Following criticism of the Lebanon-Cyprus Maritime Boundary Agreement (MBA) by the governments of Israel and Turkiye, LebTalks spoke with energy and policy expert Roudi Baroudi, who has authored several books and studies on sea borders in the Eastern Mediterranean. Baroudi praised the pact as “full of positives” for the interests of both parties and stressed the words of Lebanese President Joseph Aoun, who pledged after signing the MBA that “this agreement targets no one and excludes no one.”

LebTalks: How significant is the signing of the maritime boundary agreement between Lebanon and Cyprus?

RB: The official signing of the Lebanon-Cyprus deal is a major achievement, one that confers important advantages on both parties. This process was delayed for a very long time for no good reason, so President Joseph Aoun and the government deserve congratulations for having seized the initiative, and for having seen the job through to completion. So do Cypriot President Nikos Christodoulides and his team, because they did the same thing. What made this historic agreement possible – after an impasse lasting almost two decades – was that Lebanon finally had a president who both understood the need for an MBA and made achieving it a top priority.

LebTalks: What does Lebanon gain by signing this deal?

RB: The agreement, which was reached by the negotiating teams in September, provides several benefits for both countries in the short, medium, and long terms.

The new equidistance line between the two states, defined according to the rules and guidelines of the United Nations Convention on the Law of the Sea (UNCLOS), provides a fair and largely uniform boundary between the two brotherly countries’ maritime zones. Most of the new turning points used to draw the line have moved in Lebanon’s favor compared to the earlier negotiation in 2011, giving it an extra 10,200 meters on its western front while Cyprus received 2,760 meters.

Crucially, the MBA wipes away all overlapping claims caused by previous uncertainty over the precise location of the border. Accordingly, this eliminates 108 km2 of (map attached) Lebanese offshore blocks that were actually in Cypriot waters, as well as 14 km2 of Cypriot blocks which were also on the wrong side of the line.

Apart from removing a key risk for would-be investors, the agreement also contributes to stability and security by providing clarity and thereby enabling easier cooperation, not just bilateral, but also, potentially, involving other states as well. It really is full of positives for both Lebanon and Cyprus, and therefore for the region as a whole.

LebTalks: What should Lebanon do to follow up on this agreement?

RB: To make the most of this clearer playing field, the logical next step is for Lebanon and Cyprus to immediately start drafting a joint development agreement, which would allow them to have a smooth partnership in place for any hydrocarbon reserves which are found to straddle their maritime boundary.

Perhaps the most important feature of the Lebanon-Cyprus MBA is that it provides a clear and stable starting point, putting Lebanon in ideal position to finish defining its maritime zones. The new line means that Lebanon’s existing maritime boundary arrangements with Israel, signed in 2022, should be tweaked a little, but it also makes it easier to do that – and to negotiate a similar agreement in the north with Syria when that country’s new leadership is ready to do so.

LebTalks: What about the objections voiced by Irael and Turkiye?

RB: With all due respect, these claims and complaints are completely baseless. As President Aoun has stressed from the very day it was signed, this accord targets no one, excludes no one, challenges no one else’s borders, and undermines no one else’s interests. I know there has been some negative commentary from both Israel and Turkiye, but there really is nothing here for anyone to be upset about. The line agreed to by Lebanon and Cyprus, which Turkiye has claimed is ‘unfair’ to residents of the self-styled ‘Turkish Republic of Northern Cyprus’, is literally several kilometers away from any waters claimed by the TRNC. Beirut and Nicosia were very careful to make sure of this.

As for the Israelis, the only material change relating to the Lebanon-Cyprus line is that it pushes the Israel-Cyprus line in Cyprus’ favor. But that’s not Lebanon’s fault. Or Cyprus’ or anyone else’s. It’s just a fact of new mapping technologies, which today are far more precise and more accurate than those used when the Israel-Cyprus line was drawn in their 2011 treaty.

On that subject, I would also note for all stakeholders in the East Med that while Lebanon and Cyprus are the region’s only full-fledged members of UNCLOS, all states are subject to its rules and precedents, which have become part of Customary International Law. Since the Lebanon-Cyprus deal adheres strictly to those rules and the science behind them, the criticisms haven’t got a legal leg to stand on. This is especially true with regard to Israel, whose own treaty with Cyprus was negotiated on the basis of the very same laws, rules, and science.

I have to assume that a lot of this is posturing, that both Israel and Turkiye will settle down once they’ve had more time to analyze the deal and see that, far from damaging them in any way, it could help all concerned by contributing to regional stability and economic growth. And again, I would go back to Aoun’s words on signing day, when he declared that “this agreement should be a foundation for wider regional cooperation, replacing the language of violence, war, and ambitions of domination with stability and prosperity.”

