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13 June, 2024
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Cyprus energy hub hopes hanging by a thread

Nicosia awaits big news from Greek company in Israel to keep prospects alive in shaken energy industry


Nicosia is eagerly awaiting news any day now that could potentially revive the island’s hopes in the energy game, with all eyes on whether a UK-based company with contracts in Israel could find enough gas to bypass red tape and send some of it to a friendly neighbor’s hub.

London-based Energean, an Israel-backed Greek gas company that focuses on the eastern Mediterranean, is expected early this week to announce drilling results from exploration of Athena inside Israel’s Exclusive Economic Zone.

According to daily Politis, Energean has been aiming to discover 21 billion cubic feet of natural gas at Athena, something which would allow the company to propose a sweet deal to Nicosia.

Unlike Egypt, where terminals on land conduct liquefied natural gas operations, Energean is expected to propose a floating liquefied natural gas facility in Cyprus

“The reason that Energean is waiting for the drilling results at Athena is so that it can move forward with a formal proposal in Cyprus,” Politis wrote, citing sources who said Israeli restrictions on exports had been eliminated under new agreements concerning the field in question.

Energean previously said it would decide in the second quarter this year whether to drill two optional wells.

Agreements in other fields between Energean and the Israeli government dictate what portion may be allowed to be exported, with Politis saying the Greek company might propose to Nicosia a 200 kilometer pipeline out of Athena to transport liquefied natural gas to Cyprus. 

Unlike Egypt, where terminals on land conduct liquefied natural gas operations, Energean is expected to propose a floating liquefied natural gas facility in Cypriot waters, where LNG can be then shipped to continental Europe.

Disputes continue with the Israelis and the Chinese

The move comes following delays and legal disputes between the Cypriot government and China Petroleum Pipeline Engineering Company, which was contracted to build a floating storage and regasification unit in Vasiliko.

But the deal has been stuck with the Chinese company seeking damages and pointing to costly modifications and constant adjustments to project specifications.

Cyprus and Israel have also been involved in a long dispute over the development of the Aphrodite-Yishai gas field in the eastern Mediterranean, with some 10% claimed by Israel.

Although never officially stated, reports last year said the Israeli partners preferred joint development with Aphrodite partners Chevron, Shell and Delek, instead of a buyout in the form of a one-time compensation payment.

Chevron, which took steps recently to increase its production of liquefied natural gas, told shareholders it was expanding an existing LNG project in Israel, in line with US President Joe Biden’s call to American companies to help increase the supply of LNG in Europe.

Israel has also been talking with Turkey about a possible natural gas pipeline between the two countries, which would demand political maneuverings on all parts in the region including Greek Cypriots in the Republic of Cyprus and Turkish Cypriots in the breakaway northern part of the island.

Nicosia has been pursuing an EastMed underwater pipeline with Israel and Greece, which would bypass Turkey, while Italy has shown interest but never fully committed to the details of the plan.

Washington recently came out and said explicitly it would not support an EastMEd pipeline, citing economic, environmental, and political considerations for the region.

US officials also pointed to smaller projects and more immediate solutions as a response to a need to eliminate European dependence on Russian oil and gas.

Cyprus  |  Israel  |  Egypt  |  natural gas  |  LNG  |  FLNG  |  Energean  |  eastmed  |  Mediterranean  |  Russia  |  Europe  |  Turkey

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