Describes the complex scenario developing in the eastern Mediterranean through Israel’s deep water gas discoveries that have set it on a course of strategic energy independence, and the prospect of similar discoveries off Cyprus that have the potential to draw Israel into a new conflict between old adversaries - Turkey and Greece.

1. World Affairs Council - North County Chapter
January 5, 2012
By David Edick Jr.

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4.  Technically recoverable oil & gas reserves
 122tcf gross mean gross volume GAS
 (gross range 50bcf to 227tcf)
 1.7 billion barrels mean gross volume OIL
 (gross range 483m – 3.758b)
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7.  Marine-1 and Marine-2: 2000(Gaza), 1.4tcf,
40bcm (BritishGas, Lebanese,PalestinianFund)
 Mari-B: 2000, 1.2tcf (Noble 47%), 800ft, 2004
 Tamar: Feb 2009, 8.4tcf (Noble 36%) 5,505ft
◦ Israel Gas Demand 350mcf/day; Tamar target 1bcf
◦ Will cover domestic demand for 15-20 years
 Dalit: Mar 2009, 500bcf/14bcm (Noble 36%)
 Leviathan: Dec 2010, 16tcf/450bcm, (Noble
39.6)
◦ Export LNG from Israel or Floating LNG – or
◦ LNG via Cyprus
 Aphrodite (Cyprus): Dec 2011
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8.  The initial Tamar well cost $140 million and
was drilled in 5,500 feet of water some 57
miles from shore to a depth of 16,076 feet.
 The Tamar discovery tested 30 million cubic
feet of gas a day, constrained by facilities.
Production wells will each be capable of
making 150 million a day.
 Premium-quality gas, nearly pure methane
 Leviathan may extend into Lebanese waters
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9.  Noble Energy, Inc. (Houston, USA)(NYSE)
◦ Delek subsidiary holds 4%
 Delek Group (Yitzhak Tshuva)…includes
◦ Delek Drilling LP
◦ Avner Oil Exploration LP
 Yam Thetis (joint venture…Mari-B field)
◦ Noble (47.1%)
◦ Delek Drilling LP (25.5%)
◦ Avner Oil (23%)
◦ Delek Group…indirect holding (4.4%)
 Aphrodite (Cyprus): Noble 70%, Delek Drilling LP
15%, Avner Oil Exp LP 15%
 Dec 6, 2011: Cyprus OK’s Nobel option sell 30%
Aphrodite to Delek Drilling LP & Avner Oil Exp LP
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12.  Cyprus awards Block 12 lease to Noble
◦ Later found to be on trend w Tamar & Leviathan
 Drilling Cyprus A-1 well began Sept. 19,
2011
 Drilled to depth of 19,225ft in 5,540ft water
 Discovery announced Dec 28, 2011: 3-9tcf;
median 7tcf (200bcm)
 Could meet Cyprus gas demand for 210yrs
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13.  Seismic acquisition in Cypriot and Lebanese
water is being carried out by Norway’s Petroleum
Geo‐
Services (PGS).
A paper prepared by PGS staff and posted on the
internet in May 2009 said high‐quality 3D data
show “several attractive large sub‐salt four‐way
dip closures and new stratigraphic plays offshore
Cyprus and Lebanon.” It added that “numerous
DHI’s [direct hydrocarbon indicators] associated
with the prospects indicate several active
petroleum systems
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15.  Turkish Republic of Northern Cyprus (TRNC) was
established after the July 20,1974 invasion (following
Greek Cypriot coup July 15, 1974) and is recognized
only by Turkey.
 The Greek Cypriot government in Nicosia has
international recognition and is a member of the
European Union.
 Turkey, which insists the Greek Cypriots in the southern
part of the island, divided since 1974, can only drill with
the consent of the Turkish Cypriot minority in the north.
 Turkey, once a firm ally of Israel and now a bitter
adversary, sent two warships plus air force fighters to
escort a Turkish seismic ship into Cypriot waters to
conduct exploratory drilling in September – to defend
TRNC/Turkish political position.
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16.  Greek Cypriot President Demetris Christofias
 Northern Cyprus leader Dervis Eroglu
 Cyprus assumed the presidency for the
Common Security and Defence Policy (CSDP)
of the EU on January 1st 2012, as Denmark,
the current Presidency of the European
Council, does not participate in the European
Defence Agency (EDA).
 Cyprus takes Presidency EuroCouncil H2,
2012
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18.  Evangelos Florakis naval base
 Thirteen sailors and fire fighters died because
98 containers holding 2000tons of munitions
reluctantly confiscated by the government in
2009 from a ship sailing from Iran to Syria
 Blast heard 30 miles away
 Vassilikos power station: ~ 50% electric power
 Damage est EUR2b; upwards of 20%GDP
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19.  Bond Downgrade related to woes in Greece
 Impending crisis following power plant
destruction (power shortage, generator lease
costs, diesel fuel imports)
 October 6, 2011: Russia loans EUR2.5b
($3.3b) at 4.5% (half market rate) for 4.5
years
 President Demetris Christofias (educated in
Soviet-era Moscow, fluent Russian speaker)
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20.  Under the UN Convention on the Law of the Sea
(UNCLOS), a coastal State has sovereign rights to
explore and exploit, conserve and manage the
natural resources in its Exclusive Economic Zone
(“EEZ”). 1982,1994
 Under UNCLOS Article 57, the EEZ extends a
maximum of 200 nautical miles from the shore.