The upcoming UN Climate Change Conference (COP30) will be the first to take place in the Amazon, sending a powerful symbolic message about the central role developing economies must play in the global response to the climate crisis. But at a time of geopolitical fragmentation and low trust in multilateralism, symbolism is not enough. Developing economies must plan and propel the green transition. Africa is no exception.

So far, Africa’s climate narrative has been one of victimhood: the continent contributes less than 4% of global greenhouse-gas emissions, but it is highly vulnerable to the effects of climate change. This disparity fuelled the calls for “climate justice” that helped to produce ambitious climate-financing pledges from the industrialised economies at past COPs. But with those pledges going unfulfilled, and Africa’s climate-finance needs rising fast, moral appeals are clearly not enough.

A shift to a more strategy-oriented discourse is already underway. The Second Africa Climate Summit (ACS2), which took place in Addis Ababa last month, positioned the continent as a united actor capable of shaping global climate negotiations. It also produced several initiatives, such as the Africa Climate Innovation Compact and the African Climate Facility, that promise to strengthen Africa’s position in efforts to ensure a sustainable future.

Instead of continuing to wait for aid, Africa is now seeking to attract investment in its green transition, not because rich countries “owe” Africans – though they do – but rather because Africa can help the world tackle climate change. But success will require progress on four fronts, all of which will be addressed at COP30.

The first is the cost of capital. Because systemic bias is embedded in credit-rating methodologies and global prudential rules, African countries face the world’s highest borrowing costs. This deters private capital, without which climate finance cannot flow at scale. While multilateral development banks (MDBs) can help to bridge the gap, they typically favour loans – which increase African countries’ already-formidable debt burdens – rather than grants.

At COP29, developed economies agreed to raise “at least” $300bn per year for developing-country climate action by 2035, as part of a wider goal for all actors to mobilise at least $1.3tn per year. If these targets are to be reached, however, systemic reform is essential. This includes changes to MDB governance, so that African countries have a greater voice, and increased grant-based financing. Reform also must include recognition of African financial institutions with preferred creditor status, and the cultivation of a new Africa-led financial architecture that lowers the cost of capital.

The second area where progress is essential is carbon markets. Despite its huge potential for nature-based climate solutions, Africa captures only 16% of the global carbon-credit market. Moreover, the projects are largely underregulated and poorly priced, with limited community involvement. Africa is now at risk of falling into a familiar trap: supplying cheap offsets for external actors’ emissions, while reaping few benefits for its people.

While some African countries are developing their own carbon-market regulations, a fragmented system will have limited impact. What Africa needs is an integrated carbon market, regulated by Africans, to ensure the quality of projects, set fair prices, and channel revenues toward local development priorities, including conservation, renewable energy, and resilient agriculture. This system should be linked with Article 6 of the Paris climate agreement, which aims to facilitate the voluntary trading of carbon credits among countries.

The third imperative for Africa at COP30 is to redefine adaptation. Rather than treating it primarily as a humanitarian project, governments must integrate adaptation into their industrial policies. After all, investment in climate-resilient agriculture, infrastructure, and water systems generates jobs, fosters innovation, and spurs market integration.

By linking adaptation to industrialisation, Africa can continue what it started at ACS2, shifting the narrative from vulnerability to value creation. Africa should push for this approach to be reflected in the indicators for the Global Goal on Adaptation, which are set to be finalised at COP30. The continent’s leaders should also call for adaptation finance to be integrated into broader trade and technology frameworks.

The final priority area for Africa at COP30 is critical minerals. Africa possesses roughly 85% of the world’s manganese, 80% of its platinum and chromium, 47% of its cobalt, 21% of its graphite, and 6% of its copper. In 2022, the Democratic Republic of the Congo alone accounted for over 70% of global cobalt production.

But Africa knows all too well that natural-resource wealth does not necessarily translate into economic growth and development. Only by building value chains on the continent can Africa avoid the “resource curse” and ensure that its critical-mineral wealth generates local jobs and industries. This imperative must be reflected in discussions within the Just Transition Work Programme at COP30.

These four priorities are linked by a deeper philosophical imperative. The extractive logic of the past – in which industrialisation depended on exploitation and destruction – must give way to a more holistic, just, and balanced approach, which recognises that humans belong to nature, not the other way around. Africa can help to lead this shift, beginning at COP30.

