Brief n. 26, January 2023

The military conflict in Ukraine has not only changed the geopolitical situation in Europe but has also called into question the European Union's energy security. As a result of the sanctions imposed on the Russian Federation, the European economy is facing a number of challenges. The problem is further complicated by the fact that in 2020 Russia provided 20% of Europe's uranium imports, 26.9% of Europe's oil imports, and 41.9% of its natural gas imports. Today, the EU needs to find alternative sources of hydrocarbon imports, especially natural gas. To what extent can the Middle East or any other gas producer provide such an alternative?

Opportunities for gas imports from the Eastern Mediterranean

Gas supplies for Europe could come from the Eastern Mediterranean, Iran, Qatar; and Algeria. The combination of oil and gas fields on the Eastern Mediterranean shelf is called the Levantine Basin. In 2010, the US Geological Survey made a preliminary estimate that the Levantine Basin, which stretches from Egypt in the south to Turkey in the north, contains 3.45 trillion cm of natural gas and 1.7 billion barrels of oil. It is possible that the region's potential is much higher - 6.42 trillion cm of gas and 3.8 billion barrels of oil. Experts estimate that the eastern part of the Mediterranean Sea contains about 3.5 trillion cm of gas and about 850 million barrels of oil. About 20% of these reserves are located in Lebanon.

At the same time, most of the natural gas in the Eastern Mediterranean is concentrated in Israeli territorial waters, with the main fields being Tamar and Leviathan. The idea of delivering Israeli gas to Europe was already in the making four years ago. On 20 March 2019, Israel, Cyprus, and Greece signed an energy cooperation agreement under the auspices of the United States. The planned 2,200 km (1367 miles) gas pipeline was to be called East Med. It was to run 170 km (105 miles) south of Cyprus. From there it would cross the island of Crete into the Greek mainland. The final point of East Med was to be the Italian city of Otranto. After some hesitation, the Italian government agreed to host the pipeline on its territory. However, the maximum capacity of the pipeline is 10 billion cm (cm) of gas per year. Thus, East Med could provide only 2% of Europe's gas requirements and replace 5% of Russia's imports.

However, there are some significant obstacles to the realization of the project. Turkey strongly opposed it because it relies on the extraction of gas not only from Israeli but also from Cyprus fields. Ankara considers the Cypriot gas reserves to be the property of the unrecognized Turkish Republic of Northern Cyprus (TRNC). In addition, since the early 2000s, the ruling Justice and Development Party (AKP) has pursued a policy of turning Turkey into an oil and gas hub for Europe and the Middle East. The country's leadership will resist any attempts to build gas pipelines that bypass Turkey. In this regard, the Turks have actively begun drilling off the coast of Cyprus. Turkey is drilling in contested waters off Cyprus. Greece and the Republic of Cyprus have accused Turkey of violating the two countries’ rights within their respective exclusive economic zones, while Ankara has disputed some of the claims arguing they were encroaching on Turkish and Turkish Cypriot rights. In August 2022, Turkish Foreign Minister Mevlut Cavusoglu warned that Turkey was defending sovereign rights in the eastern Mediterranean.

Another way for Turkey to raise the stakes in the geopolitical game in the Eastern Mediterranean was to support the Government of National Accord (GNA) in the Libyan civil war. On 27 November 2019, during a visit to the Libyan capital, Turkish Foreign Minister Mevlut Cavusoglu and Turkish Defence Minister Hulusi Akkar signed a bilateral agreement on the delimitation of interstate maritime boundaries. It significantly increased the size of the Turkish and Libyan continental shelves. The direct maritime boundary between the two states had hampered plans for the construction of a gas pipeline and restricted Greece's rights to exploit natural gas in the area. On 30 November 2019, Turkey and the Libyan Government of National Accord (GNA), led by Faiz Saraj, signed a military cooperation agreement. Turkey engaged to supply Libya with arms, send military advisers and train the Libyan armed forces. The drawing of a new maritime border between Turkey and Libya ruled out the possibility of building an Israeli gas pipeline to Europe without their consent. Finally, in January 2022, the US administration withdrew its support for the East Med pipeline project.

Israeli Project

An alternative to East Med could be a pipeline from Israel through Turkey. The two sides have been negotiating it since 2007. However, a sharp deterioration of bilateral relations following the Mavi Marmara incident in 2010 prevented this from happening.(1) Turkey became very critical of Israel; this situation was exacerbated by Ankara's support for the Palestinian Hamas movement. However, Turkey decided to improve relations with Israel in early 2022. In March 2022, Turkey and Israel reached an agreement on energy cooperation. The agreement includes a gas pipeline project that would bring Israeli gas to Turkey and on to Europe. But while the Turkish side is treating the agreement with unprecedented optimism, the Israeli side is more cautious.


Iran has the world's second-largest natural gas reserves after the Russian Federation, with 34 trillion cm of gas (17% of the world's reserves). The problem is that Iran does not have the means of transporting its gas. Nor does Iran have the necessary means to increase the country's gas production. In 2021, while Russia exported around 180 billion cm of gas, of which 130 billion cm will go to Europe and Turkey, Iran exported around 25 billion cm to its buyers — Turkey, Iraq, and Armenia.

