Monday, 26 September 2016

Don'tever forget Syria is about reяources

The Natural Gas War Burning Under Syria






24 September, 2016

Qatar always wanted to punch above its weight. In Syria, it got the chance.

In 2009, Qatar, a leading natural gas producer, approached Syria about routing its planned 1,500 mile pipeline to the gas markets of Europe through Syria’s Aleppo province. Qatar wanted a pipeline straight to Europe as its current gas transport modes were limited to Liquefied Natural Gas (LNG) tanker, mostly to Asia with limited spot shipments to Europe or the Dolphin pipeline to the United Arab Emirates and Oman. The pipeline would head north and end in Turkey after crossing Saudi Arabia, Jordan, and Syria. Syriadeclined Qatar’s offer, which would have cut the European market share of its partner, Russia, and instead agreed to participate in the “Friendship Pipeline” between Iran and Iraq that was considered a “Shia Pipeline” to some and a target for the Sunni monarchies of the Gulf. Not understood, or ignored, was Syria’s longstanding support of the Iranian regime, especially during the 1980-1988 Iran-Iraq War, and its long relationship with Russia, dating from 1944, which should have been a warning of who might appear if things hotted up.


In 2010, Israel and Syria held back-channel talks that reportedly included Israel’s return of the Golan Heights to Syria in exchange for security guarantees. The talks lagged due to mutual suspicions about the other side’s ability to deliver and, by early 2011, the Arab Spring had erupted across the region and leaders’ attentions turned to more immediate concerns. At this point, America had the opportunity to strike a blow against the Islamic Republic’s ally, the Assad regime. In 2011, Turkey provided a home for the opposition Syrian National Council and, in August 2011, the U.S., its allies, and the UN were calling on Bashar Assad to step down.

In 2011, Syria, Iran, and Iraq agreed to build a pipeline to connect Iran’s South Pars gas field to Europe. The pipeline would run from Assalouyeh, Iran to Europe via Iraq, Syria, and Lebanon, with Syria as the center of assembly and production.


What remains unclear is why, when Syria turned down its original pipeline proposal, it didn’t pursue its second option for the pipeline route: Saudi Arabia – Kuwait – Iraq. Aside from the challenging terrain in Iraq, the mostly likely reasons are the discovery of vast gas reserves in the eastern Mediterranean, and Saudi opposition to a pipeline through Kuwait. If a more Qatar-friendly regime were to gain control of Syria, Qatar would be able to garner more profit and have influence over the state, something it is unable to do with Saudi Arabia, which vehemently opposes Qatar’s historic support of the Muslim Brotherhood, Jordan, a U.S. ally, or Iraq, an Iranian ally. At that point it was nothing personal, just business, and the Assads had to go.


This was Qatar’s best chance to influence the affairs of the region. It has a tiny native population – guest workers make up almost 90 percent of Qatar’s population of 2.2 million – and an unhealthy one, so some options are limited as it has a very small military. It does, however, have a healthy check book and was able to use it to help finance the Syrian opposition forces.


To better understand the war in Syria, remember the surge in natural gasdiscoveries in the Eastern Mediterranean starting in 2009. Israel, Cyprus, and Egypt have found large gas deposits, and offshore Lebanon has the potential for significant gas resources. Israel has the potential to export gas to Egypt, Jordan, the Palestinian Authority, and Turkey. (Israel and Turkey have discussed a pipeline to Turkey, but Cyprus has objected as it does not have diplomatic relations with Turkey.)


If the pipeline from Iran to Syria it could create an energy hub in Syria, and could block Qatar gas sales to Europe at a time when Qatar’s gas exports to the U.S. have dropped to zero, largely due to increasing U.S. domesticproduction of natural gas. Thus Qatar would be limited to the Asian LNG market as it scrapped for the EU market with Iran, Iraq, Syria, and Russia. And the only thing that could make it worse is happening: Europe is forecast to take more than half of U.S. LNG exports by 2020.


Qatar, Saudi Arabia, and their confederates are in it to win it, and the fighting in Syria has focused on the pipeline routes. Aleppo province, which would host the Qatari pipeline, is where Turkey wants to establish abuffer zone to support “moderate” rebel forces. If Turkey can control this territory, it will bolster the Qatari pipeline and ensure its own preeminence as the energy hub in southern Europe, where it would gather oil and natural gas from Russia, Central Asia, the Caspian, the Eastern Mediterranean, and the Middle East, and become less reliant on Russian gas, which accounted for over 50 percent of its imports in 2014But Russia hasn’t been standing still: it has surrounded Turkey on three sides by occupying Crimea, sending more troops to Armenia, and deploying the S-400 air defense system to Syria, creating a no-fly zone, and maybe a “no-buy” zone for potential customers of Qatari gas.


The Pasha’s increasingly autocratic behavior may spur hedging behavior in Europe, such as balancing the Pasha with the Tsar and completing Russia’s Nord Stream pipeline, negotiating better deals with key suppliers Norway and Algeria, importing LNG from the U.S., and getting serious about fracking for shale gas. Turkey turned the flow of refugees to Europe on and off to get what it wanted, and the possibility remains that it will one day do the same with energy.


And Qatar may have to write some more checks in addition to the ones it has sent to Assad’s opposition. Turkey has some serious policy and infrastructure shortfalls that work against it becoming a serious energy hub soon: weak domestic gas regulation, state subsidies, monopoly control of the gas transmission network, only two LNG terminals, and a lack of storage capacity. 

Syria may be too wrecked to be a hub and Turkey lacks the infrastructure for the role. Russia may be interested in investing in increasing Turkey’s hub capacity and Turkey, which is making amends with Russia, may take the money over Qatar’s for a pipeline that may never be built. Russia’s good relations with Cyprus and Israel could propel movement towards a resolution of the Cyprus dispute so the gas pipeline from Israel to Turkey becomes a reality, having the knock-on effect of attracting more outside investment to Turkey.


To succeed in its pipeline goals, Qatar will have to make serious investments in the Turkish end of its project as well as resisting political pressure from Russia. Until then, it will be limited to making LNG shipments to Europe by tanker. In the meantime, these pipeline geopolitics have contributed to serious consequences for the Middle East.


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