The barriers to progress are formidable. China likes to tout South-South solidarity, but it does not necessarily put its money where its mouth is. The European Union is struggling to reconcile competing priorities and cope with political volatility. The US will not attend COP30 at all, potentially emboldening others to resist ambitious action. If consensus proves elusive, parties might pursue “mini-lateral” deals, which sideline Africa.

When it comes to the green transition, Africa’s interests are everyone’s interests. If the continent is locked into poverty and fossil-fuel dependency, global temperatures will continue to rise rapidly. But if Africa is empowered to achieve green industrialisation, the rest of the world will gain a critical ally in the fight for a sustainable future. – Project Syndicate

• Carlos Lopes, COP30 Special Envoy for Africa, is Chair of the African Climate Foundation Board and a professor at the Nelson Mandela School of Public Governance at the University of Cape Town.

قال الخبير في شؤون الطاقة رودي بارودي في مقابلة حصرية مع LebTalks: “إن اتفاقية الحدود البحرية بين لبنان وقبرص خطوة رائعة وضرورية وتعطينا الأمل، لأنها لا تقتصر على تحديد أساس للتعاون بين الفريقين، بل تسهم أيضاً في تقليص المخاطر عليهما، وتُظهر للمنطقة والعالم مدى فاعلية الحوار والديبلوماسية”.

ولفت بارودي إلى أن “هذه الخطوة تُتوّج مساراً تأخر بلا داعٍ لما يقارب العقدين أذ كان مجمّداً منذ العام 2007، ما يجعل الإنجاز أكثر قيمة،معتبرا أن رئيس الحكومة نواف سلام وفريقه قاموا بدورهم من خلال دعم الاتفاق، لكن الفضل في تحريك الملف من الجانب اللبناني يعود بالدرجة الأولى إلى الرئيس عون، ولذلك يُعتبر هذا إنجازاً شخصياً له،وينطبق الأمر ذاته على الرئيس القبرصي نيكوس خريستودوليدس، فهذه محطة تاريخية للبلدين معاً”.

وعن أهمية هذه المعاهدة، أوضح بارودي أن “تسوية الحدود البحرية أمر بالغ الأهمية في الوقت الراهن، لأنها تفتح الباب أمام فرص جديدة، فالاتفاق يجعل لبنان أكثر جاذبية للشركاء الدوليين الكبار الذين يحتاج إليهم لتطوير قطاع النفط والغاز البحري الناشئ. وإذا تمكّن هذا القطاع من ان يحقق جزء بسيط من إمكاناته، فإن الفوائد ستصل إلى كل الاقتصاد اللبناني تقريباً، ما يجعل من هذا الاتفاق سبباً للاحتفال الوطني. والأمر نفسه ينطبق على قبرص“.

و هنّأ بارودي الحكومة اللبنانية على قرار منح حقوق الاستكشاف في البلوك البحري رقم 8 إلى ائتلاف دولي قوي وذو سمعة ممتازة يضم شركات توتال اينرجي الفرنسية وإيني الإيطالية وقطر للطاقة القطرية، لافتاً إلى أن هذين القرارين يمهّدان الطريق أمام مستقبل يصبح فيه لبنان دولة منتجة ومصدّرة للغاز، ما يوفّر زخماً غير مسبوق لاقتصاد في أمسّ الحاجة إلى كل دعم”.

لكن بارودي حذّر من أن الطريق لا يزال طويلاً أمام التنفيذ الفعلي، قائلاً: “الخطوة الأهم الآن هي المتابعة فعلى الحكومة أن تُنفّذ سلسلة من الإصلاحات المطلوبة منها، وأن تستثمر في بناء القدرات، وتُبقي على الكفاءات والخبرات لإدارة الموارد البحرية وصونها كما أن لبنان يحتاج إلى اتفاق لترسيم الحدود البحرية والبرية مع سوريا،و تحديد نقطة ثلاثية على ذلك الجانب بين لبنان وقبرص وسوريا،وهناك مؤشرات إيجابية مع الحكومة السورية الجديدة”.

وتابع بارودي قائلاً إن على بيروت أيضاً أن تضع خطة واضحة لتطوير قطاع النفط والغاز البحري: و”أغتنم هذه المناسبة لأقترح أن تبادر الحكومة اللبنانية فوراً إلى دعوة نظيرتها القبرصية للتفاوض حول اتفاق تطوير مشترك، ينظّم تقاسم أي موارد نفطية أو غازية مشتركة تقع على جانبي الحدود البحرية،فإبرام اتفاق بهذا الخصوص سيجعل قطاعي الطاقة البحريين في كلا البلدين أكثر جاذبية للمستثمرين”.
وختم بارودي بحماسة قائلاً: “هذه هي الأبواب التي فُتحت أمامنا بفضل اتفاق ترسيم الحدود البحري . لذا، مرة أخرى، نتقدّم بالشكر والتهنئة إلى الرئيس عون والرئيس خريستودوليدس على حكمتهما في السعي وراء هذا الاتفاق، وشجاعتهما في المثابرة حتى النهاية”.

