteworthy, with the Damietta and Idku liquefaction plants, Egypt will rank among the ten biggest LNG exporting countries in the world, according to Bloomberg.

Besides, in addition to the traditional risks liquefaction project developers face, the currently oversupplied LNG market is deterring many project developers. This LNG “glut” is primarily driven by the rapid growth in LNG supplies, mainly coming from Australia, the USA, and Russia over the past few years. Demand for LNG is not responding in tandem to enable a balanced market at an acceptable price to all, resulting in a current lower price environment.[91]

4. Compelling substitutes to natural gas, provided low oil prices subsist,[92] and if renewables’ costs keep sinking. A recent study by the United Nations Economic Commission for Europe (UNECE) concluded: “Overall, in the near-term, it appears renewables can be expected to provide low-cost electricity in much of the UNECE region. Renewables will be favored both by investors seeking to profit from the market and by governments and politicians seeking to benefit from the provision of low-cost energy to the public while limiting the burden on public finances.”[93]

Moreover, renewable energy advocates indicate that solar panels are becoming the most competitive choice for electricity generation, even cheaper than natural gas-operated plants that are more flexible and responsive to surging loads. The investment firm Lazard confirms this fact with specific numbers. Furthermore, a study issued by the University of California, Berkeley, in July 2020 inferred that zero greenhouse gas emissions from 90 percent of US electric network could be achieved if the country increases its adoption of renewables, energy storage, and transmission channels, in addition to closure of all coal operated plants and a reduction by 70 percent of natural gas usage. ^[94]

5. IOCs balking at participating in the E&P bidding rounds. Energy intelligence firm Rystad Energy considered in April 2020 that more than fifty percent of the global licensing tours could be canceled due to the collective impact of the COVID 19 pandemic and the oil price war. The firm confirms that the budgets of the oil and gas firms and their willingness to venture with novel risky exploration undertakings shall constitute the main determinants under the existing market conditions.^[95]
6. Revival of the Persian gas pipeline^[96] if the new Biden administration lifts US sanctions. This would exclude Lebanon from the routing and would severely compete with the East Mediterranean’s gas exports. Hence, lobbying is needed to ensure a sufficient share of the exports to the EU if the project was to materialize again.
7. Increases in renewables installations fostered by more stringent government policies towards emissions and a rise in carbon pricing.^[97] For instance, the director of energy research for the Union for Concerned Scientists insists on the affordability of decarbonization policies which also help avert extensive dependence on natural gas and yield considerable public health advantages. : “A national carbon price and/or low-carbon electrify standard would help avoid an over-reliance on natural gas while costing the average US household only $0.74 to $1.03 per month.” He adds that the public health benefits of $230 billion for using a low-to-no carbon fuel would be double the cost associated of pricing carbon.” ^[98]
8. Changing behavior and energy-consuming preferences of consumers in favor of green energy as highlighted by BP in its net-zero scenario.^[99]
9. Growing demand for renewables versus a subdued one for fossil-based energy sources heralded in BP’s outlook. : “As fossil fuels face diminishing demand, renewable sources of energy could all increase their share of the energy mix from 2018’s figure of 5% to between 20 and 60% by the end of the outlook’s 30-year time frame. Wind and solar are expected to represent the lion’s share of this growth. If that happens, Dale added that renewables would “penetrate the energy system more quickly than any fuel in modern history.”[100] The EIA confirms this trend projecting between 2018 and 2050 an increase in global RE  consumption of 3.1% yearly, a 0.6% for  oil and other fluids, just 0.4% for coal, and a 1.1% growth in NG consumption annually.^[101]
10. The intricate geopolitical scene in the region exacerbated by many long standing disputes that also harness energy vying. The domination of the seaward oil and gas reserves found in the last decade and the entitlement to further exploration in the East Mediterranean are one salient geopolitical issue that adds to many. : 1-Libya’s partition problem, noting the country’s significant oil and gas wealth as well as its strategic geopolitical location enabling the control of the whole Mediterranean; 2- Greece-Turkey quarrel over the Asian sea; 3- Cypriot-Turkish conflict about the island’s division and its subsequent quarrel over the EEZ; 4- Syria’s struggle; 5- the Middle East problem. These disputes make this region a prime geopolitical hotspot impacting nearby territories, including Southern Europe, Western Asia, and North Africa.[102] There are also two more disputes mentioned earlier.
11. Prolonged political stalemate, and decision-making disability for many reasons. That is particularly the case of Lebanon. For instance, the development of potential gas resources can generate huge benefits for the country by unfolding a fresh and possibly significant income flow, strengthening energy security, and curbing polluting emissions. Despite all that, paralysis in the decision-making aggravated by a sectarian political system hinders the country’s prospects of exploiting its gas reserves in the near term. The expected timeframe appears to be pushed further till the end of the 2020s. A policy paper by the Lebanese Center for Policy Studies (lcps) prominently elaborates on the subject.[103]
12. “The latest success will encourage more exploration in the area, but probably more regional rivalry as well.”[104] A living example is the latest gas discovery by Exxon Mobil and Qatar Petroleum (QP) of Glafcos, an offshore field located more than 150km southwest of Cyprus.
13. Failing exploration which is unlikely as the US geologic survey indicated large quantities of oil and gas in the East Mediterranean basin.
14. The intricate access to markets from a political and logistical angle, not to mentions the exorbitant costs of exploration: “Cyprus and Israel’s main challenge in exploiting this gas potential has been the cost of discovery (around $100 million per hole drilled) and the political and logistical complexity of reaching markets.”[105]
15. Being relatively new entrants from the East Mediterranean region, to compete with well-established supply giants primarily for a share of the neighboring European market. On the recent discoveries all over the Levantine region: “The total figure for Cyprus gas reserves is now as high as 20 tcf, a figure that could change the island’s fortunes despite not being particularly large in regional terms. Israel has twice as much gas, and Egypt even more, along with an established infrastructure for exporting it as liquefied natural gas (LNG) using special tankers. All of these players are dwarfed by Russia (1,230 tcf), Iran (1,170 tcf), and Qatar (880 tcf).^[106]
16. The tough competition on LNG global export markets triggered by the US and exacerbated by the worldwide economic downturn, the increasing adoption of renewables, the mild cold seasons, and the COVID-19 outbreak. Consequently, at one time, the LNG price has dropped dramatically, beating by far the pipeline gas option. Last year’s first quarter example of Europe, Asia, and Turkey is a clear illustration.^[107] However, the low price window proved unsustainable.[108]

