Greece Hopes for Revival of East Med Pipeline Project
A high level delegation headed by Greek Prime Minister Antonis Samaras, along with members of his Ministerial cabinet, visited Israel on the 8th of October. Various memorandums and agreements were signed and a East Mediterranean gas pipeline project revival looks likely.
Greece's Minister of Environment, Energy and Climate Change Ioannis Maniatis relayed to his counterpart in Israel, Silvan Shalom, that Athen's foremost interest is to push forward the East Med energy corridor via a tripartite cooperation between Greece, Cyprus and Israel, in which natural gas will play a key role.
The main argument used was the geo-economic link between the Middle East and the EU, in times of major crises in the region and the need for Europe to diversify its gas import supplies.
As such, a pipeline running offshore Israel to Europe through Greece would stabilize the area and cement a decade’s long export market for the companies involved.
Minister Shalom replied that if a pipeline is indeed built, he would prefer it to pass through Greece rather than Turkey, which is in essence another antagonist for the corridor route and a major domestic gas consumer market.
For the time being Tel Aviv is considering several options, without having decided on the best policy to follow concerning its significant offshore gas reserves, which may even exceed 800 bcm.
Options being discussed at various political and economic levels in Israel include a pipeline straight into Southern Turkey that will then connect with the local transmission system that will soon add TANAP to its array of pipeline routes.
A second option would be the afrementioned pipeline to Cyprus, connecting local offshore reserves before ending in Southern Greece to connect with the local pipeline network that will add TAP in its capacity by 2019.
Moreover the establishment of an LNG station in Israel is being considered, either in Haifa for exports to European markets, or in Eilat, with an eye for lucrative Asian-Pacific markets.
Lastly is the option for the construction of an LNG terminal in Cyprus where all the East Med gas will be stored before being re-exported to (mostly) EU destinations.
It should be noted that Israel has not assessed the amounts of gas to be exported in total over the coming years, and what amounts should be kept for domestic consumption. In fact, this is a crucial aspect of the entire discourse because for a long-term investment project of around 30 years, hundreds of billions of cubic meters are going to be needed, which decreases considerably the local reserves and the capacity of Israel to fully proceed into mass scale gasification programs for domestic use.
A pipeline to Turkey is estimated to cost €3 billion, while the one to Greece around € billion. Greece's DEPA recently awarded a feasibility study to JP Kenny that concluded a pipeline of 1200km with an 8 bcm annual capacity would cost at least €4.7 billion and identified three basic scenarios for the route of the project:
- Route offshore Cyprus to the Island of Crete and then to Southern Greece
- Directly offshore Israel to Crete and Southern Greece
- Terminal on mainland Cyprus to Crete and mainland Greece
In all cases the projects of the Trans-Adriatic Pipeline (TAP) and Interconnector Greece-Bulgaria (IGB) are mentioned as linked to the East Med pipeline and where DEPA places its priority on persuading the Israeli side into joining the project.
Presently the situation is in flux and the Israelis will take their time deciding on which route to place their bets.
Key factors that will influence such decisions are not purely economic but geopolitical and security related due to the peculiar state of affairs in Israel, in the midst of chaotic developments in the Arab world and in light of the war in Syria, the Iranian nuclear program and its rift with Turkey. Consequently, it could be said that signs of the direction to be followed are not expected until early 2014.