The dispute between Turkey and Israel over major natural gas fields under the eastern Mediterranean escalated sharply after Ankara scrambled F-16s to intercept an Israeli aircraft over Turkish-controlled northern Cyprus, where Ankara has started exploratory drilling.

At the same time, the Islamist government of Prime Minister Recep Tayyip Erdogan threatened reprisals against international companies bidding for oil and gas exploration zones in the Greek-controlled south of the war-divided island, Israel’s partner in exploiting offshore gas fields.

“The companies … which cooperate with the Greek Cypriot administration will not be included in energy projects in Turkey,” the Turkish Foreign Ministry declared Friday.

In Monday’s alleged intrusion, Turkey’s military command said an Israeli aircraft, type not specified, violated the air space of northern Cyprus, which Ankara calls the Turkish Republic of Northern Cyprus, five times.

It said two Turkish F-16s were scrambled from the airbase at Incirlik in southern Turkey and drove off the alleged intruder.

Israel’s military made no comment. However, Israel signed a military cooperation agreement with the Greek Cypriot government in Nicosia in February.

Few details have been released but Cypriot sources say it covers the possible deployment of Israeli fighters to an airbase outside the resort city of Paphos in the island’s southwest.

Cyprus has been divided since 1974 when Turkey invaded following a short-lived, Athens-engineered coup by supporters of union with Greece.

The Turkish zone is recognized only by Ankara. The Greek Cypriot government is internationally recognized as the sovereign authority of the whole island and its territorial waters.

Ankara has threatened to send in its navy to halt offshore drilling by the Greek Cypriots, which is says cannot be allowed until the dispute over island has been settled, a prospect currently perceived as extremely distant.

Turkey maintains some 30,000 troops in the TRNC. It deployed a squadron of F-16s there in 2010.

However, if the Turkish air force used jets from Incirlik to intercept the alleged Israeli intruder over Cyprus, it would indicate the jets in the TRNC have been withdrawn.

The Turks have been further incensed by plans Israel and Cyprus have to jointly export gas from their offshore fields, which are part of the same geological structure, to the European Union via Greece.

From 1996, Israel was a strategic ally of Turkey, then a secular Muslim state. But in May 2010, the Israeli navy intercepted a Turkish-led convoy of ships carrying humanitarian aid to Israeli-blockaded Gaza in international waters and nine Turks were killed.

Erdogan’s Islamist government, which had been increasingly at odds with the Jewish state over the Palestinian issue, turned on Israel and curtailed diplomatic relations. Erdogan remains bitterly anti-Israeli.

The intersection of the Arab-Israeli conflict with the age-old rivalry between Greece and Turkey, both NATO members, has enflamed the dispute over the energy riches that lie beneath the eastern Mediterranean.

Claims by Lebanon that Israel’s biggest gas field extends into Lebanese waters has intensified the volatility of the crisis over gas fields that would transform the economies of all concerned in a region that has been reliant on imported energy.

Israel, which made the first gas strikes in 2009-10, has been planning the defense of its offshore platforms and other facilities by its navy, including surface-to-air missiles deployed on the platforms and round-the-clock patrols.

The fields, which contain an estimated 30 trillion cubic feet of gas, could also be threatened by the Iranian-backed Hezbollah in Lebanon, which is heavily armed with missiles and skilled in asymmetric warfare, including seaborne suicide attacks.

Cyprus began exploration in 2011 and has reported a strike of up to 8 billion tcf in its Aphrodite field off the southern coast that adjoins Israel’s biggest field, Leviathan.

With an estimated value of $127 billion, that’s enough to meet Greek Cypriots’ gas needs for 200 years.

Nicosia is auctioning off exploration licenses for 12 other offshore blocks and at least 29 international companies have submitted bids. This has incensed Ankara.

The state-run Turkish Petroleum Corp. began onshore drilling in the TRNC in early May near the largely deserted Greek city of Famagusta, seized in 1974, escalating the energy crisis.

The Turks said they also plan to drill in six blocks of the northern coast soon.

The U.S. Geological Survey reported in 2010 that the Levantine Basin contains 122 tcf of gas and 4 billion barrels of oil.