Is nuclear competing with natural gas?

The case of LNG imports to Asia in 2019 is a starking example. While China and India have boosted their imports by 12% and 14% respectively, the increase was offset by a decrease of 7% for each of Japan and South Korea due to competition from nuclear and renewables in power generation. The net result was a tiny growth of only 1% in LNG imports to Asia. ^[109] Nuclear energy’s strength is that it provides near-zero-emissions at an unmatched close to 90% capacity factor, an efficiency that is way better than any other generation technology.[110]

Moreover, an advanced reactors study performed in 2017 combined data from eight leading nuclear firms seeking commercialization of plants starting from 250MWe capacity. Individual reactor units surveyed ranged from 48MWe to 1650MWe. The findings were encouraging. At the low-value side of the possible cost interval, these reactor plants can yield the least costly generation alternatives at hand, which paves the way for deploying nuclear energy further, where clean energy is particularly sought after:

At the lower end of the potential cost range, these plants could present the lowest cost generation options available, making nuclear power “effectively competitive” with any other power generation option. At the same time, this could enable a significant expansion of the nuclear footprint to the parts of the world that need clean energy the most – and can least afford to pay high price premiums for it.^[111]

An outcome that could represent a badly needed solution to an energy thirsty world. Meanwhile, nuclear generation has grown substantially over the last 20 years, rising from 16 TWh in 2000 to 330 TWh in 2019.[112]

