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With Strings Attached: Implications of Europe’s Turn to Mediterranean Gas

In its efforts to wean itself off Russian energy supplies, Europe is increasingly looking to its southern neighbourhood. But this comes with its own set of geopolitical challenges.

Choppy waters: a ship drills for natural gas at the Karish field off Israel's coast. Image: Reuters / Alamy

As heatwaves hit Europe, governments across the continent are already worrying about a cold winter and a deepening energy crisis. Since Russia launched its war of aggression against Ukraine five months ago, European countries have been scrambling to reduce their dependence on Russian oil and gas imports, not least to limit one of Moscow’s most important sources of revenue. Yet, they also fear that Russia could beat them to the punch and cut off energy flows to Europe before alternative sources have been secured. Russia has already stopped supplying gas to Poland, Bulgaria and Finland, and reduced deliveries to Germany, Italy and other European states.

As Europe searches for alternatives to Russian gas, debates about fracking are re-emerging, and discussions about if and when Europe can import more liquified natural gas (LNG) from leading exporters such as the US and Qatar are drawing much attention. Additionally, European states are turning to old and new gas producers in the eastern and western Mediterranean, lured not least by the promise of short supply routes along which pipelines already exist or could feasibly be constructed.

In the eastern Mediterranean, Israel is emerging as a major gas producer. In June, the EU, Israel and Egypt agreed to work on a partnership that could eventually see Israeli gas be transformed into LNG in already existing Egyptian gas liquification plants before being shipped to Europe. Meanwhile, further west, Algeria, a longstanding gas producer that already sends about a quarter of its gas to Spain, signed a deal with Italy in May to increase its supplies to Europe.

Neither arrangement represents a quick fix. It will likely take years for the necessary infrastructure in Europe, Israel and Algeria to be built and for the latter two to sufficiently increase their production capacity to even begin to replace the volumes of gas Europe imports from Russia. Just as importantly, both deals tie Europe more closely to complex and potentially explosive geopolitical contexts. If European countries should have learned anything from Russia’s war in Ukraine, it is surely that energy agreements are more than mere commercial transactions; considering their strategic implications for European security is therefore vital.

Israeli Gas, Hizbullah’s Drones and the Egyptian Economy

The eastern Mediterranean has long been a highly contested space. Just over the past decade, the overlapping rivalries and shifting alignments among the region’s states – Cyprus, Egypt, Greece, Israel, Lebanon, Syria and Turkey – have shaped (and been shaped) by the conflicts in Libya and Syria, and between Israel and the Palestinians, to name but a few. At various times, these conflicts have repeatedly drawn in extra-regional powers, including European states, Russia, the US and even Iran, Saudi Arabia and the United Arab Emirates (UAE).

With the gas deal with Israel and Egypt, the EU has increased its own stake in this complex environment beyond the obligations it already had to its member states of Cyprus and Greece. Two aspects are particularly important to consider.

If European countries should have learned anything from Russia’s war in Ukraine, it is surely that energy agreements are more than mere commercial transactions

Firstly, with the agreement, the EU wades into the longstanding maritime border dispute between Israel and Lebanon. The offshore Karish Field, from which the gas destined for Europe is supposed to come, is adjacent to the area that both countries claim to be part of their own exclusive economic zone. The US government has appointed a Special Envoy, Amos Hochstein, to mediate in the dispute, but negotiations have been progressing slowly – if at all – in recent months.

Buckling under an unprecedented economic crisis and a dysfunctional political system, the Lebanese state’s capacity to effectively engage on these matters is somewhat limited at the moment. But Hizbullah, which suffered a setback in the Lebanese parliamentary elections in May, appears to see the border dispute and the international spotlight on gas exploration in the eastern Mediterranean as a useful opportunity to bolster its anti-Israeli credentials. On 2 July, Israeli authorities said that they had shot down three Hizbullah drones approaching a gas rig at Karish.

Hizbullah later said the drones had been unarmed and were part of a reconnaissance mission, but the incident certainly illustrated the volatility of the situation in the area. This does not have to deter Europe from seeking to expand energy trade with Israel or other eastern Mediterranean producers, but the obvious political risks must be taken into account in Brussels and should inform thinking about future security arrangements in the region.

