Before assessing pipelines as a vehicle for enhanced cooperation, it is worth considering the history of existing projects and what impact, if any, they have had on interstate relations. Was peace a prerequisite for pipelines or did pipelines contribute to a resolution of existing conflicts?
THE IRAQI TRANSBOUNDARY PIPELINES
The oldest pipeline project in the Middle East can be traced back to the colonial period when oil was first discovered in present-day Iraq. In 1927, the Iraq Petroleum Company struck oil in Baba Gurgur near Kirkuk. To transport the oil to western markets, a pipeline was proposed, and construction began in 1937. The routing of this pipeline was extraordinary considering the current geopolitics of the area. From Kirkuk the pipeline traveled southwest to Haditha, west toward Amman, and on to Haifa (Appendix 1). The completion of the pipeline coincided with the establishment of Israel; oil flowed for only a few days before war broke out.
Soon thereafter, pipelines to the Mediterranean were built to Baniyas, Syria, and through Syria to Tripoli, Lebanon. A large pipeline to the Turkish Mediterranean coastal city of Ceyhan was completed in 1977. Given the strained relations between the Syrian and Iraqi Ba’thists, once the first Turkish line was completed, Iraq stopped using the Syrian pipelines and relied primarily on the outlet through Turkey and on new terminals in the Persian Gulf. By the early 1980s, Iraq had three Gulf terminals – Mina al-Bakr, Khawr al-Amaya, and Khawr al-Zubayr. However, because they were all damaged during the Iran-Iraq war, Iraq constructed a new pipeline in 1985 that fed into Saudi Arabia, terminating at the Red Sea port of Yanbu. In December 1996, the Iraq-Turkey pipeline was reopened under the oil-for-food program.
After the start of the Iraq War in 2003, Iraq’s pipelines were subjected to numerous acts of sabotage by insurgents. Meanwhile, the United States actively discouraged flow of oil via Syria.1 The flow of the most active pipeline to Turkey, with a capacity of 1.6 million barrels per day, fell to 30,000 barrels in 2003. Despite occasional spurts of activity, the pipeline remained considerably below capacity until 2008, when the flow increased to 355,000 barrels after the U.S. military began protecting pipelines as an operational objective.2
Plans to revitalize the Haifa pipeline and the Trans-Arabian pipeline (built by the British in the 1940s, the latter went from Saudi Arabia to Lebanon through Syria) depend on Jordan’s willingness to support the projects and so far there are few indications that it does. The Trans-Arabian pipeline’s resurrection was supported as far back as 1975 when former Secretary of State Henry Kissinger signed a memorandum of understanding, according to which the United States would guarantee Israel’s energy supply in the event of a crisis. Kissinger’s consulting firm, Kissinger & Associates, drew up plans in the mid-1980s—when Saddam Hussein was a key American ally—to run a pipeline from Iraq to Aqaba in Jordan, near the Israeli port of Eilat, partly to make the need for such a reserve less relevant. However, these plans never reached fruition due to Saddam’s attack on Kuwait and the subsequent Gulf War.3 Whether or not the Haifa pipeline can be resurrected or a new Aqaba spur built from the original Trans-Arabian Pipeline largely depends on the ability and willingness of the United States and Middle Eastern governments to link such projects to regional peace-building efforts.
THE TRANSMED PIPELINE
Plans for a trans-Mediterranean pipeline go back to the early 1960s when natural gas demand in Europe was growing. As early as 1963, French companies, with the support of the French government, proposed building pipelines to bring Algerian gas to Spain and on to France.
At the time of its construction in the 1970’s, the Transmed pipeline was the deepest pipeline at over 150 meters. It was intended as a transboundary effort involving not only the source and demand country but also a transit country, Tunisia, and international waters. Transit through Tunisia from Algeria was a significant political challenge due to the two countries’ strained relations. Tunisia’s first president, Habib Bourguiba, had initially supported the Algerian rebels in their anti-colonial struggle against France but later sided against an independent Algeria in its territorial disputes with Morocco. Tunisia insisted on negotiating bilaterally with Italian energy giant Ente Nazionale Idrocarburi (ENI) rather than collectively with Algeria and was able to secure an annual $25 million transit fee.4 Despite such tensions, the establishment of a pipeline appears to have been an important motivator for the signing of the ’’Treaty of Fraternity and Concord’’ between the two countries in 1983. The improvement of relations between the two sides coincided with the development of the pipeline to the extent that the treaty and the opening of the pipeline occurred in the same year.5 In addition, the pipeline paved the way for several other projects across the Mediterranean (Appendix 2).