 States must deposit charts and lists of geographical
coordinates of the EEZ to the UN Secretary-General.
 The closest distance between Israel and Cyprus is
140 nautical miles
 Article 74 provides that States with opposite or
adjacent coasts must delimit their EEZs by applying
international law to achieve an equitable solution.
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21.  162 states and the European Community
have joined UNCLOS
 Cyprus (1988), Greece (1995), Lebanon
(1995)
 Israel, Turkey, & Syria are not signatories
 Lebanon & Israel: although Israel is not a
party to UNCLOS, these rules are nonetheless
generally considered binding on both states
as customary international law.
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22.  Turkey did not sign the UN convention on the Law of the Sea.
 However, in November 1986, Turkey declared an Exclusive
Economic Zone in the Black Sea and concluded an agreement
with the Soviet Union concerning states with coasts opposite or
adjacent to the coasts of Turkey, using the method of the
median line.
 Later Turkey started talks with Bulgaria and Romania on the
same issue and reached an agreement with them, which was
similar to the one it concluded with the Soviet Union.
 Fishing Zone/EEZ with Romania (April 1986) and Ukraine (1995)
 Consequently, whereas Turkey has cooperated with adjacent
states in the delimitation of the Exclusive Economic Zone in the
Black Sea, which is a closed or semi-closed sea as is the
Mediterranean Sea,
 Yet it refuses to do the same in the Mediterranean, even though
it has itself created a precedent in the Black Sea.
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24.  December 1988, Cyprus ratified the UN Convention
on the Law of the Sea.
 February 2003 Cyprus signed an Agreement on the
Delimitation of the Exclusive Economic Zone with
Egypt. (Mineral rights mentioned)
 January 2007 Cyprus signed an Agreement on the
Delimitation of the Exclusive Economic Zone with
Lebanon (not yet ratified by Lebanese parliament).
 The Agreement is based on the internationally
accepted principle of the median line and in
accordance with the UN Convention on the Law of the
Sea.
 Dec 2010, the Agreement on the Delimitation of the
EEZ between Cyprus & Israel was signed -Cyprus
ratified Feb ‘11
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25.  Israel and Lebanon do not have a finalized land
border - much less a maritime border.
 UN Blue Line & 1923 Mandate Line
 In July 2010, Lebanon deposited with the UN
Secretary General, charts and a list of
geographical coordinates of points defining the
southern limit of Lebanon's EEZ: in other words
where they see their border with Israeli as lying.
The deposit also gave coordinates for their EEZ
with Cyprus. www.menasborders.com
 In September 2011, Turkey protested against
Lebanon’s maritime treaty with Cyprus
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26.  Lebanon is technically at war with Israel
 Israeli Minister of National Infrastructures Uzi Landau
had warned Beirut that Israel would use force to
protect “the rule of law…and international maritime
law,”.
 Israel is considering a $100 million plan to buy patrol
boats to protect the offshore gas fields
 May ask companies developing fields to help buy
 The government may decide to go for Super Dvora-
class ships built by state-owned Israel Aerospace
Industries and Shaldag-class vessels produced by
Israel Shipyards in Haifa
 Sa’ar corvettes; Dolphin submarines
 Current 24-hr presence of drone aircraft
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28.  Awful economic/financial situation
 Tyranny of Doctrine of Austerity
 Can Greece stay in the Eurozone?
 Does Greece have a future in the EU?
 Greece is a member of NATO – as is Turkey,
but…
 What is the future of NATO in a post-
Eurozone world?
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30.  Only 15 per cent of the current account
deficit is covered by non debt inflows,
 Financed instead with a weight of portfolio
inflows and short term borrowing
 Over $200b in gross finance requirement
2012
 Over $50b of 77.6b trade deficit is for energy
 Erdogan colorectal cancer?
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32.  Sept 19, 2011: Noble starts drilling Aphrodite/Block-12.
 Sept 27, 2011: Turkey announces it was exploring for gas in an offshore
zone where Cyprus started drilling. Seismic ship Piri Reis was escorted into
position by a navy frigate and a flight of warplanes previous night.
 Sept 29, 2011: 2 F-15 Israeli jets flew through the airspace of both Greek
Cyprus and Turkish-controlled northern Cyprus - then ‘buzz’ the Turkish
seismic ship Piri Reis. Turkey sent two F-16 jets to track the Israeli F-15s,
which subsequently returned to Israel.
 Sept 29, 2011: Israeli military helicopter flew over the Turkish seismic
research ship the Piri Reis, exploring for gas off of Cyprus's southern coast.
 Dec 23, 2011: Israel halts $140m advanced intelligence equipment sale to
Turkey
 Dec 24-25, 2011: Admission by former Turkish PM Mesut Yilmaz that
Turkish secret agents intentionally started forest fires in Greece (islands) in
the 1990s as part of state-sponsored sabotage.
 Jan 3, 2012: Turkish reports of Israeli Heron drone was observed spying
above the Turkish 14th Hawk B. Brigade Command in Hatay’s Kırıkhan district
for 4hrs.
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