The decision of the Council of Ministers to approve Lebanon’s maritime boundary agreement (MBA) with Cyprus is a genuine tour de force, a feather in the cap for President Joseph Aoun and his government.

This step caps a process that was unnecessarily delayed for almost two decades, but that only makes this achievement more gratifying.

Having settled maritime boundaries is crucial right now because of the opportunities it opens up. The agreement makes Lebanon much more attractive to the major international partners it needs to develop its nascent offshore oil and gas sector. If and when that sector reaches even a small fraction of its potential, the benefits should flow to virtually every corner of the Lebanese economy, so everyone in the country should really celebrate this.

As if to punctuate the moment, the Council of Ministers also awarded the rights to a key offshore area, Block 8, to a reputable international consortium consisting of France’s TotalEnergies, Italy’s ENI, and Qatar’s QatarEnergy.

Together, these moves help to pave the road toward a future in which Lebanon becomes an energy producer and exporter, adding unprecedented momentum to an economy that desperately needs it.

These are both major milestones, and the government – along with President Joseph Aoun, whose own leadership on the border deal was crucial to initiating the negotiations – deserves plenty of credit.

The important part now is the follow-up. The government still needs to implement a long list of reforms, invest in capacity building, and retain competent personnel and managers to steward and safeguard the country’s offshore resources. It also will need to do its homework on how best to nurture that offshore business.

There is so much to be done – but so much to be claimed by doing it! Getting the MBL with Cyprus finalized was at the top of the list, and resolving Block 8 was not far down, so the government deserves congratulations for both.

And since I mentioned nurturing, I also take this opportunity to propose that the Lebanese government immediately invite its Cypriot counterpart to negotiate another crucial deal: a joint development agreement, or JDA, which would govern the sharing of any oil and/or gas resources which straddle their border at sea. Setting up a JDA now would not only prevent possible delays in the future – it also would make both countries’ offshore energy sectors even more attractive to investors.

Οι τεταμένες σχέσεις Ισραήλ-Λιβάνου και οι ραγδαίες εξελίξεις στη Μέση Ανατολή έχουν κινητοποιήσει τη Λευκωσία για επαφές υψηλού επιπέδου για την επικύρωση της ΑΟΖ με το Λίβανο. Ετσι ο  πρόεδρος της Κύπρου Νίκος Χριστοδουλίδης συναντήθηκε  με τον εμπειρογνώμονα περιφερειακής πολιτικής Ρούντι Μπραούντι,  μακροχρόνιος υποστηρικτής του διαλόγου, της διπλωματίας και της ειρηνικής ανάπτυξης,  ως προς τις ασφαλέστερες διαδρομές προς μεγαλύτερη σταθερότητα για ολόκληρη την Ευρω-Μεσογειακή περιοχή και άτυπο  διαμεσολαβητή των δύο χωρών. Μάλιστα έχει γράψει και σχετικά βιβλία, όπως την «οριστικοποίηση Θαλάσσιων Συνόρων στην Ανατολική Μεσόγειο: Ποιος Θα Ειναι ο Επόμενος;» και «Ένα Κλειδί, Πολλαπλά Έπαθλα: Οριστικοποίηση Θαλάσσιων Συνόρων ανάμεσα στην Κύπρο, το Λίβανο και τη Συρία».

Ο  κ. Χριστοδουλίδης και ο ομόλογός του από το Λίβανο, ο πρώην Γενικός Τζόζεφ Αουν, συμφώνησαν τον Ιούλιο να διαπραγματευτούν και να οριστικοποιήσουν μια γραμμή θαλάσσιων συνόρων . Και οι δύο χώρες αναμένουν ότι θα αποκομίσουν πολλά οφέλη από μια τέτοια συμφωνία, και η κατοχύρωση εδαφικών συνόρων στη θάλασσα θα καταστήσει ευκολότερη την προσέλκυση ξένων επενδυτών για την ανάπτυξη των ενεργειακών πηγών τους.