Political obstacles include US sanctions on Iran's energy sector, renewed in 2018, that prohibit foreign companies from cooperating with Iran. Given the anti-Iranian position of the current US administration and the de facto stalemate in negotiations, it is unlikely that major Western investment in Iranian projects will be forthcoming in the medium term.

Over the past twenty years, two options for delivering Iranian gas to Europe have been discussed. First, the Nabucco pipeline: in 2008, EU leaders called for the creation of a southern gas corridor that would bypass Russia in order to diversify gas supplies. In the same year, the EU and Turkmenistan signed a memorandum on Turkmen gas supplies via the proposed Trans-Caspian Gas Pipelinе. Later that year, Germany's RWE and Austria's OMV agreed to set up the Caspian Energy Company to study the construction of the pipeline. In May 2011, European Commission President Manuel Barroso highlighted the attractiveness of bringing Turkmen gas to Europe via the Caspian Sea.

The Nabucco gas pipeline project, which would run along the bottom of the Caspian Sea and then through Turkey to Europe, went into development in 2002. The Nabucco consortium includes RWE, OMV, Turkey's Botas, Romania's Transgaz, Bulgaria's Bulgargaz, and Hungary's MOL. At the same time, the question of filling the pipeline with 30 billion cm a year was raised. Turkmen and Azerbaijani gas was clearly not enough. The introduction of international sanctions against Iran in 2010 made it impossible for Iran to join the project. As a result, in 2015 the European Commission declared the project unprofitable and closed it down.

However, in June 2018, Turkey finally launched its own Trans-Anatolian gas pipeline (TANAP) from (Georgia to Greece) with a capacity of 16 billion cm per year with the prospect of up to 60 billion cm/year. Although it is planned to connect TANAP to the Trans Adriatic Pipeline (TAP) towards Italy, it is the second breath for Nabucco, as TANAP is actually the Asian part of the Nabucco project, while the European part of Nabucco-West is almost ready. The interconnector Greece - Bulgaria is already under construction. Moreover, the capacity of the Trans Adriatic Pipeline (TAP) is only 10 billion cm per year with the possibility of increasing the capacity to 20 billion, which is not enough for the capacity of TANAP.

In August 2018, in Aktau, Republic of Kazakhstan, the heads of the five Caspian littoral states signed the "Convention on the Legal Status of the Caspian". Under the Convention, the rules for laying gas pipelines on the bottom of the Caspian Sea provide for the consent of only neighboring countries, not all the countries of the Caspian Sea. After signing the agreement, Turkmenistan, in particular, said it was ready to lay the Trans-Caspian gas pipeline on the Caspian Sea bed, which will allow it to export its gas through TANAP to Europe through the Nabucco project.

Algeria and Libya

Natural gas is Algeria's main asset. Its gas reserves amount to 4.5 trillion cm (second in Africa after Nigeria and tenth in the world). Algeria's gas production in 2021 was 100.8 billion cm. Over the last three years, Algeria's gas exports, mostly to Europe (83%), have been on the rise. Algeria exported 43 billion cm of gas in 2019, 38.2 billion cm in 2020, and 55.2 billion cm in 2021. A large percentage of Algerian gas - 65% - goes to Italy and Spain.

During the current energy crisis, European countries have turned to Algeria in search of alternatives to Russian gas. In April 2022, the Italian government negotiated an additional 13 billion cm of Algerian gas. During an official visit to Algeria in August 2022, French President Emmanuel Macron signed a memorandum of understanding with Algeria to supply gas to France. Slovenia is also buying Algerian gas. This increase in supplies has come at the expense of a sharp drop in Algerian exports to Spain.

Algerian gas is delivered to Europe through three pipelines. These are the Trans-Med gas pipeline to Italy (capacity - 22 billion cm per year), the Med Gas pipeline to Spain (8.7 billion cm per year), and the Maghreb-Europe gas pipeline (around 20 billion cm per year). For political reasons, there are currently no exports of Algerian gas through the Maghreb-Europe pipeline. In the fall of 2021, Algerian-Moroccan relations deteriorated to the point of a diplomatic relations breakup between the two states. The Algerian side did not renew the agreement on gas transit through Morocco. However, negotiations behind closed doors continue as both countries are interested in keeping the pipeline functioning. Morocco needs gas for its Tahaddart and Ain Beni-Matar power stations. Time is on the Algerian side. It is also a way to indirectly punish Spain for recognizing Moroccan sovereignty over Western Sahara.

