Greece, Cyprus, and Israel will reportedly sign an intergovernmental agreement for the EastMed gas pipeline in Tel Aviv on 20 March in the presence of US Secretary of State Mike Pompeo, in a sign of support from Washington for the project that is expected to transfer gas from the East Mediterranean Israeli and Cypriot fields across Greece and onto Italy.
Pompeo’s presence in the signing of the EastMed pipeline also sends a signal to Turkey and Russia about Washington’s willingness to protect its interests in the region.
“It is quite important as it signifies political support to the three countries, seen by the US as its friends in the region, but also as contributing to regional stability and security,” Natural Hydrocarbons Company CEO Charles Ellinas told New Europe on 14 March. “As such, it is also a signal to both Turkey and Russia that the US is standing by the three countries. But I do not believe it extends to anything more than just political support,” he said, adding that it also signifies support for the East Med gas pipeline as an alternative to Russian gas supplies to Europe.
Offshore gas discoveries in Cyprus, Egypt, and Israel, which are transforming perspectives for the Eastern Mediterranean, including plans for the EastMed pipeline, were discussed during a panel on 13 March in Houston’s CERA Week 2019 with Cyprus’ Energy, Commerce and Industry Minister Yiorgos Lakkotrypis, Greece’s Environment and Energy Minister George Stathakis, Israel’s Energy Minister Yuval Steinitz and Egypt’s Petroleum and Mineral Resources Minister Tarek El Molla.
On 14 March, Italian energy major ENI announced a new gas discovery under evaluation in the Nour exploration prospect located in the Nour North Sinai Concession, in the Eastern Egyptian Mediterranean, about 50 kilometres North of the Sinai peninsula.
“Even though ENI has not announced size, it has been rumoured to be substantial, with the lowest estimate being 10 trillion cubic feet. But it could be more,” Ellinas said. “Coming on the back of the Exxon Mobil discovery of Glaucus it is really good news for the East Med and maintains Egypt’s lead in the region, reinforcing its growing LNG (liquefied natural gas) exports,” Ellinas said, adding that with new licensing rounds just announced by Egypt, the potential for more discoveries increases.
The announcement of US energy giant Exxon Mobil on 28 February that it has made the world’s third-biggest natural gas discovery in two years off the coast of Cyprus in the Eastern Mediterranean at the Glaucus-1, the potential for more discoveries offshore Cyprus in the planned drillings and the exploration bids in the Exclusive Economic Zones in Greece and Egypt have fuelled plans for the export of hydrocarbons from the region to Europe, including the EastMed pipeline.
Ellinas, who is skeptical about the project, reiterated his argument that the EastMed gas pipeline is a political project with little chance of being built because of commercial reasons. “It is expensive and the gas it plans to carry is also expensive. By the time it arrives in Europe it will not be able to find buyers as it will not be able to compete with other gas supplies, on price,” Ellinas said.
Another potential massive challenge is if Italy does not allow landing of the EastMed pipeline. “Whoever the owners would be, they would need to secure a different route, for example north through the Balkans. Not only this would delay the project, but also it would increase costs even further. However, the Italian position may change, especially with a change of government,” he said, stressing that whatever happens, the question of whether it is commercially viable remains paramount.