Secondly, the EU–Israel–Egypt gas agreement comes at a time when policymakers across Europe are increasingly concerned about Egypt’s economic stability. Hit hard by the impact of Russia’s invasion of Ukraine, particularly with regard to food security, the Egyptian government is struggling to contain a potentially burgeoning economic crisis. While macro-economic growth figures have remained relatively strong, inflation and soaring food and energy prices are causing increasing strain. Scarred by the experience of the political instability that gripped the Middle East and North Africa in the aftermath of the 2010/11 Arab Uprisings, and in particular the migration crisis triggered and facilitated by the violent conflicts in Syria and Lebanon, renewed instability in Egypt represents a nightmare scenario for many European governments.

The gas agreement should bring some economic benefits for Egypt, but not necessarily in a way that will help to address poverty and Egypt’s other related socio-economic challenges. The EU will therefore have to ensure that the energy deal is part of a more comprehensive engagement with Cairo that seeks to increase the resilience of the Egyptian economy through reform.

Algerian Gas, Morocco and the Western Sahara

In the western Mediterranean, meanwhile, Algeria has long been an important gas supplier for Europe. Spain has imported Algerian gas via the Maghreb-Europe pipeline, which runs through Morocco, since 1996, and via the undersea Medgaz pipeline since 2011. However, relations between Madrid and Algiers, including the energy trade between the two countries, have persistently been affected by the conflict between Algeria and Morocco over the Western Sahara, which Morocco claims as its territory, while Algeria supports the Polisario Front that seeks Sahrawi independence. Over the past two years, tensions have steadily grown.

New partnerships with Mediterranean energy producers must be recognised for the imperfect and geopolitically complex undertakings that they are

In 2021, Algeria decided to end exports via the Maghreb-Europe pipeline and therefore cut off supplies to Morocco, planning instead to expand the capacity of the Medgaz pipeline. Subsequently, in March 2021, Algiers was angered by Spain’s reversal of its position on the Western Sahara. Having previously been mostly neutral on the territory’s status, insisting that it was a matter for the UN to resolve, Madrid endorsed Rabat’s plan to retain sovereignty over the Western Sahara while granting it autonomy to run its domestic affairs. The move was to a significant extent motivated by Spain’s need to deepen cooperation with Morocco to contain migration, particularly to the Spanish enclaves of Ceuta and Melita.

As things stand, Algeria has said that it will continue to supply Spain with gas via the Medgaz pipeline. But its Ambassador to Madrid, whom Algiers withdrew in March, has not returned. Moreover, the Algerian government has repeatedly warned Spain not to re-export gas it receives from Algeria to Morocco, which has struggled to make up for shortages caused by the termination of flows via the Maghreb-Europe pipeline.

The new deal concluded in May between Italy’s energy giant ENI and Algeria’s national oil company Sonatrach has to be considered within this context. Even if Italy may find it easier to avoid becoming embroiled in the Algeria–Morocco dispute, the tensions in the Algeria–Spain relationship demonstrate that energy trade in the western Mediterranean cannot be divorced from the geopolitical realities in North Africa.

Searching for a European Position

In the search for non-Russian energy supplies, Europe is rightly looking to its southern neighbourhood. Algeria, Israel and Egypt – and perhaps, in time, other (re)emerging Mediterranean energy producers and transit countries such as Libya and Turkey – can all play an important role in increasing the continent’s energy security. However, these new energy partnerships must be recognised for the imperfect and geopolitically complex undertakings that they are. More than mere commercial transactions, they tie Europe more closely into local conflict dynamics – be it between Israel, Lebanon and Hizbullah, or between Algeria and Morocco. They should therefore be embedded in a clear-eyed and strategic European approach to the EU’s southern neighbourhood.

In May, the EU published its new Gulf strategy, which offers at least a conceptual framework for how European governments intend to balance expanding energy relations with the Gulf monarchies with other interests, ranging from economic engagement to human rights concerns. The document is far from perfect, and it remains far from certain if and when many of its ambitious intentions will be implemented. But if the EU wants to become a more serious geopolitical actor and increase its resilience to political shocks such as Russia’s invasion of Ukraine, developing similar strategies for the eastern and/or western Mediterranean is necessary.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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