1. In the US.

On the other hand, to compete with the lower-cost natural gas-based generation, nuclear needs subsidy that is not without significant net benefits as detailed earlier.^[113]  For the US, it remains to be seen whether nuclear power shall be included in the Green New Deal. Worth mention, the red flag raised by the International Energy Agency (IEA) as to the inability of renewable energy alone under the current pace to achieve complete global warming mitigation goals: “while renewable energy is blossoming, it will only account for 18% of the world’s energy in 2040. That falls short of the 28% that it says is needed to mute global warming’s impact.”[114]

On the other hand, most US research labs have shown dedication to developing the following cohort of reactors despite the political uncertainty and unfavorable economic conditions framing nuclear energy. Third-generation reactors are being built, and fourth-generation ones undergo the design stage. These latter are “very high temperature” modules that can generate less expensive and more abundant electricity, all while consuming less fuel and a carbon footprint less than that of wind and solar. Moreover, champions of this option indicate that the risk of radiation leaking is very negligible. Nevertheless, financial difficulties, among others, present a challenge at a time where the world is eager for minimal-to-zero carbon fuel supplies. Policymakers can drive nuclear forward if they impose carbon pricing. Else, natural gas shall prevail with deplorable climate consequences.[115]

Furthermore, to meet global warming reduction goals, prominent experts confirm the need for all fossil-free energy sources, nuclear included. For instance to fix global warming carbon outflows, a tripling of nuclear energy that necessitates more than 1000 new reactor equivalent to 10,000 Small Modular Reactor (SMR) is being requested by the IPCC, the IEA, the UN Sustainable Solutions Network, and the Global Commission on the Economy and Climate. More persuasively still, four of the planet’s most prominent scientists stipulated the need for a combination strategy that comprises all main sustainable and neat energy alternatives; renewables and nuclear included as well as energy efficiency and conservation. The need for nuclear to effective climate mitigation has been lately emphasized by the Union of Concerned Scientists. Baseload power and load-following of renewables are the applications where nuclear and hydro can substitute natural gas. Further, it happens that gas plants can be easily refitted to SMRs.[116]

A graph showing materials needed to install various energy systems indicates that NG combined cycle plants and nuclear plants require the least of material for their construction by far compared to solar and wind that require the most. This upholds further that wind and solar cannot be relied on alone to meet the needs of curbing climate change in the coming 10-20 years, nor is natural gas of course, at least for the US. Such a finding further supports the case for building new nuclear versus NG plants in the Green New Deal.[117]

On the other hand, the outlook for “green new nukes” is the subject of heated rhetoric nowadays in the states. On the downside, two university energy experts downplayed the prospects of nuclear and strongly endorsed renewables as most promising. The main obstacles they presented for new nukes to become commercialized are long lead times (around 14 years) in addition to exorbitant construction costs. Conversely, they also have nixed shutting down old nuclear plants and replacing them with NG, tagging that as a “disaster” from a climate point of view.[118]

Furthermore, the USA is examining the potential for SMRs and advanced nuclear reactors. In July 2020, the US International Development Finance Corporation (DFC) lifted its legacy prohibition on funding nuclear energy projects overseas. The DFC said the update recognized the “vast” energy needs of developing countries and the potential of new and advanced technologies such as SMRs and micro-reactors.[119]

1. In the EU

On the northeastern side of the Atlantic, the situation is not of much difference. Some of the EU countries are committed to furthering the nuclear power generation agenda; others are not. Twelve EU member states gathered in March 2013 to further the function of nuclear energy in the union’s energy mix.[120]

Further, the EU has set 2050 as the target year for achieving the climate neutrality of its economy. To that end, it introduced in 2019 the European Green Deal (EGD), being a bundle of 50 initiatives over five years covering all sectors. A worth indication that the EU’s overall emissions intensity from power generation is remarkably inferior if compared internationally with similarly large economies.[121]    Besides decarbonization, the EU also focuses on ensuring energy security. Citizens’ health and that of the economy strongly rely on the energy sector that cannot be permitted to halt. The EU witnessed big investments in power generation, notably through renewables fostered by its solid RE policies, among others. Moreover, in the power sector, where a quarter of the generation depended on nuclear in 2018, considerable conversion from coal to gas has occurred, boosted by the subdued natural gas prices. Furthermore, in its EU 2020 analysis, the IEA recommends assuring an even playing ground for all investors and generation methods, inclusive of natural gas and nuclear. In line with the decarbonization strategy in power generation, several EU countries intend to bolster the adoption of electric power in end-uses such as transport and buildings. For that to be achievable, nuclear energy needs to be included in the energy mix, be it via new plants or refurbishing safe existing ones. The IEA posits:

