Paul Michael Wihbey discusses "Turkey, the Eastern Mediterranean, and US Security Interests: New Dynamics in the Middle East's Balance of Energy Power"
Posted: Tuesday, October 9, 2012
On September 27, 2012, Paul Michael Wihbey, President of GWEST LLC, addressed an audience at The Institute of World Politics on "Turkey, the Eastern Mediterranean, and US Security Interests: New Dynamics in the Middle East's Balance of Energy Power."
Mr. Wihbey outlined his lecture by discussing several focus areas, including Oil and Gas in the Eastern Mediterranean, Turkey's rising power, and possible conflict scenarios.
A New Frontier
The Eastern Mediterranean is a "new frontier" for oil and gas. The United States Geological Survey estimates that there are over 1.1 billion barrels of recoverable oil in the region, in addition to a large amount of natural gas. However, the region's political geography leads to many competing jurisdictions over the offshore blocs. Mr. Wihbey examined each county's potential resources in depth and how they interact with the geopolitics of the region. Syria's offshore reserves, for example, could allow their Alawite minority to pursue regional autonomy analogous to the Kurds of Iraq. Israel has expanding gas fields, but they are large and deep. This makes them expensive to develop, and financiers are uncomfortable assuming the risk. The Palestinian Authority also has an estimated 1.4 trillion cubic feet in an offshore gas field, but it is a disputed territory. Lebanon has significant oil and gas deposits, but its internal sectarian politics have stifled development. Cyprus is likely to cooperate with Israel. Finally, Turkey has historically imported its energy needs but has potential shale gas in the Anatolian and Thrace basins. The Eastern Mediterranean has huge latent oil and gas resources, which could become very promising if the North American energy boom can be replicated.
However, the reserves are only part of the picture. Energy markets are not only driven by prices, but by geopolitics. Cheaper oil makes "marginal barrels," those that are hard and expensive to exploit, and less attractive and competitive. Financing a large-scale project is expensive. The region's competing exclusive economic zones and lack of infrastructure make it unattractive to investors.
Turkey bucks this trend. It has stable political leadership and a rapidly growing economy. The country is already a strategic energy bridge with the infrastructure and technical expertise in place. Turkey controls the energy supply chain, even if it doesn't control the wells themselves. Pipelines and terminals eastward will allow regional suppliers in the Middle East to bypass the Straits of Hormuz in the Persian Gulf to bring their oil to market. For example, the Ceyhan Terminal services oil from Basra and northern Iraq, allowing the Kurdistan Regional Government the income to enjoy a degree of autonomy from the Iraqi central government. A key difference between Turkey and the other jurisdictions in the region is that it has an existing infrastructure and an energy-industrial base of know-how.
This allows Turkey to have an enhanced, energy driven sphere of influence. In addition to its deals with the KRG, Turkey is likely to dominate any autonomous regions in Syria. Since it makes sense for contiguous regions to be interlinked, Turkey could ultimately dominate all of the offshore regions.
Turkey could eventually serve as a firewall, acting in harmony with United States and European Union interests. The Middle East is undergoing a shift of the balance of power as the United States lowers its profile. American policy used to be based on three pillars: access to Persian Gulf oil supplies, Israel as a strategic asset, and the prevention of a regional hegemon. Mr. Wihbey argued that the first two were declining in importance, and the containment of Iran could best be resolved by Turkish ascendance. Turkish-led regional integration in energy will promote regional growth and development and bring more stability to the region.