Page 5 - DMEA Week 35 2022
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DMEA COMMENTARY DMEA
Altogether, Cyprus’ offshore zone appears to is specifically pursuing co-operation with
hold at least 17.5 trillion cubic feet (495.8 bcm) Israel in the gas sector. The two countries have
of gas, making its reserves comparable to those stepped up trade on this front over the last cou-
of Leviathan, which holds about 18.9 trillion ple of years, and as a result Israel has been able
cubic feet (535 bcm). to increase the volume of gas it delivers to Egypt.
But there are problems with EastMed. It has also gained access to Idku and Damietta
LNG plants – a boon for Egypt, which is hopeful
EastMed’s old obstacles of becoming a regional gas liquefaction hub of
The pipeline project has garnered a considera- sorts.
ble amount of attention over the years and has
attracted some high-profile support since it was Israel’s Egyptian strategy
first mooted more than a decade ago. That cul- This has been a sensible strategy for Israel vis-à-
minated with the signing of a tri-partite accord vis the European market because it has created
between Israel, Cyprus and Greece in early synergies with existing infrastructure that was
2020, and the Israeli government approved the already capable of exporting gas to Europe.
document later in the year, clearing the way for In other words, Israel benefited from work-
construction to begin and gas to start flowing ing with Egypt because it did not need to build
around 2025. its own export facilities from scratch or build
However, the scheme ran into trouble. The its own relationships with European custom-
EU had designated EastMed a Project of Com- ers from the ground up; instead, it could ben-
mon Interest (PCI) in 2013, but its interest began efit from the LNG plants and customer ties that
to flag after Ursula von der Leyen became pres- Egypt already had in place. At the same time,
ident of the EC. (Following her accession to the Egypt also benefited from working with Israel
post in December 2019, she began pressing for because it gained a new source of feedstock for
the adoption of greener energy policies.) Then its LNG plants, which had been sitting idle for
in January 2022, the US government said that some time, and the opportunity to portray itself
it would no longer offer political support to as a reliable supplier.
the pipeline, as it viewed green energy projects Meanwhile, the benefits of this arrangement
and cross-border electrical interconnections as did not escape notice in Brussels. Israel, Egypt
higher priorities in Europe. and the EU signed a memorandum of under- Two of the gas
In the wake of Russia’s invasion of Ukraine, standing (MoU) on co-operation in gas supplies
these obstacles are not quite as intimidating as in June of this year. fields discovered
they might once have been. Winter is coming,
and Europe needs gas. Green energy is nice to Egyptian option for Cyprus? thus far offshore
have, but fossil fuel is better than freezing. Could Cyprus try to follow a similar strategy?
But is this argument strong enough to build Perhaps. Cyprus are less
support for EastMed? Maybe not. It could not do exactly the same as Israel has than 100 km
done because it has no overland pipeline con-
EastMed’s ongoing drawbacks nections to the North African country, but it away from Zohr,
The problem with EastMed is that underwater could pursue underwater connections via local
pipelines are difficult to build. They are compli- pipelines or even tie-backs. Egypt’s largest
cated feats of engineering, and they cost a great After all, the distances involved would not be
deal of money to design, plan and install. The large. Two of the fields discovered thus far off- gas deposit
equipment needed to execute such projects shore Cyprus, Glaucus and Aphrodite, are less
properly and safely tends to be limited in supply than 100 km away from Zohr, Egypt’s largest gas
and booked far in advance. deposit, with reserves of 30 trillion cubic feet
As a result, subsea pipelines are often diffi- (850 bcm).
cult to build quickly – and there is no reason to In turn, Zohr is connected to Egypt’s domes-
believe that EastMed would be any different. tic gas networks and to the gas liquefaction
Indeed, there are good reasons to believe that plants, meaning that a link to Zohr would allow
this particular subsea pipeline might be more Cyprus to send gas to Europe as LNG.
difficult to build than others. Even better, this kind of link could be estab-
In no particular order, potential complicat- lished far more quickly and cheaply than a
ing factors include but are not limited to: the large-scale, new-build, end-to-end system such
sheer length of the proposed 1,900-km route, as EastMed.
which would make EastMed the longest under- It would have a lower capacity, but it might be
water pipeline in the world; the technical and able to make up for that with speed – and speed
geological complexity involved in laying pipe in may be a more important consideration to the
3,000-metre-deep water; seismic activity in the EU at a time when Russian gas supplies are dry-
region; and competing territorial claims over ing up and prices are climbing.
multiple portions of the proposed route. Some questions would remain, such as how
Under such circumstances, it is hardly sur- rapidly Cyprus might actually be able to launch
prising that Israel has been willing to explore gas production. Even so, these questions might
another alternative for moving its gas to the seem easier to answer if the parties involved
European market. That alternative is Egypt, knew that they had a fast, easy and cheap way to
which has shown itself eager to work with move Cypriot gas to market in Europe – through
neighbouring states on this front – and which Egypt.
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