«Η επίτευξη συμφωνίας θα ανοίξει όλες τις πόρτες για την Κύπρο και το Λίβανο», δήλωσε ο κ. Μπαρούντι μετά από τη συνάντηση. «Οι τάσεις πηγαίνουν στη σωστή κατεύθυνση, και όχι μόνο σε σχέση με το Λίβανο. Ο πρόεδρος της Κύπρου έχει φιλόδοξα σχέδια εξωτερικής πολιτικής, ιδιαίτερα σχετικά με τις δραστηριότητες της Κύπρου τους πρώτους έξι μήνες του 2026, όταν θα έχει την προεδρία του συμβουλίου της Ευρωπαϊκής Ένωσης».

«Εκμεταλλεύτηκα επίσης την ευκαιρία να ευχηθώ στο πρόεδρο της Κύπρου  καλή επιτυχία σε αυτή την αποστολή», πρόσθεσε, «ειδικά καθώς αναμένεται να εστιάσει όχι μόνο στην ενίσχυση της συνοχής της Ευρώπης, αλλά και στην ενίσχυση του ρόλου της Κύπρου ως γέφυρα μεταξύ Ευρώπης και γειτονικών χωρών.»

Πράγματι, η Λευκωσία έχει ένα φιλόδοξο πρόγραμμα για την προεδρία της και συνεργάζεται στενά με τη Δανία, που ασκεί την προεδρία αυτό το εξάμηνο , και την Πολωνία, που θα διαδεχθεί την Κύπρο. Η λεγόμενη«τριπλή προεδρία» βοηθά στη διασφάλιση συνέχειας από τη μία προεδρία στην επόμενη.

Ο κ. Μπαρούντι έχει γράψει αρκετά βιβλία και μελέτες σχετικά με το πώς τα υπάρχοντα εργαλεία του ΟΗΕ μπορούν να βοηθήσουν τις παράκτιες χώρες να συμφωνήσουν δίκαια και ισότιμα θαλάσσια σύνορα, να μειώσουν τις εντάσεις και να αποκομίσουν σημαντικά οικονομικά και κοινωνικά οφέλη. Έχει επίσης γράψει και μιλήσει δημόσια για διάφορες ευκαιρίες περιφερειακής συνεργασίας, από διασυνδεδεμένα ενεργειακά δίκτυα και υπεράκτια αιολικά πάρκα μέχρι κοινή διαχείριση θαλάσσιων προστατευόμενων περιοχών.

Το 2023, απονεμήθηκε στον κ. Μπαρούντι  το Βραβείο Ηγεσίας από το Transatlantic Leadership Network, ένα think-tank της Ουάσινγκτον, για τη «πολύτιμη συμβολή του στην οικοδόμηση μιας ειρηνικής και ευημερούσας Ανατολικής Μεσογείου».

Σε δεκάδες άρθρα, μελέτες, εμφανίσεις στα μέσα ενημέρωσης και ομιλίες, για παράδειγμα, ο βετεράνος της κλάδου έχει τεκμηριώσει την επιχειρηματική βάση για το νησιωτικό κράτος να γίνει κέντρο επεξεργασίας και διανομής φυσικού αερίου για τους γείτονές του. Αυτό θα περιελάμβανε την Κύπρο να δημιουργήσει  έναν υπόθαλάσσιο αγωγό φυσικού αερίου προς την ευρωπαϊκή ενδοχώρα, ένα εργοστάσιο υγροποιημένου φυσικού αερίου (LNG) που θα ήταν το μεγαλύτερο έργο που έχει ποτέ η χώρα, ή και  υπεράκτια πλωτά συστήματα αποθήκευσης και υγροποίησης για την εξυπηρέτηση απομακρυσμένων χωρών δια θαλάσσης.

«Όλες αυτές οι μελέτες και οι παράγοντες που ανέδειξαν παραμένουν επίκαιροι σήμερα», δήλωσε ο κ. Μπαρούντι. «Η Κύπρος διαθέτει την εγγύτητα, τις τιμές γης και τις σχέσεις με τους γείτονές της για να γίνει ο συνεταιριστής όλων στις εξαγωγές ενέργειας, αλλά και να λειτουργήσει ως θεμέλιος λίθος για μια πιο σταθερή και ευημερούσα περιοχή.»

NICOSIA – 29, September 2025: Cypriot President Nikos Christodoulides met today with the international energy policy expert, Roudi Baroudi, who presented copies of his two latest books, “Settling Maritime Boundaries in the Eastern Mediterranean: Who Will Be Next?” and “One Key, Multiple Prizes: Settling Maritime Boundaries Among Cyprus, Lebanon, and Syria”.

Baroudi, a long-time advocate of dialogue, diplomacy, and peaceful development as the surest routes to greater stability for the entire Euro-Med region, said he felt “honored to have been received by the President.”

