WHEN IMPORTERS TURN TO EXPORTING OIL AND GAS — THE SHALE GAS HYPE AND CERTAIN GEOPOLITICAL CHANGES LIE AHEAD IN THE EASTERN MEDITERRANEAN

Abstract

The Middle East, the world’s only major source of low-cost oil, will remain at the core of the long-term prospects of the world oil market. The IEA went too far referring to the “shale hydrocarbon revolution born in the USA”. For the time being, the global energy landscape has not been turned upside down. It is China’s soaring energy consumption rather than the US’ rising production that will fundamentally shift the world energy order. Some analysts claim that the Sino-Russian relationship will truly shift global energy boundaries: pipelines are turning east. Global oil prices may fall if and when significant volumes of additional Iranian oil return to the market. A new petroleum frontier in the Eastern Mediterranean complicates the manifold conflicts, but opens up new chances for cooperation. There are huge opportunities created by the discovery of gas in the Eastern Mediterranean — not least for countries that are short of both money and energy. Developing these opportunities will require cooperation, and could be both a lucrative and politically rewarding confidence-building measure.