Similarly, the pipeline between Algeria and Spain heading west and then north (Maghreb-Europe pipeline) required transit through Morocco. However, relations between Morocco and Algeria were considerably worse than those between Tunisia and Algeria. Algeria’s independence in 1962 had led to a border dispute over the regions of Bechar and Tindouf, sparking the infamous ’’War of the Sands’’ the following year. Also of concern was the issue of the Western Sahara, where in the 1960s the Sahrawi tribe led an independence movement, as Morocco, Algeria, and Mauritania all sought to assert their dominance over the region. Much to Morocco’s chagrin, the Algerian government supported self-determination for the Saharawi. Yet, in spite of the hostility, economic interests helped bring Algeria and Morocco back to the negotiating table. The prospect of a pipeline was one important element in the thawing of relations between the two adversaries. Both countries decided to reopen diplomatic ties in 1988, around the same time that plans for the Maghreb-Europe pipeline began to take shape.
Meanwhile, the tenuous relations between Spain and Morocco have been strained by longstanding territorial disputes. Although the status of the enclaves of Ceuta and Melilla remains unresolved, bilateral relations have improved steadily since the European Union began to play a more active role in bridging regional differences. The Maghreb-Europe pipeline, which opened in 1997 between Morocco and Spain, has arguably played an important role in this regard as well. Not surprisingly, energy cooperation is recognized by the EU as a major tool for fostering cooperation. For example, the action plan for the Euro-Mediterranean partnership with Morocco, initiated by the EU in 2005, stated that “development of the energy sector, including inter-connections and infrastructure under optimal safety, competitiveness, and quality conditions” is an area of priority for cooperation.6 In October 2008, Morocco became the first country south of the Mediterranean to receive ’’advanced status,’’ a further affirmation of the EU’s willingness to deepen economic and political ties with key regional partners as part of its ’’neighborhood policy.’’
The Greenstream project between Italy and Libya has also served as a catalyst for better relations between Arab and European countries. The project—initiated in 2003 after Italy succeeded in convincing the EU to relax sanctions on Libya— carries some 10 billion cubic meters of gas a year from Mellitah on Libya’s western coastline to Sicily and then on into southern Europe (covering about 10 percent of Italy’s annual consumption needs). The $6.6 billion pipeline, with projected returns of $20 billion over 20 years, is one of the world’s deepest underwater pipelines and the longest in the Mediterranean.
Relations between Italy and Libya had been greatly shaped by the experience of colonization. After Muammar al-Qaddafi came to power in 1969, more than 20,000 Italians born in Libya were expelled. The opening ceremony for the pipeline in 2004 was directly linked to a gesture of reconciliation to grant Libyan-born Italians the right to return. The ceremony was held on October 7, the date the Italian invasion began in 1911. In his remarks at the ceremony, Qaddafi said: ’’We now want to make it a day of friendship and cooperation between Libya and Italy, a cooperation which has been cemented by the gas project which we are inaugurating today.’’ The Italian Prime Minister Sylvio Berlusconi responded: ’’Today, a new era of rapprochement and cooperation starts between our two peoples thanks to this project which will supply Italy with 10 percent of its energy needs.’’7
More recently, the direct undersea pipeline from Algeria to Almeria, Spain, known as the Medgaz project, was completed in December 2008, while the Galsi pipeline project, which would bring Algerian gas to Italy via Sardinia, is in the early stages of development. As exemplified by continuing interest in such projects, pipelines have played an important role in strengthening and cementing ties within the Maghreb as well as between North African and European countries.
EGYPT AND ISRAEL: COOPERATION AMID CONFLICT
Despite its modest fossil fuel reserves, Egypt is becoming an important pipeline builder and supplier of gas to its neighbors, most notably Israel. Egypt is estimated to have 67 trillion cubic feet of proven natural gas reserves with probable reserves of nearly twice as much. By the end of 2004, its cumulative gas production amounted to 1.5 trillion cubic feet. The government aims to double exports in five years from the current level of 17 billion cubic feet to 35 billion cubic feet per year.8
Construction on a pipeline from Egypt’s gas fields began in 2001. Initially, the project was only meant to supply gas to Jordan. Soon, however, economies of scale made it more attractive to consider other partners, and Israel, both geographically and economically, was a natural choice for such an effort. In 2005, Egypt and Israel negotiated an agreement whereby the Egyptian government would sell 1.7 billion cubic meters of gas per year to Israel. The gas is being pumped via a 100 kilometer subsea pipeline running from the Egyptian Mediterranean port of El-Arish to the Israeli city of Ashkelon (Appendix 1). The gas is being sold to the East Mediterranean Gas Company (EMG), which is a consortium of the Egyptian General Petroleum Corporation, Israel’s Merhav Group, and Egyptian businessman Hussein Salem, who claims to have sold his shares to American and Thai investors.9 Egypt agreed to sell the gas at a variable price between $2.5 and $2.65 per million British thermal units (BTU).10 This project has gone largely unreported due to the political sensitivity of any cooperation between the two countries, which have maintained a cold peace since the establishment of diplomatic relations in 1979.