Maintaining and further reducing the carbon intensity of power generation is central to the EU’s decarbonization strategy. Many EU member states envisage boosting the electrification of end-uses, notably in transport and buildings. This includes the phasing out of coal use in power generation, the switching to natural gas and further to low-carbon and renewable gases (biomethane, hydrogen), and the boosting of all other low-carbon sources in power generation, such as wind and solar, sustainable biomass, and new nuclear plants, as well as extending the lifetime of existing ones that can operate safely. Electrification entails a range of security aspects that need to be addressed.[122]

A significant implication is that, unlike natural gas, nuclear energy is classified as a low-carbon power generation technology. Such a classification might offer nuclear a considerable advantage in the medium to long term, especially if the promising new generation of safer, cleaner, and more economical reactors were successfully developed.

Meanwhile, the European Commission’s (EC) 2050 outlook anticipates a 15% contribution of nuclear energy in electricity generation. Currently, the EU’s existing reactors line is becoming older. Several plants were shut off. A small number of new reactors are being built, and several are being programmed. The IEA analysis perceives that new national policy initiatives are mandatory for nuclear power generation to strive. Otherwise, the EU’s nuclear electricity share might tumble to just 5% by 2040. If not well accounted for, grave consequences might ensue at the regional level on the security of supply and electricity cost. To avert this outcome, the IEA suggests the EU should ensure nuclear option financing at par with other technologies, thus maintaining the nuclear possibility open for 2030 and further. Other essential measures include backing extensions of life and constructing new plants in EU member states that adopt nuclear, enhancing safety, and the disposition of refuse when withdrawing old plants from service.

Worth noting that a recent study by Mckinsey & Co. expected the power demand of Europe to rise 40% by 2050 and that unsurprisingly, coal and gas with time shall be substituted by renewables and possibly nuclear.[123] More importantly, the report corroborated that nuclear generation is the most cost-effective solution to achieve emission reduction goals.^[124] A finding that is of significant impact when cost-effectiveness is crucial.

• what is the Long term outlook of natural gas in some main global markets?

Globally, the IEA expects abundant supply to prevail in gas markets until around 2025. Further, it has slashed its 2040 predictions for the worldwide demand claiming the sector is encountering considerable unpredictability. Moreover, the IEA perceives a further reduction of gas demand and a swell in low-carbon gases, thus further diminishing gas’s need. That would ensue by 2050 from the complete enactment of the European Green Deal and the fast advancement towards zero carbon emissions.

Furthermore, gas is encountering “existential questions” in some fully grown markets of northwest Europe. The IEA holds: “Although short-term gains are still possible from coal-to-gas switching, the narrative that natural gas is a transition fuel is being seriously scrutinized in the context of pledges to reach net-zero emissions by mid-century.”^[125] The future function of gas infrastructure in Europe came into play due to the ascent of biogas and hydrogen. On the supply side, the forecast sees EU gas production falling at the same pace as the decline in demand. 23 Bcm is the forecasted production in 2040, down from 71Bcm.^[126] Moreover, demand uncertainty inhibits attempts to engage in long-term supply contracts, which favors the spot LNG option, although the risk of high prices persists if demand picks up again.^[127]

The North American outlook presumes that the shift away from coal shall boost gas demand in the short term. However, renewable energy is foreseen to take over gas after 2025 despite the continuing growth in demand. Noteworthy that sixty percent of this latter comes from LNG exports of the US and Canada. ^[128]

Besides, Mckinsey’s gas demand prospects foresee gas alone among all fossil fuels to keep growing till 2035. However, it expects growth in demand to decrease to 1.3% p.a. in the 2018-2023 interval and to 0.7% between 2023 and 2035. The bulk of demand still comes from Asia, with a growth of 2.1% p.a. between 2018 and 2035. The 2035 outlook further allocates 70% of the total worldwide growth of 635bcm to the gas-intensive industry sectors (+313bcm) and to power generation (+135bcm).

