The Ukrainian crisis will strengthen EU leaders’ resolve not only to see to the rapid completion of the Southern Gas Corridor, but also to support offshore oil and gas exploration in the Eastern Mediterranean.

Few will have forgotten the disputes between Ukraine and Russia which in 2006 led to Russia cutting off all gas supplies passing through Ukrainian territory (a situation repeated in 2009/2010). This was the catalyst for the European Council to seek a new EU energy and environment policy, the outcome of which was the EU Energy Security and Solidarity Action Plan, identifying the development of a Southern Gas Corridor to supply Europe with gas from Caspian and Middle Eastern sources.

Azerbaijan (the Shah Deniz gas field) is the primary source of gas for the Southern Gas Corridor. Shah Deniz was discovered in 1999 and is one of the world’s largest gas-condensate fields, with 40 trillion cubic feet (over 1 trillion cubic metres) of gas in place. It is located on the deep water shelf of the Caspian Sea, 70km south-east of Baku, in water depths ranging from 50 to 500 metres. Shah Deniz is an unincorporated joint venture between the UK’s BP, Azerbaijan’s SOCAR, Norway’s Statoil, Russia’s Lukoil, France’s Total, Iran’s NICO and Turkey’s TPAO, and is operated by BP on behalf of its consortium partners under a production sharing agreement.

On 28 June 2013, the Shah Deniz consortium partners announced TAP (the Trans Adriatic Pipeline), which will be approximately 870km in length and will connect with TANAP (the Trans Anatolian Pipeline) and the South Caucasus Pipeline, as the winner of the so-called “pipeline race” to transport the gas into Europe.

There are some very interesting energy politics at play here. Apart from transporting Azeri gas into Europe, Azerbaijan is also looking to get a foothold in European energy distribution assets, having recently signed a deal with the Greek government – which HFW advised on – to acquire a two-thirds stake of DESFA (the Greek gas transmission operator) for €400 million.

Meanwhile in Europe itself, Cyprus is advancing its efforts to exploit the recently discovered Aphrodite gas field, which it hopes will help pull the country out of its economic crisis. Named after the goddess of love, the field could contain up to six trillion feet of cubic gas. Just 0.5 trillion cubic feet of gas could provide Cypriots with energy for 25 years, leaving ample reserves for export to Asia and Europe, according to Cyprus’ Energy Minister Giorgos Lakkotrypis.

The idea that, apart from shale gas, Europe could also benefit from Mediterranean offshore gas is inching towards reality. Greece recently launched an international tender for a study to assess the feasibility of a proposed pipeline to transmit gas from Israel and Cyprus in an effort to reduce dependence on Russian supplies. The Eastern Mediterranean Pipeline is designed initially to carry 8 billion cubic metres a year of Israeli and Cypriot gas. It would stretch from Israel’s Leviathan natural gas field to Greece and on to European markets through the IGI-Poseidon pipeline, led by Italian utility Edison and state-controlled Greek utility DEPA.

Of course, all these projects are hugely capital-intensive, and so the cash-strapped countries in Southern Europe will need to find ways to attract significant amounts of investment from oil majors, infrastructure funds, etc. if any of this is to become reality.