The Middle East has been one of the most important sources of oil for a century. It can be compared only with North America and Russia together with the Caspian Basin. However, the transfer of this commodity to the markets has always been painful, despite the fact that it is the easiest and the cheapest to exploit compared with the others.
This is a long story which can fill books to be covered in full details. But we will summarize it in two episodes in historical order to make it more comprehensible for readers.
The story starts with the dissolution of the Ottoman Empire, which had dominated the region for the previous four centuries. That in itself did not have a negative effect on energy flow: it was only a political handover from the Ottoman Empire to the British Empire. British rule was a kind of extension of the order and peace in Middle East, which ended shortly after the end of WW II. The end of British rule in late 1940s was also, unfortunately, the end of order and peace in the region.
The political turmoil was ignited by the Arab-Israeli war, which broke out in 1948 and resulted in Israel’s independence. However, Israel does not bear the blame alone, because many other countries put much fuel in the fire; namely Iran-Iraq war in 1980’s, Gulf Wars I and II in the 1990s and 2000s, and the recent ISIL catastrophe that is a result of Syrian civil war and the political disorder in Iraq. This turmoil hindered energy flow and investments in the region.
The Kirkuk-Yumurtalik oil pipeline is a good example of the construction and operation losses caused by politics. The pipeline was built as two parallel lines in 1970s and 80s between Iraq and Turkey instead of a shorter and easier route through Syria. The rough territory of southern Turkey was preferred to the more favorable route over Syrian Desert at a much higher cost because of the political uncertainties of Syria. However, the flow from Kirkuk to the Gulf of Iskenderun was not so smooth because of occasional sabotage by PKK terrorists together with the illegal siphoning.
Another difficulty arose in 1991 when Gulf War I ended. Turkey shut down the pipeline in accordance with the UN embargo against the Saddam regime in Iraq. The pipeline was partially re-opened in 1995 under the “oil for food” program for the Iraqi people, in accordance with UN Security Council Resolution 986. The current negotiations between Turkey, the Northern Iraq Regional Government and the central government of Iraq show that the pipeline may finally reach its full capacity, which is estimated around 1.5 million barrels a year.
Turkey’s cumulative loss only as transit country is estimated nearly $5 billion, which is small to that of Iraq, which lost between $15 and $20 billion.
The Iran-Iraq war posed yet another problem, both for production and for transport of crude oil from the Persian Gulf in the 1980s. The reciprocal missile attacks against oilfields, refineries and cargo tankers sailing in the gulf created terrible losses which is difficult to estimate to both sides.
In 1990, Iraq invaded Kuwait to pave the way for the following two Gulf Wars, in 1991 and 2003. Both wars were disastrous for Iraq. The decade-long political stalemate, which ran from 1991-2003, between the Saddam Regime and the West ruined the welfare of Iraq, where hundreds of thousands children reportedly died of hunger and a lack of medicine. It took another decade until oil exports were more or less restored, while the political order needed even more time to be restored.
The most recent threat to the oil resources — and a terrible enemy of the people in the region, as well — is ISIL, which is a result of Gulf Wars and the Syrian civil war. ISIL controls most of the oil and gas production of Syria and a considerable portion of that of Iraq. The energy production installations like refineries, oil/gas rigs, pipelines, etc. are the targets for Coalition air attacks on ISIL. God knows if and when the so-called ISIL will be eradicated.
One of the most recent gas deposits to be discovered lies off the Israeli coast. It is hoped that the oversupply will be exported to neighboring countries once the local demand is met. However, those hopes are shadowed by the traditional – and seemingly eternal — Arab-Israeli wars and hatred.
Israel’s first likely customers are Jordan and some private companies in Egypt. The initial agreements with Jordan and Egypt were unwelcome. Protests were held, urging some legislators to press to scrap the deal, which calls for supplying Jordan with 45 billion cubic meters gas from Leviathan offshore field over a period of 15 years. But the existing pipeline between Egypt and Israel was attacked by extreme Islamists in the Sinai Peninsula.
Like many other countries in the region, Egyptians and Jordanians apparently put their hatred in front of their interests. If for a moment they were able to reverse their priorities, then the course of peace process could take a better direction. This was explained well by Malek Kabariti, a former energy minister of Jordan in an interview with The Anadolu Agency during the recently held Bosporus Energy Club meeting in Istanbul.
“At the end of the day, we have to look for Jordan’s interest,” Kabariti said. “The Egyptians are already in negotiations with Noble to import gas from the East Mediterranean region.”
He regarded the deal as a chance to facilitate peace in the region.
“It is not only Israeli gas,” he said. “It is Israeli-Palestinian, Turkish-Lebanese, Egyptian-Cypriot gas. It is a combination of all these countries. This, I think, is a good mechanism for making all countries and decision-makers in the region talk seriously about peace.”
Middle East wars alone do not pose all the obstacles to the free flow of energy. The four-decade political stalemate over Cyprus is also an obstacle to the upstream and downstream process regarding the vast natural gas resources of the Levant.
Southern Cypriots are continuously lobbying for an underwater pipeline to stretch from Cyprus to Greece and then on to Europe, apparently to bypass Turkey. This is like someone showing his right ear with his left hand from behind the neck. Most experts agree that such a project will not only cost more, but also delay the delivery of energy for years.
The relationship of politics and energy in the Middle East might seem strange, like a carrot with a horse behind it. The carrot cannot proceed unless the horse is in front.
Emre Gürkan Abay 