On the supply side, the US is expected to reap the lion’s share of the 635bcm overall growth in gas supply with more than fifty percent (+380bcm) by 2035. Russia shall follow with a bit more than seventeen percent (+110 bcm), the same for Africa. Conversely, Europe and the rest of Asia shall witness a quick drop in production.

On the other hand, the prospects for LNG look somehow mixed. Solid demand growth of 306% p.a. is forecasted from 2018 till 2035, with another market glut between 2024 and 2026. New supply capacity will be necessary starting 2028-29. Not surprisingly, China, ASEAN, and South Asia shall be responsible for over 95% of LNG growth in demand till 2035. On the new LNG capacity, the report posits: “Over 100 LNG projects totaling 1,100 mtpa are competing to fill the 100 mtpa supply gap by 2035; many of the marginal projects are from the US.”[129]

Lastly, the report anticipates a notable evolution in LNG business models with forward and backward integration of contestants, in addition to the rise of novice business paradigms such as traders or utility resellers.

A brief oil outlook

The long-range oil outlook up to 2035 seems steady in prices, with the barrel of oil expected to average in the range of USD65 to 75. The supply growth is forecasted to come from OPEC, US shale, and several offshore fields whose costs amount to less than USD75/barrel. The growth in demand is expected to reach its climax at the beginning of the 2030s. More importantly, the exploration and production firms shall have to increase the production of new crude by more than 40 million barrels per day. The majority of this increase is supposed to come from seaward fields and yet unauthorized shale undertakings. Essentially, the share of so far unexplored resources is estimated to be between 4 and 5 percent of this production growth.^[130]

Conclusion

The prospects for new oil and gas ventures in the East Mediterranean are not as brilliant as they were a decade ago or earlier. So many factors contribute to this state of affairs. The most prominent of which could be the urgent climate change threat and the subsequent “green deals” and decarbonization strategies, mainly in the large economies of the US, the EU, and China. The rise of renewables there, supported by public policies, and the growing carbon pricing needs awareness is a stark embodiment. In particular, the shale revolution, predominantly in the United States, is of no lesser influence. Whether in oil or natural gas, the US is rapidly moving to export countries’ front rows. In the coming times, mounting LNG exports from this country shall contribute to repressing energy prices for end-users, mainly in Europe, Latin America, and Asia.

Moreover, the spike and ongoing expansion in LNG export capacities of major players in North America, Australia, and Russia, is expected to have a prolonged curbing effect on energy dealings. These prevalent giant energy suppliers shall also present a tough competition to new entrants such as those from the East Mediterranean. Besides, the current global glut of natural gas supply on world markets is expected to persist, although solid LNG demand growth is anticipated till 2035. Forecasts indicate additional supply capabilities shall not be required before 2028-29. Thanks to energy security imperatives, the large EU confederation shall diversify its gas supplies, thus creating significant export opportunities for potential East Mediterranean exporters. Developing and developed large economies in Asia shall still require the bulk of natural gas supplies.

Besides, breakthroughs and game-changing innovations in new clean and safe technologies other than renewables are still beyond close reach. The blue and turquoise hydrogen alternatives are promising but still in their infancy stage. New nuclear technologies, third and fourth-generation reactors warrant brighter, safer, and cheaper energy sources. However, they still need at least a decade to materialize if all goes as planned. Also, plenty of barriers have to be overcome for nuclear energy to strive further. Ensuring subsidies are one of them. However, since renewables alone cannot meet climate change mitigation targets, there may be an opportunity for nuclear energy to play a more significant role globally. The same could be said for natural gas though not as friendly to global warming as nuclear—worth mention the power storage and energy efficiency technologies that require investigation. Furthermore, coal to gas switching primarily in power generation represents a significant upside for gas in the short to medium term. The rapidly growing markets of East Asia represent the most extensive expected global demand growth.

