Cyprus
President Nicos Anastasiades, Egypt’s President Abdel-Fattah el-Sissi and Greek
Prime minister Alexis Tsipras endorsed a gas export pipeline from Cyprus to Egypt
and the EastMed gas pipeline at a bilateral and trilateral meeting in Nicosia
last week.
During a
visit to Cyprus on November 20, el-Sissi and Anastasiades reportedly agreed to
start talks in December towards an agreement to build the pipeline to deliver
natural gas to Egypt from Cyprus’ Aphrodite gas field.
A day
later, at a meeting that included Tsipras, the three leaders discussed the new
gas deposits in eastern Mediterranean.
“During the
last few days we had successful bi- and tri-partite meetings in Nicosia
involving the heads of state of Cyprus, Egypt and Greece. Politically very
important to the countries involved but also in promoting stability and
cooperation in the region,” Cyprus Natural Hydrocarbons Company CEO Charles
Ellinas told New Europe on November 24, following a conference by IENE in
Athens. He added that these meetings might now be enlarged to include Italy and
Lebanon, and indirectly Israel.
“The odd
man out of course is Turkey who does not recognise Cyprus. And I say the odd man
out, because all other countries in the region recognize Cyprus’ right to
explore its EEZ (Exclusive Economic Zone) and export its hydrocarbons to
international markets,” Ellinas said.
“The
meetings endorsed a gas export pipeline from Cyprus to Egypt and the EastMed
gas pipeline. Unfortunately these were portrayed as done deals. In other words
the pipelines are now reality and will be constructed. This, of course, is not
the case. These are inter-governmental framework agreements facilitating the
pipelines. Even though essential, before these become projects we have the
small matter of securing gas sales agreements. It’s only then that the oil and
gas companies will make final investment decisions and commit the multi-billion
dollar investments required for construction,” he said.
Ellinas
repeated earlier comments that the challenge in implementing these projects
“has been, and remains to be, global gas prices. These are low and with the
relentless penetration of renewables and the glut of gas/LNG (liquefied natural
gas) in the market they will remain low”.
He stressed
that new gas projects that strive to export hydrocarbons from the East
Mediterranean will only succeed if they keep costs low and can work within the
price range prevailing in the global gas markets.
“I hope
that the gas pipeline talks between Egypt and Cyprus companies lead to success
and that Aphrodite gas secures export markets through this route. But this is a
challenge,” Ellinas said, adding that if it were easy, US energy company Noble
and its partners “would have done it by now, after five years of trying. They
would be the first to monetise their assets”.
Israeli
prospects to export gas to Egypt are challenging. “In addition to other
problems, Egypt reconfirmed recently that the International Chamber of Commerce
Court of Arbitration decision ruling that the Egyptian companies must pay IEC
close to $2 billion is still an obstacle. And, of course, any such exports face
the same gas price challenges I described above for Cyprus gas going to Egypt
for liquefaction and export,” the Cyprus Natural Hydrocarbons Company CEO said.
The
European Union is looking to import newly discovered gas supplies from the East
Mediterranean to increase its energy security. Ellinas said that combining all
gas resources of Israel, Cyprus and Egypt would create a much bigger pool,
which could be more attractive to Europe. “However, the price issue will still
be the main limitation. It is difficult to see how East Med gas can reach
Europe at prices within average annual gas price prevailing in Europe, of the
order of $5/mmBTU. More expensive gas will find it difficult to find buyers,”
he said.
On the
positive side, drilling is restarting in Cyprus with Italian energy major ENI
planning to drill in Block 6 end of November, with more to follow next year,
Ellinas said, adding, “Prospects look good. However, the main problem is not
discovering more gas. Securing gas sales exports is the challenge”.
https://www.neweurope.eu/article/cyprus-greece-egypt-strive-export-east-med-gas-europe-price/