Page 5 - EurOil Week 35 2022

EurOil COMMENTARY EurOil

attracted some high-profile support since it was and as a result Israel has been able to increase
first mooted more than a decade ago. That cul- the volume of gas it delivers to Egypt. It has also
minated with the signing of a tri-partite accord gained access to Idku and Damietta LNG plants
between Israel, Cyprus and Greece in early – a boon for Egypt, which is hopeful of becoming
2020, and the Israeli government approved the a regional gas liquefaction hub of sorts.
document later in the year, clearing the way for
construction to begin and gas to start flowing Israel’s Egyptian strategy
around 2025. This has been a sensible strategy for Israel vis-à-
However, the scheme ran into trouble. The vis the European market because it has created
EU had designated EastMed a Project of Com- synergies with existing infrastructure that was
mon Interest (PCI) in 2013, but its interest began already capable of exporting gas to Europe.
to flag after Ursula von der Leyen became pres- In other words, Israel benefited from work-
ident of the EC. (Following her accession to the ing with Egypt because it did not need to build
post in December 2019, she began pressing for its own export facilities from scratch or build
the adoption of greener energy policies.) Then its own relationships with European custom-
in January 2022, the US government said that ers from the ground up; instead, it could bene-
it would no longer offer political support to fit from the LNG plants and customer ties that
the pipeline, as it viewed green energy projects Egypt already had in place. At the same time,
and cross-border electrical interconnections as Egypt also benefited from working with Israel
higher priorities in Europe. because it gained a new source of feedstock for
In the wake of Russia’s invasion of Ukraine, its LNG plants, which had been sitting idle for
these obstacles are not quite as intimidating as some time, and the opportunity to portray itself
they might once have been. Winter is coming, as a reliable supplier.
and Europe needs gas. Green energy is nice to Meanwhile, the benefits of this arrangement
have, but fossil fuel is better than freezing. did not escape notice in Brussels. Israel, Egypt
But is this argument strong enough to build and the EU signed a memorandum of under-
support for EastMed? Maybe not. standing (MoU) on co-operation in gas supplies
in June of this year.
EastMed’s ongoing drawbacks
The problem with EastMed is that underwater Egyptian option for Cyprus?
pipelines are difficult to build. They are com- Could Cyprus try to follow a similar strategy?
plicated feats of engineering, and they cost a Perhaps. It could not do exactly the same as Israel
great deal of money to design, plan and install. has done because it has no overland pipeline
The equipment needed to execute such projects connections to the North African country, but it
properly and safely tends to be limited in supply could pursue underwater connections via local
and booked far in advance. pipelines or even tie-backs.
As a result, subsea pipelines are often dif- After all, the distances involved would not be
ficult to build quickly – and there is no reason large. Two of the fields discovered thus far off-
to believe that EastMed would be any different. shore Cyprus, Glaucus and Aphrodite, are less
Indeed, there are good reasons to believe that than 100 km away from Zohr, Egypt’s largest gas
this particular subsea pipeline might be more deposit, with reserves of 30 trillion cubic feet
difficult to build than others. (850 bcm). In turn, Zohr is connected to Egypt’s
In no particular order, potential complicating domestic gas networks and to the gas liquefac-
factors include but are not limited to: the sheer tion plants, meaning that a link to Zohr would
length of the proposed 1,900-km route, which allow Cyprus to send gas to Europe as LNG.
would make EastMed the longest underwater Even better, this kind of link could be estab-
pipeline in the world; the technical and geo- lished far more quickly and cheaply than a large-
logical complexity involved in laying pipe in scale system such as EastMed. It would have a
3,000-metre-deep water; seismic activity in the lower capacity, but it might be able to make up
region; and competing territorial claims over for that with speed – and speed may be a more
multiple portions of the proposed route. important consideration to the EU at a time
Under such circumstances, it is hardly sur- when Russian gas supplies are drying up and
prising that Israel has been willing to explore prices are climbing.
another alternative for moving its gas to the Some questions would remain, such as how
European market. That alternative is Egypt, rapidly Cyprus might actually be able to launch
which has shown itself eager to work with neigh- gas production. Even so, these questions might
bouring states on this front – and which is spe- seem easier to answer if the parties involved
cifically pursuing co-operation with Israel in the knew that they had a fast, easy and cheap way to
gas sector. The two countries have stepped up move Cypriot gas to market in Europe – through
trade on this front over the last couple of years, Egypt. ™

Week 35 02•September•2022 www. NEWSBASE .com P5