The Eastern Mediterranean potentially holds substantial amounts of natural gas, some already discovered but with a lot more to come. Even though substantial quantities of this gas can be consumed within the region, mostly by Egypt, Israel, and Turkey, potential discoveries are such that eventually there will be exports to Europe and beyond. One question is whether export-led development will lead to the creation of a regional trading hub. Gas trading hubs are well established in the northwestern states of the EU and are gaining ground in parts of Southern Europe, such as Italy, and in Central Europe. But elsewhere the concept is often misunderstood, especially around the Eastern Mediterranean. In the Eastern Mediterranean, there is neither a market mechanism to buy or sell gas in an efficient manner, nor a pricing mechanism to determine spot prices. Gas sales are still based on traditional long-term oil-indexed bilateral agreements.
Charles Ellinas is a Nonresident Senior Fellow, Eurasian Energy Futures Initiative, Atlantic Council
John M. Roberts, Senior Fellow, Dinu Patriciu Eurasia Center and Global Energy Center, Atlantic Council
Harry Tzimitras, Nonresident Senior Fellow, Dinu Patriciu Eurasia Center and Global Energy Center, Atlantic Council, Director of Peace Research Institute Olso (PRIO) Cyprus Centre