After the January 2009 war in Gaza, pressure mounted on Egypt to reconsider the deal. The government has argued that it was simply selling gas to a private company which, in turn, was selling it on its own terms. Since the pipeline went into operation in May 2008, there have been heated exchanges in the Egyptian parliament and lawsuits filed against the deal. A November 2008 judicial ruling called for a moratorium on gas exports to Israel due to the government failing to adequately consult lawmakers. The ruling, however, was overturned in February 2009 by a higher court. Minister of State for Legal and Parliamentary Affairs Moufid Shehab indicated that under the 1979 Egyptian-Israeli peace treaty, Israel has the right to submit tenders to buy gas. An opposition member of parliament countered that the government had violated article 151 of the constitution which states that strategic agreements should first be discussed in parliament. Despite these legal and political challenges, the pipeline has thus far endured, suggesting that major infrastructure investments in pipeline transport – in this case worth $400 million – are likely to be lasting cooperative mechanisms, even against the backdrop of major crises such as the war in Gaza.11
In addition to gas from Egypt, Israel has been considering other partnerships. Former Israeli National Infrastructure Minister Benjamin Ben-Eliezer confirmed in an interview that Israel and Turkey were discussing the construction of a 610 kilometer undersea pipeline from the Turkish port of Ceyhan to Ashkelon, which could be completed as early as 2011.12 The prospect of pipelines between Israel and two Middle Eastern states with which it has tense relations suggests that energy security can be a significant binding element in situations otherwise unconducive to cooperation.
THE DOLPHIN PROJECT
Within the Gulf Cooperation Council (GCC), the most significant project has been a marine pipeline supplying gas from Qatar to the UAE. The Dolphin Project, as it is known, evolved out of Abu Dhabi’s need for gas. It was part of a broader political effort by the UAE to strengthen ties with other smaller Gulf States to balance Saudi Arabia, the dominant Gulf power that has been involved in several territorial disputes with both the UAE and Qatar.
Well before becoming a major economic power, the UAE had bowed to pressure from the Saudis to sign an agreement in 1974, under which Saudi Arabia relinquished claims to the Buraimi region, while the UAE ceded a 25 kilometer-long land strip linking it to Qatar and relinquished nearly 80 percent of the resources of the Shaybah oilfield.
Amidst this backdrop, Qatar and the UAE signed an agreement in 1998 to develop gas trading ties, doing so through the construction of a pipeline the following year. Saudi territorial waters were bypassed in the proposal though the countries welcomed cooperation from Saudi Arabia in addressing nearby border tensions. After the signing of a memorandum of understanding, concerted efforts were taken to resolve border disputes – a clear indication of the power of pipelines to facilitate dispute resolution. In May 1999, Oman and the UAE signed an agreement to demarcate their border at Umm Zummul, where the borders of Saudi Arabia, Oman, and the UAE converge. A month later, Qatar and Saudi Arabia agreed to mark their shared 60 km border culminating in a signed accord in March 2001, followed by an Oman-UAE accord in 2003 to settle territorial ambiguities that had existed since the colonial era.13
The Dolphin Project was initiated in 2004 under the auspices of a newly created company called Dolphin Energy which comprises three shareholders: Mubadala Development Company (owned by Abu Dhabi) with 51 percent, and Total of France and Occidental Petroleum of the United States with 24.5 percent each. Qatar supplies the gas and has its own management for the portion of the pipeline based in Doha. The pipeline supplies up to 2 billion standard cubic feet per day of natural gas from Qatar to the UAE. The gas is derived from South Pars gas field—the largest independent gas reserve in the world—shared by Iran and Qatar. The underlying legal structure of common property law, which allows for such sharing is itself an example of how energy concerns can foster cooperation, even in the case of Iran and Qatar, a pairing historically been at odds on foreign policy.
