Eastern Mediterranean Natural Gas Sector Developments
Over the past few days a set of developments in the Eastern Mediterranean's natural gas sector have shed a new light on the turbulent region, which, for the most part, is characterized by the ongoing military preparations against Syria.
To begin, Eni is said to be interested in securing a deal with Israel in order to transfer gas from its offshore reserves into Cyprus.
Israel's energy Minister is currently on tour in Italy to meet with his counterpart along with Eni directors to discuss future plans that include participation of the Italian company in transferring gas that is going to be produced there in the near future.
Eni already has a license to explore for gas on Block 9 located offshore Cyprus and is also set to participate in the Lebanese licensing round, while it wants to keep cordial relations with the Arabic world where it has substantial investments.
As such, Israeli media claims that the Italians will aim to establish gas compressor installations in Israel and then ship it to Cyprus, while charging around $10 per mmbtu, which could be considered a competitive price.
This project however depends on whether Eni will be successful on Block 9, so as to have the necessary capacity to use Cyprus as a staging point for worldwide LNG exports.
Furthermore, Noble Energy, Avner Oil, Delek and Isramco are moving their plans for initial research and exploration investments of $122 million in the Eran field offshore Israel. This location is estimated to hold 684 billion cubic feet of natural gas and should investments prove successful, it will further boost Israel's potential for significant gas export.
Simultaneously, the Greek and Egyptian Foreign Ministers met recently in Cairo where they discussed agreement in their respective Exclusive Economic Zones (EEZ), an issue that was hampered over the years due to the alliance of Turkey and Egypt that was abruptly ended after the unsuccessful support of Turkey to the late Egyptian Premier Morsi. This will result in a new round of negotiations in which Egypt agreed to let Cyprus be included, which may end likely in the Greek EEZ reaching as far as the joint borders of those of Cyprus-Egypt.
Greece is already hinting that the next step would be to hand out licenses for gas explorations in order to mimic other East Mediterranean countries. Should there be any meaningful plans to export gas from the Eastern Mediterranean to the EU, close collaboration of all neighboring states is needed in order to join reserves and share costs associated either with the establishment of a pipeline route or via LNG installations.
Interesting news out of Brussels was that the European Parliament agreed on providing Greece natural gas hub status that could only be materialized if the country achieves domestic production. The decision, originally drafted by the Greek MP Niki Tzavella, stipulates that the development of domestic energy creates new trading hubs in the EU, which would be able to create market of direct natural gas distribution.
Presently, at the EU-level, Greece cooperates with Cyprus in order to achieve subsidies and political support in its plans to create an East Med energy corridor by also pressing Israel to join and direct its future exports westwards.