Israel enters pipeline agreement with Greek, Cyprus leaders

JUNE 22, 2020 22:19

East-Med gas deal signed by Cyprus, Greece and Israel, January 2020 (photo credit: HAIM ZACH/GPO) — East-Med gas deal signed by Cyprus, Greece and Israel, January 2020

(photo credit: HAIM ZACH/GPO)

Netanyahu invites other countries to join “alliance in the Eastern Mediterranean” for economic benefit and stability.

Israel is becoming an energy superpower, Prime Minister Benjamin Netanyahu said, upon signing a gas pipeline construction agreement with Greece and Cyprus in Athens on Thursday.

Netanyahu, Greek Prime Minister Kyriakos Mitsotakis and Cypriot President Nicos Anastasiades, and their countries’ energy ministers fare signed an agreement to build an undersea natural gas pipeline from Israel to Europe.

The ambitious “East-Med” energy project will include the construction of a 1,900 kilometer offshore and onshore pipeline from Israeli economic waters to the western Greek mainland, via Cyprus and Crete.

“This is a historic day for Israel, because Israel is quickly becoming an energy superpower, a country that exports energy,” Netanyahu said. “We opened the Leviathan gas field days ago. It brings us great outputs, but with the exports that will be possible by way of this pipeline, we will have hundreds of millions of shekels in income for Israeli citizens, for welfare, health, young people and the elderly, for everyone.”

The prime minister also pointed to gas export deals with Jordan and Egypt, saying that they strengthen the peace between them and Israel.

Cooperation between Israel, Greece and Cyprus, which Netanyahu called “a real alliance in the eastern Mediterranean” that is economic and diplomatic, but also stabilizes the region and contributes to its security. He called on more countries to join the alliance, saying Italy will be first, but Egypt is also welcome.

Energy, Water and Infrastructure Minister Yuval Steinitz, who accompanied Netanyahu on his trip, told Channel 11 that “this is the first time Israel and Europe are cooperating on a major infrastructure project. Israel will become one of Europe’s energy suppliers.”

The pipeline project has been included in the EU's list of "Projects of Common Interest," boosting energy market competition and fostering increased energy security for member states. The pipeline is initially expected to transport annual quantities of about 10 billion cubic meters (bcm) of natural gas from Israeli and Cypriot offshore gas fields by 2025; capacity is subsequently forecast to increase to 20 bcm.

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The Eastern Mediterranean gas supply is expected to connect to the planned Poseidon Pipeline in Greece, a major natural gas interconnector co-financed by the European Union, running from the Greek-Turkish border to Italy and linking European markets with diversified energy sources.

Turkey, however, could be an obstacle, in light of the agreement it signed with the Libyan government in Tripoli in November, dividing economic rights to the eastern Mediterranean between them. Greece and Cyprus view the agreement as an illegitimate expansion of authority. Ankara has made it clear to Israel that it believes any steps taken in the area should be cleared with Turkey.

According to a preliminary project-feasibility assessment concluded by international engineering firms in 2016, the construction of the pipeline, including offshore supply to Italy, is estimated to require an investment of 6.2 billion euros ($6.95b.).

In November, Israel Natural Gas Lines (INGL) signed a memorandum of understanding with IGI Poseidon – a Greek-Italian joint venture between DEPA S.A. and Edison S.p.A – to advance the development of the EastMed pipeline, assess the configuration of the project and utilize both `existing and planned infrastructure in a coordinated manner.

Hours before the signing of the agreement in Athens, British-Greek oil and gas producer Energean Israel signed a Letter of Intent with DEPA for the potential sale and purchase of 2 bcm of natural gas per annum from Energean's Karish and Tanin gas fields offshore Israel. The document represents the first agreement for the future commercial use of the EastMed pipeline.

Potentially lucrative exports of Israeli gas from offshore reservoirs follow deals struck with Jordan and Egypt to supply gas from the Leviathan and Tamar gas fields, worth a total of $25b. over the next 15 years. Jordan's National Electricity Company (NEPCO) said it had received the first supply of gas from Leviathan field operator Noble Energy on Wednesday.

The largest discovered to date offshore Israel, Leviathan is estimated to contain up to 605 billion bcm of natural gas, equivalent to 65 years of Israeli gas consumption. Israel's Petroleum Council, the national body tasked with advising the energy minister regarding petroleum rights, approved granting 12 new licenses for gas and oil exploration to two Israeli-British consortia in July 2019.

Seven natural gas fields have been discovered off the coast of Israel to date; a third tender process for exploration is expected to take place in 2021.

Netanyahu plans to stay in Athens until Saturday night. Defense Minister Naftali Bennett will fill in for him as prime minister during his absence.