Christodoulides and his Lebanese counterpart, former General Joseph Aoun, agreed in July to have their respective teams negotiate and finalize a maritime boundary line (MBL). Both countries expect to derive numerous benefits from such a pact, and having treatied borders at sea will make it easier to attract the foreign investors required to develop their respective offshore oil and gas resources.

Reaching a deal “will open up all sorts of doors for Cyprus and Lebanon,” Baroudi said after the meeting. “The trends are going in the right direction, and not just vis-à-vis Lebanon. The President has ambitious foreign-policy plans, particularly with regard to Cyprus’ activities for the first six months of 2026, when it will hold the rotating presidency of the European Union.”

“I also took the opportunity to wish His Excellency every good fortune on that mission,” he added, “especially since it is expected to focus not only on shoring up Europe’s cohesion, but also on beefing up Cyprus’ role as a bridge between Europe and its neighbors.”

Indeed, Nicosia does have an ambitious agenda for its time in the presidency, and is working closely with Denmark, the current holder, and Poland, which will follow Cyprus’ term. The so-called “trio presidency” helps to ensure continuity from one presidency to the next.

Baroudi has published several books and studies on how existing United Nations tools can help coastal states to agree fair and equitable maritime boundaries, reduce tensions, and reap significant economic and social rewards in the bargain. He also has written and spoken publicly about a variety of opportunities for regional cooperation, from interconnected power grids and offshore wind farms to joint management of marine protected areas. In 2023, he was awarded the Transatlantic Leadership Award by the Transatlantic Leadership Network, a Washington think-tank, for what it described as “his valuable contribution in building a peaceful and prosperous Eastern Mediterranean.”

In addition to these works, ever since 2011, when the full potential of the East Med’s offshore hydrocarbon deposits began to emerge, Baroudi’s advocacy role has seen him provide thought leadership for a variety of projects and proposals that would transform Cyprus into a regional energy hub. In dozens of articles, studies, media appearances, and speaking engagements, for example, the industry veteran has made the business case for the island nation to become a gas processing and distribution center for its neighbors. This would include Cyprus hosting one end of an undersea gas pipeline to the European mainland, a liquified natural gas (LNG) plant that would be the country’s largest-ever project, and/or offshore floating storage and gasification units(s) to serve more distant customers by ship.

“All of these studies and the factors they highlighted are still relevant today,” Baroudi said. “Cyprus has the proximity, the land prices, and the relationships with its neighbors to make it everyone’s partner for energy exports, but also to serve as the bedrock for a stabler and more prosperous region.”

The biggest news in the energy industry last week was that a state-owned Chinese company had completed a massive offshore oil and gas platform for Saudi Aramco. Breathless media reports shared impressive details about the facility’s record-setting size, weight, and output capacity, with some describing it as a massive bet on continuing strong demand for fossil fuels despite the meteoric rise of renewables.

The real significance of this news, though, is not to be found at the Qingdao shipyard where it was made, at the headquarters of the China Offshore Oil Engineering Company that built it, or at the Marjan field off Saudi Arabia’s east coast where it will be installed and operated.

In fact, in order to truly appreciate the implications involved, one needs to travel back in time a little more than 50 years. For on 8 June 1974, the United States and Saudi Arabia reached a historic agreement that has bound the two countries ever since.

Signed by then-US Secretary of State Henry Kissinger and then-Minister of Interior Prince Fahd bin Abdulaziz, the pact established two joint commissions tasked, respectively, with increasing bilateral economic cooperation and with determining the kingdom’s military needs. It also created several joint working groups responsible for specific elements to support growth and development, including efforts to: a) expand and diversify Saudi Arabia’s industrial base, beginning with the manufacture of fertilizers and other aspects of the petrochemical sector; b) increase the number of qualified scientists and technicians available to make the most of technology transfers; c) explore partnerships in areas like solar energy and desalination; and d) find ways to cooperate in agriculture, especially in the desert.

Henry Kissinger with Prince Fahd of Saudi Arabia, 1974

Contrary to widespread misperceptions, the agreement did not say anything about Saudi crude being priced and/or transacted exclusively in US dollars. In a side-deal that remained secret until 2016, however, the United States pledged full military support in virtually all circumstances and the Kingdom of Saudi Arabia committed to investing a massive share of its oil revenues in US Treasury bills. While there was no public quid pro quo, therefore, this was to some extent a distinction without a difference: the world’s biggest oil exporter ended up spending hundreds of billions of dollars on American debt and American-made weapons, making it only sensible that the vast majority of its crude sales would be in greenbacks. By extension, the sheer weight of Saudi oil in world markets – and especially within the Organization of Petroleum Exporting Countries – virtually guaranteed that the dollar would become the de facto default currency of those markets, Petrodollars.

