US energy envoy sees bright spot for natural gas

Says find in Egyptian waters is good news for the region

WASHINGTON: Signs of hope are scarce in the Middle East, a region awash in violence, civilians fleeing crumbling states, and economies built largely on oil squeezed by a dive in global prices.

But Amos Hochstein, the US energy envoy, sees some long-term potential for natural gas development to help provide economic security from Iraq to the eastern Mediterranean. Low crude prices have hit particularly hard in Iraq, where the central government in Baghdad and the semi-autonomous Kurdistan Regional Government (KRG) are locked in a spat over oil revenues.

The row threatens to reduce Iraq’s ability to organise the fight against Islamic State militants. But Hochstein, in an interview at the State Department, was optimistic on the long-term energy prospects of natural gas.

“There’s a lot of potential for gas in the KRG. Why shouldn’t we see Kurdistan as delivering significant amounts of gas via Turkey into Europe?” Hochstein, the State Department’s special envoy for international energy affairs, said late last week.

The European Union is looking to diversify its natural gas sources. The EU now depends on Russia for one third of its gas, about half of it shipped through Ukraine where Russia is seen to be stoking a civil conflict.

Iraq also needs reliable and affordable sources of power, though it first needs to build more power plants.

Meanwhile, the US is trying to work with both Baghdad and KRG on sharing oil revenues, he said. “It’s limping along,” he said about the relationship between the two.

Hochstein said last month’s mammoth find in Egyptian waters of the Zohr offshore natural gas field by Italy’s Eni, the largest in the Mediterranean, was good news for the region.

Some analysts contend the Egyptian find poses a challenge to plans by Israel and Cyprus to export their own natural gas from recently discovered fields. Hochstein disagreed, saying the find shows that under the right conditions, countries such as Lebanon, Israel and Cyprus can uncover greater energy reserves.

“What this confirms is that recent discoveries, are not accidental, but that this is an under explored basin that could yield many more fields,” he said. “All that needs to happen is to put in place the right regulatory environment and investment climate.”

Published in The Express Tribune, September 13^th, 2015.

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