Hence, view the above circumstances and considerations, the East Mediterranean countries are pressed to capitalize on the opportunities available for monetizing their oil and gas reserves, both proven and potential, the soonest. Accelerating and intensifying the exploration and production activities is one requirement. Fostering relations with the large EU bloc and other massively importing nations is another means to ensure a significant share of oil and gas exports. The existing Euro-Mediterranean framework could effectively serve the purpose of regional collaboration. The exploitation of the under-employed regional gas infrastructure such as Egypt’s LNG terminal and the Arab pipeline (which could be expanded to Iraq and Turkey) is another essential means of increasing beneficial exchanges among East Mediterranean countries and exporting outside the region. The cooperation between regional players to expand the required infrastructure presents further horizons for its growth and development. The East Mediterranean gas pipeline project to Europe is one salient collaboration opportunity that could become more feasible and rewarding if all concerned nations of the region participate. The strategy of expanding their local power generation from renewables to free the produced oil and gas for export solicit attention and action, if not done yet. Exporting those resources could furnish the Levant nations with some eagerly needed foreign currency. Easing regional geopolitical tensions and resolving EEZ disputes remains a challenging, mutually beneficial course of action. Transparent gradual licensing and the institution of adequately managed and controlled Sovereign Wealth Funds prove to be highly recommended means of guaranteeing prosperity of producing nations.

On the other hand, a compelling, game-changing positive role could be envisaged for the relevant Intergovernmental Organizations (IGOs). Following are some recommendations:

–   Stimulating further the regional collaboration on energy, be it through the Euro-Mediterranean partnership platform, OPEC,  or via the Arab League, or even the UN

–   The creation of a global intergovernmental entity for regulating and foreseeing the worldwide natural gas market to prevent supply gluts or shortages, ensure sustainable gas flows at fair prices, and secure equitable benefits to both exporting and importing nations as to the world providence.

– The IMF provides the necessary incentives, guidance, expertise, and funding, if necessary, to nations of the region to assert smooth removal of energy subsidies, the development of RE sources, and oil to gas switching. The establishment of transparent SWFs is another area where IMF’s constructive intervention and monitoring can yield considerable public good.

–   The International Atomic Energy Agency (IAEA), the Nuclear Energy Agency (NEA), and other concerned IGOs relevant to nuclear energy are requested to do whatever necessary to guarantee faster progress in the research and development towards proven safe and affordable nuclear power generation technologies. The aim is to contribute effectively and the soonest in the global climate change mitigation efforts by raising nuclear power in the generation sector. At the current pace, renewable energy alone does not seem to meet the climate mitigation goals.

–   Policymakers to impose reasonable carbon pricing in all industrialized nations, to begin with.

–   The UN to tackle the region’s profuse EEZ delimitation contentions by exerting necessary mediation efforts and pressure to ensure a prompt and impartial resolution.

–   The UN to launch a mediation campaign with various stakeholders to ease up tensions and resolve the numerous geopolitical disputes in the region. The aim is to create a more favorable and stable environment that encourages investments to benefit the regional and global economy.

–   To remedy the harmful methane GHG emissions issue from natural gas exploration activities to distribution globally by the concerned IGOs. The purpose is to warrant meaningful climate change mitigation gains, among others, from coal to gas switching.

–   View the great harm it is imposing on their nations’ economies, not the less on their people, the UN, the EU, and the international community are requested to adopt a firmer sanctioning stance with responsible officials of nations who engaged in poor non-responsible governance practices, rent-seeking, corruption, and mismanagement in general, especially when it comes to exploiting public natural resources and wealth.

Finally, the opportunities for economically profitable new oil and gas ventures in the East Mediterranean are still there, though the high global market rivalry is to be accounted for. Nevertheless, the window of opportunities is narrowing, and time is of the essence. The concerned nations of the region have to hasten and expand their exploration and production plans. They have to reshape their energy mix towards more power generation from renewables. They also have to resolve the dispersed maritime border disputes, defuse geopolitical tensions, and foster to the utmost their regional collaboration if they desire to secure the most significant possible share of the remaining oil and gas energy market pie.

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