Serbia as a future European energy hub: Untapped potential for Egypt’s energy development

Aleksandra M. Pećinar
Wednesday 31 Mar 2021

Egypt is gaining prominence for its rising natural gas production and new discoveries, as the country plans to achieve self-sufficiency in gasoline and diesel by the year 2023

Geopolitical plans in the area of Southeast Europe are influenced by medium and large national, supranational, and international actors such as the USA, Russia, Germany, Turkey, Greece, the European Community, NATO, and China.

At the same time, the geo-economic perspectives of the region vary, with the aim of either “uniting” Eurasia, such as the plan to “expand” Vardar and its connection with the Danube, which would help transport products from China to Central Europe, or lead to its “separation” through the construction of a pipeline from the Caspian Sea and the Eastern Mediterranean, in order to reduce Europe’s dependence on Russia’s natural resources.

As southeast Europe regains centrality in the geopolitics of energy, Serbia, as well as EU member Bulgaria have acquired a big stake in the game. With the change of year, three events flipped the gas market upside down in southeast Europe.

On New Year’s Eve, Serbian President Aleksandar Vucic gave the green light to supply his country with Russian gas through Bulgaria and the Balkan stream pipeline, a branch of the Turkish stream.

Although Washington has been urging Serbia to diversify its energy supplies and use American liquid gas shipments — which tend to be more expensive. Defying US calls to reduce its dependency on Russian energy supplies, Serbia, which has so far received Russian gas via Hungary and Ukraine, has officially launched a new gas link that will bring additional Russian gas to the Balkan country via Bulgaria and Turkey.

A few hours earlier, gas began to be supplied to Bulgaria from Azerbaijan via the new Adriatic pipeline TAP. Bulgarian Prime Minister Boris Borisov even spoke about the end of the Russian monopoly on the Bulgarian market. The third event was the launch of the new floating liquified natural gas (LNG) terminal near the Croatian island of Krk.

US liquified petroleum gas arrived there by tanker and was then routed to the Croatian network, which is connected to the European one. With this move, Croatia not only almost eliminates its dependence on Russian gas, but also becomes a major exporter of LNG to Hungary and Ukraine. And as if all these were not enough, due to the so-called Southern Gas Corridor, it was Gazprom who heralded significant competition in both the Greek and Italian markets.

After the December 2020 announcement of the Serbian president, Serbia has unambiguously been offered the chance to strengthen its` position at the energy chess- board of southeast Europe.

Additionally, as early as the following month, the country, along with Cyprus, Greece, Israel, Bulgaria, and Hungary, issued a joint statement by their energy ministers with a view to enhancing energy cooperation, having expressed their support to the East Med pipeline project.

Moreover, with publishing of the works contractor selection tender for the Niš-Dimitrovgrad gas pipeline, the European Union and Serbia are progressing a new big infrastructural project. A new gas interconnector will connect the city of Niš with the Bulgarian capital Sofia, creating the possibility for Serbia to get access to natural gas supply from the LNG terminal in Greece, and also from TAP and TANAP gas pipelines, which are part of the southern gas corridor.

Thanks to the connection of these above mentioned existing and planned gas pipelines, after the completion of the East Mediterranean project supply from coastal gas reserves of the Leviathan field, that is between Cyprus and Israel, will be possible.

However, taking into consideration that, in the same time, Greece and Egypt were discussing the possibility of changing the route of the East-Med gas pipeline in order to tackle the technical difficulties of the project, but also the fact that the competition of the ‘Balkan stream’ extension to the Turk stream pipeline has received little attention even in the countries through which it runs, the question arises how will southeastern Europe exploit these opportunities?

Apparently, one should take account that today, the role of the Eastern Mediterranean in redefining the international system is perhaps even more critical than in the past. It became evident that the melting of the arctic ice posed challenges to the classic axioms of Sir Halford Mackinder and Nicholas Spickman, according to which the suppression of the Russian factor, as a diachronic geopolitical perception of Anglo-Saxon naval forces, was the “cornerstone” of the Cold War “containment” of Moscow in access to the so-called “warm waters”, where Turkey — formerly the Ottoman Empire — played a crucial role due to the Bosporus and the Dardanelles.

