EU urges feasibility study for importing Israeli natural gas

By JONATHAN STEARNS
Bloomberg

The European Union signaled interest in a possible pipeline to import Israeli offshore natural gas via Cyprus and Greece, highlighting the EU’s efforts to reduce reliance on Russia.

Top EU officials said the Eastern Mediterranean initiative, which Israel, Greece and Cyprus are promoting, merits a feasibility study. The project could also tap gas discovered in neighboring Cypriot waters.

“This is an interesting project,” Deputy Industry Minister Claudio De Vincenti of Italy, which holds the 28-nation EU’s rotating presidency, told reporters today in Brussels after he chaired a European energy meeting. “It could play an important role in diversifying our resources.”

Russia’s decision this month to halt construction of the $45 billion South Stream pipeline, which was to bring Russian gas directly to the EU via the Black Sea, is emboldening efforts in the bloc to find new sources of the fuel.

South Stream, led by Russia’s OAO Gazprom, ran afoul of EU rules on fair public procurement and on the separation of gas supply from pipeline ownership. As a route that would bypass Ukrainian transit pipelines, South Stream also became politically controversial after Russia’s encroachment in eastern Ukraine.

Israel’s 2009 and 2010 discoveries of two gas fields off its Mediterranean coast have led to energy agreements with Jordan, a preliminary deal with Egypt and hopes that the estimated 29 trillion cubic feet of gas may help improve relations with Arab states as well as Turkey and Europe.

Cyprus to Crete

The possible EastMed pipeline, which Greece says would probably cost 3.5 billion euros ($4.3 billion) to 5 billion euros, faces a technical hurdle because a proposed route between Cyprus and the Greek island of Crete would be through relatively deep waters.

“The gas interconnection between -- what was the Greek and Cypriot suggestion -- Cyprus and Crete is from the technical point of view rather challenging,” Maros Sefcovic, European Commission vice president for energy, told reporters. “The best thing would be to proceed with a feasibility study.”

Sefcovic said the commission, the EU’s executive arm, would explore possibilities to help with conducting the study.

The EastMed initiative may challenge a separate option of exporting Israeli offshore gas to more nearby Turkey. That’s politically controversial in Greece and Cyprus because Turkey has occupied northern Cyprus since 1974. In October, EU leaders accused Turkey of stoking tensions in the eastern Mediterranean after Cyprus said Turkish vessels, including warships, entered its waters to explore for energy.

‘Vertical Corridor’

In another southern European energy initiative this week, Greece, Bulgaria and Romania floated the idea of creating a “Vertical Corridor” to transport gas as far as the Baltic region. This could involve liquefied natural gas (LNG) terminals in the northeastern Greek cities of Alexandroupolis and Kavala, said Greek Energy Minister Yiannis Maniatis.

The project would be based on an interconnection with the so-called Southern Gas Corridor meant to bring supplies to the EU from the Caspian region, according to Sefcovic.

He said the commission would examine ways to help in “accelerating all the processes needed for good, solid integration of the energy system of these countries into the overall European Union energy framework.”

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