These arrangements suited both sides at the time, which featured a very particular set of circumstances. The previous year, as Egypt and Syria attempted to regain territories occupied by Israeli forces since the 1967 war, US President Richard Nixon authorized an unprecedented airlift of weaponry – everything from tanks, artillery, and ammunition to helicopters, radars, and air-to-air missiles – to Israel. Arab oil producers responded by playing their strongest card, announcing an oil embargo against states that supported the Israeli war effort. That led directly to supply shortages, soaring prices, and long lines at filling stations across the United States and many other countries, too, and indirectly to several years of higher inflation. Although the embargo had been lifted in March 1974, Washington was keen to prevent similar shocks in the future.

The American economy was particularly vulnerable to longer-term repercussions because of several factors, including a general slowdown caused by its long, expensive, and ultimately unsuccessful war in Vietnam. The real problem, though, stemmed from another issue: in 1971, as the dollar continued to lose ground against major European currencies, Nixon had taken the United States off the gold standard, gutting the Bretton Woods arrangements put in place after World War II and throwing foreign exchange markets into disarray. With the Cold War as backdrop, America appeared to be losing ground in its strategic competition with the Soviet Union.

The so-called “side-deal”, then, was actually far more important than the public agreement because it would restore the dollar’s primacy in international markets, making it once again the world’s favorite reserve currency, while simultaneously reducing the likelihood of future Arab oil embargos. The new system worked very well for a very long time: the US economy regained its stability, and Saudi Arabia embarked on a long program of socioeconomic development that continues to this day. Even as the Americans have sought further protection by reducing their reliance on Saudi and other OPEC crude, their bilateral partnership and the dollar’s general prevalence in the oil business have likewise persisted despite all manner of diplomatic spats, crises, and other obstacles.

Back in the present-day, the Soviet Union is no more, and although the United States has an even more formidable strategic rival in China, this competition carries neither the day-to-day intensity nor the seeming inevitability of nuclear Armageddon that the Cold War engendered. In addition, the United States is now producing more crude oil than any country ever has, further insulating its economy against exogenous shocks, while China’s rapid expansion has made it the world’s most prolific energy importer. In fact, Washington is years into a “pivot to Asia” that will see it focus less attention on the Middle East.

Meanwhile, Saudi Arabia is now led by Crown Prince, Mohammed bin Salman (MBS), a young and highly ambitious ruler who has shown himself more than willing to act independently of American desires or even demands. Accordingly, it should not surprise anyone that the behemoth facility now being transported to Marjan is just the most visible tip of the Sino-Saudi iceberg. Theirs is a burgeoning relationship driven by complementary needs, with both parties investing in one another’s economies and cooperating on large-scale energy and industrial projects.

Given all of the foregoing, it is much too early to declare the end of an era. Even if rumors that the Saudis will soon start selling oil futures contracts in yuan or other currencies turn out to be true and the results include an erosion of the dollar’s value, the US-Saudi economic relationship remains very much in place, as do defense ties ranging from procurement and maintenance to joint exercises and training. This is not to mention the approximately 60,000 Saudi students who study at American universities every year, or the countless other business and/or personal ties nurtured over decades.

Then, US President, Jimmy Carter receiving the Crown Prince Fahd of Saudi Arabia at the White House in Washington, 1977. Seeing the continuation of the Petrodollar Agreement.

All the same, a new era has definitely begun: just as the Americans have opened up other avenues to secure their energy needs, the Saudis are now moving decisively to diversify their foreign partnerships and have been doing so for many years. Inevitably, the global oil and gas economy’s center of gravity will shift eastward, but how could it be otherwise when China and several other Asian economies have become such powerhouses? The diversification path will almost certainly include occasional stretches where Riyadh will have to make difficult decisions, but this, too, reflects the confidence that MBS has in his country’s ability to determine its own destiny.

Roudi Baroudi has worked in the energy sector for more than four decades, with extensive experience in both the public and private sectors. Having advised dozens of companies, governments, and multilateral institutions on program and policy development. He has been a loyal advocate for energy stability and peace. He is also the author or co-author of numerous books and articles, and currently serves as CEO of Energy and Environment Holding, an independent consultancy based in Doha, Qatar.

Saudi Aramco, the world’s biggest oil producer, has awarded contracts worth more than $25bn for the second phase of the expansion of its Jafurah gas field and the third phase of expanding its main gas network.