In any case, the analysis of this process in accordance with strictly geographical parameters suggests that the Eurasian-African cluster has the Mediterranean as its centre, while the Eastern Mediterranean is its epicentre.

Moreover, due to the fact the reserves of the Eastern Mediterranean can be complementary to the wider supply system to EU member states, the main field of interest and competition is their energy exploitation and transfer.

Namely, the diversification of energy imports as one of the main priorities of the EU in conjunction with Russia’s reaction to NATO expansion into its strategic yard through “gas diplomacy” represents an additional aggravating factor in an already complex situation.

Hence, the newly discovered energy depots are becoming extremely important, while strengthening of geo-economic diplomacy becomes of special importance in order to develop and exploit energy deposits within the maritime plots of the Eastern Mediterranean, with the prospect of growing into regional cooperation.

In January 2019, a meeting of oil ministers was held in Cairo between Eastern Mediterranean countries, including Cyprus, Egypt, Greece, Israel, Italy, Jordan, and Palestine, aiming to strengthen cooperation and initiate a systematic dialogue on the region’s policies related to natural gas, in order to lead the development of a regional gas market.

The meeting paved the way to the subsequent establishment of the Cairo-based international organisation “East Med Gas Forum” with the aim to develop the region’s gas market, lower infrastructure costs and secure competitive prices for gas from the region.

If the EU continues to diversify its energy needs away from Russian gas giants — of which the Eastern Mediterranean gas pipeline, as a project strongly supported by the United States, would be the first step to this end — Russia’s influence, as the main supplier of natural gas to the EU, in the context of gas prices and geopolitical positioning, could be called into question to some extent.

Turkey’s major preparations for changes in the southeastern Mediterranean and its efforts to find habitat in this area due to global geopolitical mutations (claims to Greek and Cypriot maritime plots as well as other countries in the region), Egypt’s tendency to double gas production and complete new production platforms in the deep waters of the Mediterranean, the Gulf of Suez, and the Western Desert, strategic cooperation between France and Cyprus in the field of defense and energy, possible passage of the second Turkish Stream line through Greek territory, as well as increased US pressure on the German-Russian pipeline to grow into an energy and diplomatic turning point between Washington and Moscow and many European countries, including Germany and France.

These are just some of the facts that point to a potential change in the region’s energy future, with implications for security, stability, economy, and refugee flows. The NATO-Russia geopolitical competition, which is undergoing a metamorphosis due to the emancipation of the European Union in achieving goals, both in the economic sector and in the security sphere, conditions the relevance of the region as a geopolitical centre, primarily due to the failure of previous geostrategic approaches in establishing security and balance.

The fact that Egypt is gaining prominence for its rising natural gas production and new discoveries, along with the country’s plans to achieve self-sufficiency in gasoline and diesel by the year 2023, as well as its large hydrocarbon reserves, could eventually alleviate the anticipated energy deficit which Europe is about to face in the near future, and raises the question of whether the energy potential of Egypt could be crucial in these changing geopolitics of energy.  

Taking into consideration Serbia’s goal to become an energy transit corridor and future European energy hub, as well as that in October 2020, Egypt and Serbia have agreed to preserve cooperative relations with the aim of strengthening their economic ties, we assume that well-founded opportunities exist for Egypt’s energy expansion in this direction.

Bearing in mind that the current geopolitical moment represents the period of the greatest redistribution of power since the cold war; antagonism in the field of energy again raises the question “who will have the keys to warm seas”, and all the indicators point to geo-historical changes in the Eastern Mediterranean as a key area by 2030.

It remains to be seen which “energy security road map” for the region that global leaders will choose to implement, because history is not measured by months and years, but exclusively by political decisions.

* Dr Aleksandra M. Pećinar is an Adviser for Geostrategic Issues in Southeast Europe in the United Nations’ mandated University for Peace, and the European Centre for Peace and Development, Serbia.

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