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Economy

Israel, Cyprus, Greece Will Push EU Gas Line at May Summit

By Kostis Geropoulos/New Europe,

Israeli Prime Minister Benjamin Netanyahu spoke on April 4 with Greek Prime Minister Alexis Tsipras and Cyprus President Nicos Anastasiades and “among the issues discussed were advancing the feasibility study for laying a gas pipeline from Israel to Cyprus and from there to Greece and Western Europe,” the office of the Israeli prime minister said.

“The leaders noted that they are looking forward to the trilateral summit next month,” Netanyahu’s office said in a press release. The summit will be held in Nicosia.

Cyprus Natural Hydrocarbons Company CEO Charles Ellinas told New Europe on April 6 that Netanyahu, Anastasiades and Tsipras were planning to meet early January but the meeting was postponed without clear explanations, other than perhaps the UN votes on the issue of Jerusalem.

Ellinas noted that nevertheless the meeting is important in terms of contributing to maintaining close relationships between Israel, Cyprus and Greece. However, he said, the meeting has to be seen what it actually is, as a political meeting to facilitate and eventually sign an inter-governmental agreement on the EastMed gas pipeline.

“Even though essential in facilitating the pipeline, going from there to actually building such a pipeline requires commercial feasibility, participation by the oil and gas industry and financial institutions to fund it and build it and, above all, gas sales to customers in Europe,” Ellinas said. “None of these is anywhere near materialising. Without them this project remains on the table as politically desirable but commercially challenging, unless it secures a substantial subsidy from the EU, which I consider unlikely,” he added.

In the present climate of the European Union targeting increasing transition to renewables, Russian gas monopoly Gazprom about to gain EU antitrust approval, TurkStream or Turkish Stream steadily progressing and Nord Stream 2 still scheduled to proceed, it is not likely that EU would provide such subsidies to the scale required to make the EastMed pipeline commercially viable, Ellinas said.

Since 2013, the East Med is promoted by the EU as a Project of Common Interest (PCI) since it would boost EU energy security by providing another route and source for gas supplies to Europe, reducing reliance on Russia.

Ellinas also noted that liquefied natural gas (LNG) exports from Egypt are about to start using surplus gas produced in Egypt, by the end of the year. “Shell has been in discussions to buy Israeli and Cypriot gas for liquefaction in Egypt and export. This is also subject to commercial challenges due to low gas prices in Europe. It may succeed only if Leviathan and Aphrodite are prepared to sell their gas at quite low prices,” he said.

The EastMed gas pipeline would circumvent Turkey, which has increased tensions with Cyprus, Greece and Israel recently, providing a way to transport newly discovered gas supplies from the East Mediterranean to Europe. The talks in Nicosia in May follow a memorandum of understanding regarding the EastMed pipeline, which was signed in December.

According to the Public Gas Corporation of Greece (DEPA), the EastMed will connect the recently discovered gas fields in the Levantine Basin, in the southeast Mediterranean, with mainland Greece and is projected to carry 8-14 billion cubic meters per year of natural gas to Greece and Europe.

According to DEPA, the approximately 1900 kilometer long pipeline (700 kilometers on-shore, 1200 off-shore) consists of the three following main sections, as well as compressor stations located in Cyprus and Crete: a pipeline from the fields to Cyprus, a pipeline connecting Cyprus to Crete, and a pipeline from Crete crossing mainland Greece up to the Ionian coast.

From there the EastMed can link up with the offshore Poseidon pipeline enabling the delivery of additional diversified sources from the Levantine to Italy and beyond. The EastMed pipeline is preliminarily designed to have exit points in Cyprus, Crete, and mainland Greece as well as the connection point with the Poseidon pipeline.

(Follow on Twitter @energyinsider)

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