In addition to the political, there are economic reasons affecting the growth of Algerian gas exports to Europe. The country simply does not have the capacity to expand gas production and create a large LNG sector. Algeria's own domestic gas consumption has been growing steadily. Between 2013 and 2018, it increased by 10%. By 2028, it is expected to grow by a further 50%. In a recent interview, Tawfik Hakkar, CEO of the state oil and gas company Sonatrach, noted that the company's plans are focused on securing domestic consumption and existing export contracts. During the last years of former President Abdel Aziz Bouteflika's rule, the country's oil and gas sector suffered from underinvestment. This was due to the fall in world oil prices, but also to the poor management of Sonatrach and rampant corruption among its top managers. In 2020, the country's parliament approved a new law "on the production and export of hydrocarbons" and a four-year road map to develop the industry. The plan calls for a $40 billion investment. The Algerian state does not have the required funds. Whether foreign investors will provide such funds is a big question.

As for Libya (its natural gas reserves are estimated at 1.5 trillion cm), the country will not be able to become a serious player in the European gas market any time soon. The North African country's gas production has fallen several times in the ten years of its civil life. The situation is further aggravated by the military and political conflict and the confrontation between the two governments (Government of National Stability led by Fathi Bashaga and Government of National Unity (GNU) led by Abdul Hamid Dbeibeh). This confrontation is also reflected in the oil and gas industry. While Libya's oil production was 1.2 million barrels per day at the end of 2021, by the end of the summer it had fallen to less than a million barrels per day. Most of the oil and gas terminals in the east of the country are controlled by forces that oppose GNU and sabotage its decisions.


Qatar has the world's third largest natural gas reserves (25.46 trillion cm) and is the largest exporter of liquefied natural gas (LNG). Currently, 70% of Qatar's gas exports go to Asia (Japan, China, South Korea, Taiwan, India, and Pakistan) and only 30% to Europe. The emirate's leadership has invested $28 billion in developing the North Dome offshore field. Future plans include increasing LNG exports by 60% (from the current 106 to 175 billion cm per year). Half of these exports are expected to go to Asia and the other half to Europe. During the first months of the conflict in Ukraine, Qatar was literally wooed by EU delegations. The country was visited by envoys from Britain, Austria, Italy, and Germany, as well as EU foreign and security policy commissioner Josep Borrell. During the last visit of Emir Tamim bin Hamad to the US, Qatar was granted the status of "America's most important ally outside NATO". On 28 April 2022, Qatar was added to the list of countries whose citizens do not need a visa to visit Europe.

However, there are a number of obstacles to directing Qatari LNG exports to Europe. First, with the exception of the UK and Italy, European countries do not have a satisfactory regasification infrastructure; Germany has only two LNG terminals, and the last one was inaugurated in January 2023. In total, the German government hopes to replace 50 to 60% of Russian gas through LNG in 2023.

Even if the funds are found and the work is done, there is still a fundamental disagreement between the European states (consumers) and Qatar (exporters) on how to conduct trade. Qatar's current export priority is Asia. Doha is trying to retain its traditional Asian customers, which is not easy in the face of increased competition from Australia and the United States. In 2021, the Americans have pushed Qatar from second to third place among LNG suppliers to China. To increase its exports, Qatar could demand that EU countries meet several conditions. The first condition is a ban on the re-export of Qatari gas. For example, if contracted gas goes to France, it cannot be delivered to Germany. Second, the Qataris want an end to the European Commission's investigation into Qatari commercial practices in Europe, which was launched in 2018. Third, and most importantly, the Qataris prefer long-term contracts (ten years or more) to short-term spot contracts. In 2021, for example, the share of Qatari LNG delivered under spot contracts did not exceed 10-13% (9.7-13.8 billion cm). European consumers account for only 4.1 billion cm.

The United States

Record liquefied natural gas (LNG) exports from the United States helped to mitigate the lower Russian gas supplies in 2022, and will remain a vital energy source for the continent in 2023. However, the US-produced LNG comes with a price — it costs nearly four times more in Europe than in the US. American LNG exporters increased their sales to Europe by more than 137% in the first 11 months of 2022 from the same period in 2021, supplying more than half of Europe's imported LNG. In 2022, U.S. LNG producers earned $35 billion through September 2022, compared to $8.3 billion over the same period in 2021.


Over the past decade, EU leaders have talked a lot about diversifying energy supplies, but little has been done in practice. If the bureaucrats in Brussels really wanted to get rid of their dependence on Russian gas, they would not have joined the US sanctions against Iran. In 2008-2010, the EU had a real chance to negotiate with Tehran to export gas to Europe through the Nabucco pipeline. Increased imports of Algerian gas would also have been possible if the EU had adopted a more loyal policy towards Algeria, at least since 2014, and encouraged investment in the Algerian oil and gas sector.

Qatar could theoretically become a major player in the European gas market and partially replace Russia, but only in the medium and long term (6-10 years). This means that the United States must likely remain the primary supplier of LNG to Europe for at least 2023.


(1) On 31 May 2010, Israeli naval commandos boarded six civilian ships of the "Gaza Freedom Flotilla" on 31 May 2010 in international waters in the Mediterranean Sea. On the Turkish ship MV Mavi Marmara, the Israeli Navy faced resistance from about 40 of the 590 passengers. During the struggle, nine activists were killed, including eight Turkish nationals and one Turkish American, and many were wounded. On 23 May 2014, a tenth member of the flotilla died in hospital after being in a coma for four years.