The development of the Jafurah field, which is estimated to hold 200 trillion cubic feet of gas, is expected to cost $100bn and boost the state energy firm’s gas production by more than 60 per cent by 2030.

“These contract awards demonstrate our firm belief in the future of gas as an important energy source, as well as a vital feedstock for downstream industries,” said Amin H. Nasser, Aramco president & CEO.

“The scale of our ongoing investment at Jafurah and the expansion of our master gas system underscores our intention to further integrate and grow our gas business to meet anticipated rising demand.”

Aramco awarded 16 contracts, worth a combined total of around $12.4bn, for phase two development at Jafurah. This phase will include the construction of gas compression facilities, pipelines, the expansion of the Jafurah gas plant, gas processing trains, utilities, sulfur, and export facilities.

The expansion includes the construction of new riyas natural gas liquids (NGL) fractionation facilities in Jubail, including NGL fractionation trains, utilities, storage, and export facilities.

The state-energy giant also awarded 15 lump sum turnkey contracts worth approximately $8.8bn to kick off the phase three expansion of the master gas system. The expansion will increase the size of the network and raise its total capacity by an additional 3.15 billion standard cubic feet per day (bscfd) by 2028 through the installation of around 4,000km of pipelines and 17 new gas compression trains.

Furthermore, Aramco awarded an additional 23 gas rig contracts worth $2.4bn, two-directional drilling contracts worth $612m, and 13 well tie-in contracts at Jafurah, for a total of $1.63bn.

Aramco’s LNG ambitions

Saudi Arabia is working on developing its unconventional gas reserves, which require advanced extraction methods such as those used in the shale gas industry.

Aramco signed 40 corporate procurement agreements worth $6bn with local suppliers in February as the state-owned energy giant seeks to develop the country’s energy services sector while boosting its localisation programme.

The agreements cover the supply of a range of products comprising strategic commodities, such as instrumentation, electrical, and drilling equipment.

Meanwhile, an additional 15 trillion standard cubic feet of gas (scfd) were proven at Aramco’s Jafurah field in February, adding significant volumes to the kingdom’s proven gas and condensate reserves.

The company estimates that Jafurah’s reserves have reached 229 trillion cubic feet of gas and 75 billion barrels of condensates. Jafurah is the country’s largest unconventional non-oil-associated gas field and reportedly the biggest shale gas development outside of the US.

Aramco is expanding its portfolio into LNG at a time when global demand for the fuel has surged, particularly in Europe, which is replacing reduced pipeline supplies from Russia. It forayed into the global LNG market last September by acquiring a minority stake in EIG Partners’ MidOcean Energy in a deal valued at $500m.

The state-energy giant signed non-binding agreements with two US energy firms Sempra and NextDecade, for the supply of 5 million tonnes per annum (mtpa) and 1.2 of mtpa LNG, respectively, for 20 years.

Reuters

London

Oil giant Aramco is in talks with US firms Tellurian and NextDecade on two separate LNG projects as the Saudi firm seeks to boost its gas trading and production, three sources close to the talks told Reuters.

US gas production has boomed over the past decade with oil majors and Aramco’s rivals competing to build several projects to export gas to Europe and Asia.

The state energy firm is in talks with Tellurian to buy a stake in its 27.6mn metric tonne per annum (mtpa) Driftwood LNG plant near Lake Charles, Louisiana.

Aramco officials visited the site three times last month — including together with executives from Australia’s Woodside on one of those occasions, said the sources who declined to be identified as talks are not public. Aramco is also in talks with US LNG firm NextDecade for a long-term gas purchase agreement from a proposed fifth processing unit at its $18bn Rio Grande facility.

Aramco declined to comment. Tellurian said it does not comment on market speculation. Woodside said it continuously assesses organic and inorganic growth opportunities but declined further comment. NextDecade did not immediately respond to Reuters request for comment.

Aramco is seeking to strengthen its position in the LNG market, which is set to grow by 50% by 2030, especially in the US, where LNG capacity is set to almost double over the next four years.

Tellurian has spent years and hundreds of millions of dollars on trying to finance and build the Driftwood plant.

Last fall, Tellurian warned investors that continued losses and dwindling cash reserves might not be enough within a year to cover operating and debt costs.

Aramco is one of the world’s largest oil producers and top exporter, pumping nearly 10% of the world’s crude supply.

Aramco made its first LNG investment abroad when it bought a stake in US MidOcean Energy for $500mn last year.

In March, Reuters reported that Aramco was in talks to invest in Sempra Infrastructure’s Port Arthur project in Texas.

It is also competing with Shell to buy the assets of Temasek-owned LNG trading firm Pavilion Energy.