Four Nations to Fund Eastmed Pipe Survey
Israel, Greece, Cyprus and Italy are to sign a draft agreement next month for the construction of an undersea natural gas pipeline, the Eastmed. The planned pipeline, if built, would transport gas from the East-Med to Italy through Greece and be the world's longest ever undersea gas pipeline – with an intended start-up date of around 2025.
However, the project has yet to overcome some hurdles. The first being a survey for economic and technical feasibility, which should be conducted next year and cost €70mn ($80mn), according to The Marker an Israeli business daily. The survey will be financed by the EU (50%) and IGI Poseidon, a 50:50 joint venture of Italy's Edison (part-owned by EDF) and Greece's Depa.
IGI Poseidon has conducted a previous $2mn survey into the project and, if it's approved, will be in line to build it; the company is also close to starting development of the IGB, an interconnector between Greece and Bulgaria. IGI Poseidon also wants to develop an interconnector from the Greek-Turkish border to Italy (not linked to the TAP project, which includes a section across Greece, then involving a route via Albania and subsea to Italy).
Ron Adam, an Israeli foreign ministry official responsible for natural gas negotiations who had spoken at the 2018 Energy & Business conference in Tel Aviv, said that the survey will look at potential customers and prices. According to IGI Poseidon's website, the project is technically feasible; it also said that the project should cost less to build than similar-capacity import projects to the EU and is therefore economically viable in various prices scenarios. Current discoveries in the East-Med would sustain 30 bn m3 of gas export annually. The proposed 1,990 km pipeline has three undersea sections, totalling 1,300 km offshore and 600 km onshore. According to the Israeli Energy Ministry, its construction would cost $6.7bn; however other sources put this closer to $10bn.
Some even question if Eastmed is necessary. Energean CEO Mathios Rigas told NGW in August: "The Eastmed pipe is not an easy project. If, or when, it happens it will benefit everyone including us, as we would get access to a great market … [But] there are other options to transport gas apart from a pipeline, such as liquefaction, or compressed natural gas. Because we have a shipping presence, we understand offshore transportation operations."
Israel’s route to world markets – via Greece, or Egypt
Last month Egypt indicated its readiness to discuss the re-opening of the Damietta liquefaction and export plant, shut for six years, and the ramp-up of the country's other such plant at Idku. The inference is that major new Egyptian fields such as Zohr could supply gas for export via the two plants in the medium-term, but that gas from other regional sources could be liquefied there later, provided agreement is reached by all parties. Egypt imported its last LNG cargo in late September and in October bid farewell to one of its two floating import terminals.
Rigas’s view is relevant as he also heads the Energean Israel joint venture of Greece’s Energean (70%) and private equity fund Kerogen Capital (30%); the latter will have one of the first gas production ships in the eastern Mediterranean installed by late 2021. Just over half its 8bn m3/yr production capacity (4.2bn m3/yr) will be used for Karish-Tanin gas going to the Israeli market, but that still leaves the rest available for future export - which could benefit Energean Israel if its near-term exploration programme nearby proves successful. First steel was cut recently on its Karish-Tanin production ship, it said November 27.