Cyprus changes tack with plan for gas link to Israel

Cyprus hopes to develop plans for a pipeline linking it to Israel's east Mediterranean gas fields during talks which start next month, the island's top energy official told Reuters.

Proposals by the new centrist Cypriot government, which came to power in March, represent a markedly different approach to its predecessors in getting gas to Europe and other markets.

Rather than the 2,000 km (1,243 mile) EastMed pipeline to continental Europe, the new government is proposing a much shorter one linking Cyprus to fields off Israel. Once in Cyprus, the gas could be converted to LNG and shipped to Europe.

The eastern Mediterranean has yielded major gas discoveries in the past decade, mostly off Israel and Egypt, with interest rising since Russia's invasion of Ukraine hit flows to Europe.

Lesser Cypriot discoveries are yet to enter into production and for Energy Minister George Papanastasiou, a nearly four-decade energy industry veteran, his new plan provides answers.

"It's a win-win," he said in an interview on Tuesday.

Papanastasiou said the EastMed pipeline, which has been under discussion between Israel, Cyprus and Greece for about a decade, had not been dropped but it faced challenges.

"It's a very high, cost intensive project, but there are technical issues such as the depth of sea where the pipeline needs to be laid," the minister said.

Other than being shorter and faster to build, a 300 km link to fields off Israel will provide Cyprus with access to cheap gas, and give Israel another export outlet in addition to Egypt.

The projects had the backing of Israeli Prime Minister Benjamin Netanyahu and Cypriot President Nikos Christodoulides, Papanastasiou said.

"There will be two technical committees with experts from both sides, starting the conversation in July. The first committee will be gas and hydrogen, and the second committee electricity," Papanastasiou said.

Being able to potentially carry hydrogen, considered a clean fuel, made the pipeline a project which would be eligible for future financial support from institutions such as the EIB or EBRD. Both have stopped financing fossil fuel projects.

"As soon as we develop the technologies and we have enough green power generation then the pipelines can be used for hydrogen transportation," Papanastasiou said.

With estimated gas needs in Cyprus of only 0.7 billion cubic metres, the government also wants liquefaction facilities which Papanastasiou said would encourage investors and enable the gas to get to the "most thirsty market" right now of Europe.

Cyprus and Israel are also looking at expediting a link of their electricity grids via a subsea cable, he added.