In ascertaining the rationale for the Dolphin Project, economic factors were necessary but not sufficient to make it happen. Political considerations— including expectations that the pipeline could serve as a basis for strengthening cooperation— were also instrumental. In an official response to a questionnaire, Dolphin Energy administration addressed the drivers for the project as follows:
’’The long term operating costs for Dolphin [are] considerably less than an LNG facility. All of these aspects cause the Dolphin project to cost considerably less on a per unit basis. Cost was a motivating factor for Dolphin, but there were also political and logistical reasons as well.’’14
The political rationale for moving ahead with the project is perhaps best reflected in the pricing arrangements. The Qatari government enjoys enormous demand for its gas and the decision to pursue a project with the UAE—and at a lower pricing regimen than other competitors—signals that ’’the government considered regional politics… in its decision to take on the project.’’15
An important derivative benefit of the project has been an increased level of environmental cooperation. Dolphin Energy has participated in joint coral regrowth projects in the Gulf in association with Qatari and UAE authorities. A two-year program initiated in 2008—one year after the pipeline opened—will attempt to provide the first integrated study of coral ecosystems in the region. As noted in Dolphin Energy’s vision statement: ’’The founders had always conceived Dolphin as a force for international cooperation— one that would unite the vision and resources of the region with multinational capital and expertise.’’16 The success of the Dolphin Project in spurring regional cooperation exemplifies the important role pipelines can play in regional dispute resolution and ecological cooperation.
Notes:
* The author is professor of environmental planning and Asian Studies at the University of Vermont.
1 ’’U.S. Blocks Syria pipeline,’’ BBC News, April 15, 2003, http://news.bbc.co.uk/2/hi/middle_east/2951327.stm.
2 Author’s interview with Matthew Amitrano, April 8, 2009.
3 Ed Vuillamy, ’’Israel seeks pipeline for Iraqi oil,’’ The Observer, April 20, 2003.
4 Mark Hayes, ’’Algerian Gas to Europe,’’ 16.
5 For a good review of inter-Maghreb relations see Yahia H. Zoubir and Haizam Amirah Fernández, eds., North Africa: Politics, Religion and the Limits of Transformation (London: Routledge, 2008).
6 European Union External Relations, http://ec.europa.eu/external_relations/morocco/index_en.htm.
7 ’’New gas pipeline linking Libya to Italy opened,’’ Alexander’s Gas and Oil Connections, October 8, 2004,
http://www.gasandoil.com/GOC/news/ nte44584.htm.
8 Waleed Khalil Rasromani, ’’Inching Closer to Europe,’’ Daily News Egypt, April 18, 2006.
9 EMG is also backed by an investment fund managed by former Israeli intelligence officer Yossi Maiman. Mohamed Abdellah and Jonathan Wright, ’’Cairo court says Egyptian gas exports to Israel can continue,’’ Reuters, February 2, 2009.
10 The price of the gas has become a major political issue in Egypt since this amount is considerably less than the current market gate price. Egypt is thought to be losing $9 million per day due to this ’’discount.’’ The government is considering ways to raise the price as part of a renewed deal involving a second pipeline on this route. See Avi Bar-Eli, ’’Egypt: Israeli gas prices could rise by 70%,’’ Haaretz, March 2, 2009, http://www.haaretz.co.il/hasen/spages/1067579.html.
11 Gamal Essam-El-Din, ’’Sales Strategies: The Government Launched a Spirited Defense of its Position over Gas Exports to Israel,’’ Al Ahram Weekly,February 26, 2009.
12 ’’Israel sets sights on Russian Gas,’’ Upstream Online, February 8, 2007, http://www.upstreamonline.com/live/article127529.ece.
13 Jareer Elass, Stacy L. Eller, and Kohei Hashimoto, ’’Liquefied Natural Gas from Qatar: the Qatargas Project,’’ in Natural Gas and Geopolitics, ed. David G. Victor, Amy M. Jaffe, and Mark H. Hayes (New York: Cambridge University Press, 2006).
14 Dolphin Energy Corporation, e-mail statement in response to author’s questionnaire, April 15, 2009.
15 Author’s interview with Saad Al-Kaabi, director of oil and gas ventures at Qatar Petroleum, April 28, 2009.
16 Dolphin Energy Home Page, http://www.dolphinenergy.com/Public/our-company/aboutus-shareholders.htm
Concluded
Views are those of the author
Courtesy: Brookings Doha Center
