Magazine article The Middle East

Enter the Bear: Russia Muscles into the East Mediterranean Gas Bonanza, Chalking Up a 25-Year Deal with Syria for Exclusive Offshore Exploration Rights, Part of Vladimir Putin's Long-Term Strategy to Restore Moscow's Influence in the Energy-Rich Region

Magazine article The Middle East

Enter the Bear: Russia Muscles into the East Mediterranean Gas Bonanza, Chalking Up a 25-Year Deal with Syria for Exclusive Offshore Exploration Rights, Part of Vladimir Putin's Long-Term Strategy to Restore Moscow's Influence in the Energy-Rich Region

Article excerpt

While the Americans and their allies have been snarled up in complex negotiations seeking a way out of the blood-soaked Syrian labyrinth and struggling to untie the Gordian knot of the Israeli-Palestinian conflict, Russia and its energy giant Gazprom have been muscling into the eastern Mediterranean in a big way.

In recent weeks they have signed deals with Syria and the Palestinians, and are negotiating with Cyprus to establish Moscow's stake in the Levant Basin where the US Geological Survey reported in 2010 contained 122 trillion cubic feet (tcf) of natural gas and 1.7 bn barrels of oil.

In December 2013, Yuri Shafranik, chief executive of Russia's SoyuzNefteGaz and a former energy minister under President Boris Yeltsin, signed a deal in Damascus with Syrian Oil Minister Suleiman Abbas that opens the way for Moscow's move into the gas-rich region--if the Damascus regime survives the civil war that lurches into its fourth year this month.

Shafranik acts as Moscow's roving energy troubleshooter and was recently involved in the acquisition by Gazprom of two oil blocks in Iraqi Kurdistan, rapidly emerging as an upstart independent producer.

In 2013, Shafranik and his business partner Mikhail Kroupev, took a controlling interest in the British oil company Gulfsands, which was operating in northeastern Syria. Other shareholders include Rami Maklouf, Syrian President Bashar Assad's cousin and the key figure in the Assad dynasty's financial empire.

After skillfully handing President Barack Obama a face-saving way out of having to unleash military strikes against the Syrian regime by brokering a deal with Assad to surrender his arsenal of chemical and biological weapons, Russian President Vladimir Putin has pulled off another diplomatic coup that will give great impetus to his drive to restore Moscow's Cold War influence in the Middle East.

The 25-year agreement gives Russia's state-controlled SoyuzNefteGaz exclusive exploration, development and production rights over 2,188 sq. kms (845 sq.miles) of Syria's Exclusive Economic Zone (EEZ) in an area known as Block 2. That's roughly between the coastal cities of Banias and Tartous, where incidentally the Russian navy has its only base in the Mediterranean. This region is still in the hands of the Syrian regime.

The $20m deal gives the Russians, one of the world's leading energy producers and Assad's most strategic diplomatic ally their first real foothold in the Levant Basin.

"Though ostensibly technical and commercial, Moscow's involvement in Syria's offshore energy activities will not be regarded as benign," observed veteran Middle East energy analyst Simon Henderson of the Washington Institute for Near East Policy.

"Apart from possibly making the resolution of the Syrian civil war more difficult, these activities fulfill a particular vested interest for Russia.

Natural gas discoveries in the eastern Mediterranean, large in regional terms through small on an international scale, still have the ability to undermine Russia's dominant position as a natural gas suppliers to western Europe."

That, however, is bad news for the Europeans, who have been scrambling to develop other sources of gas to break their dependence on Russian exports, which Putin has cut off in the past when it suits his purpose.

A new source of gas right on Europe's southern doorstep would go a long way to helping achieve that, particularly in light of the collapse of the Nabucco pipeline project that would have pumped Caspian gas from Azerbaijan direct to Europe.

Gaza gas

On 23 January, Putin signed an investment agreement in Moscow with visiting Palestinian President Mahmoud Abbas to develop two gas fields off the Gaza Strip discovered 14 years ago by British Gas but never developed by the Palestinians because of strenuous Israeli objections and the second Intifada that erupted in September 2002. …

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