Page 9 - Euroil Week 01 2020

EurOil PIPELINES & TRANSPORT EurOil
EastMed partners strike deal
SE EUROPE
Political realities could derail the project.
GREECE, Israel and Cyprus signed a landmark deal on January 2 to build the 1,900-km, 10bn cubic metre per year EastMed gas pipeline – a project that will deliver Israeli gas to Europe for the first time.
The pipeline, which would cost around $6bn to develop, has been discussed ever since the discovery of large gas deposits off Israel in the early 2010s. It would connect other major fields in Israel’s Levantine Basin with first Cyprus and then Greece, where gas could also be routed to Italy via the Trans-Adriatic Pipeline (TAP) due to start up in late 2020.
Cyprus currently needs gas imports, but will eventually swing to becoming an exporter through the development of its own offshore gas discoveries. EastMed would therefore initially provide the island state with gas and then offer it with a means of shipping its own production to European shores.
The largest of Cyprus’ fields is Aphrodite, which holds 4.1tn cubic metres of gas, and is operated by Royal Dutch Shell, US-based Noble Energy and Israel’s Delek. The group took a major step forward in November, securing a 25-year production licence for the site.
Aprhodite is slated to begin production in 2025 and deliver its gas to Egypt via pipeline. Israel lays claim to a small share of the resources of the field, which straddles their maritime bor- der, but is likely to put this issue aside in favour of working with Cyprus on EastMed.
For Greece, EastMed would offer yet another gas import option. The country already benefits from a mix of Russian gas supplies from LNG shipments brought ashore at a terminal near Athens. It is also set to get Azeri gas via TAP and has plans to develop a new LNG import project near Alexandroupolis.
The small Balkan country has more than enough gas import capacity as it is. Its ambition is therefore to establish itself as an import hub for the wider region.
EastMed could well cover 10% of the EU’s gas, assisting the bloc in its long-held goal of diversi- fying supply. But political realities could derail the project.
Cyprus’ historic rival Turkey has vowed to block its construction, claiming the economic boost it will provide should be shared between not only Cyprus but also the Turkish-backed de-facto state of Northern Cyprus, recognised only by Ankara.
Turkey added further strain to its already dif- ficult relationship with Europe last year by mov- ing drilling rigs into internationally recognised Cypriot waters.
There are also questions of economic logic. Even EastMed’s biggest advocates, such as the Israeli government, admit that it will take seven years to build. This may be too late to capture a meaningful share of the southern European market, given the number of import projects the region has in the pipeline. ™
Week 01 09•January•2020 w w w. N E W S B A S E . c o m
P9