The recent understanding reached between Israel and Cyprus, as was declared during Energy Minister Yuval Steinitz’s visit to Nicosia, was to direct the companies, on both sides, to negotiate within a time frame the exact division of the Aphrodite-Yishai gas field. It constitutes as a positive development, but not a sufficient one. As known, the Aphrodite-Yishai gas field is a joint Israeli-Cyprus field, for which no agreement has yet been reached regarding the exact part of each country, and accordingly, of the relevant companies. About 10 years have passed since its discovery, during which an agreement could have been reached on the matter in a way that would have sped up the development process of the field. In any place, in the current circumstances this is an important step in the right direction.
At the same time, it is important to clarify a few points, especially now, while the companies are entering discussions, which are hoped to be managed seriously and practically without losing much time. Some of these points discuss the commercial-economic aspect and the others the political-strategic aspect. We shall start with the latter.
As known, Israel and Cyprus have tightened their relations in an impressionable manner in recent years in a way that serves the interests of both parties. In many ways, the bilateral relationship constituted as a catalyst for a trilateral relations, which includes Greece, and later contributed to the formation of the Regional Gas Forum, which recently has been established as a unique political organization in the region.
These circumstances were supposed to aid both countries to settle their dispute regarding Aphrodite-Yishai, especially considering the fact that it is a common procedure in the global energy field. However, it seems that lack of experience on both sides, along with mistaken Israeli considerations over the years, has greatly delayed achieving an agreement. The feeling was, that in view of the many common interests between them, there was no point in “quarreling” over this field. In retrospect, it was a mistake. Now, it seems that the two countries, and especially Cyprus, have lost valuable time before materializing the possible dividends, politically and economically, from the field.
Why is it desirable for both governments to urge the companies to reach the expected agreements?
On the Israeli side, since the procedure discussed is basic and appropriate, within which the country has responsibility and commitment to assist and stand by Israeli companies. The message folded in the absence of sufficient assertiveness is particularly problematic, both in terms of the economic interests, of the country and the companies, and in relation to the political-strategic interests, beyond the bilateral, Israeli-Cypriot level. This may be a negative precedent in similar future circumstances.
Moreover, the regional cooperation is developing impressively. Hence, disputes in this regard, which may escalate in the event of non-agreement, undermine the regional architecture created, and play into the hands of regional players who dislike the system that was formed (referring to Turkey, of course).
The negotiations between Lebanon and Israel concerning the maritime border between them, provides another important angle on the matter. Lack of assertive engagement on the part of Israel, along with its current renouncing image, will adversely affect Israel’s room for maneuver and bargaining power with Lebanon. For, if Israel fails to defend the clear interests of its companies with a friendly and allied state, how will it succeed with a state at war with it?
Israel needs to leverage the existing political circumstances, both on the Israeli-Cypriot level and on the broader regional level, in order to clarify its clear and rapid interest in resolving the dispute regarding Aphrodite-Yishai.
Furthermore, precisely in light of what appear to be Israeli-Egyptian agreement regarding the possible connection of the Leviathan gas field to the liquefaction facilities in Egypt, it is important to think of a similar or complementary connection of Aphrodite-Yishai to this route as well. This possibility has already been discussed and agreed upon, in principle at least, between Egypt and Cyprus, and in the present circumstances is given solid political-economic logic. Israel needs to accompany politically (for example, an official representative who will participate as an observer) the negotiations between the companies in order to illustrate its political interest in reaching a prompt agreement, thus also encouraging companies on the Cypriot side to strive for quick agreement. These companies include the Israeli Delek, the American Chevron, which recently purchased Nobel Energy, and Shell.
On the Cypriot side, the political and economic interest also requires a quick, respectful and satisfactory arrangement of the Aphrodite-Yishai issue. This will allow Cyprus to progress to an accelerated development stage of the field, in a way that will illustrate the economic and political dividends from the first gas field discovered in its economic waters. The development of the field will strengthen the regional cooperation that has been formed in recent years and the political architecture in which Cyprus plays an important and key role.
On the other hand, failure of the negotiations between the companies has the potential to damage relations between the two countries, even in circumstances where the joint interests among them are firm. It is likely that despite the positive progress between the two countries, Israel will not allow the development of the reservoir until an appropriate and respectable solution has been agreed between the parties for its share and contribution to it. It is worthily reminding that back in 2019 the director-general of the Energy Ministry sent a letter to the relevant companies warning them not to develop the field before reaching an agreement.
In other words: in parallel with the required Israeli government encouragement, an equally enthusiastic encouragement is requested from the Cypriot government side. And of course, by the relevant companies as well in a way that respect the excellent relations between the two countries.