Israel and Cyprus in talks for natural gas supply

The energy ministries of Israel and Cyprus are currently engaged in discussions aimed at potential cooperation in the energy sector, according to a report by S&P Global. The two countries are reportedly close to finalizing a $1.5 billion contract to supply natural gas from Israel to Cyprus via pipeline. This agreement would signify the first sale of Israeli natural gas to Europe.

A spokesperson for Israel's Ministry of Energy stated that ongoing discussions focus on matters of mutual interest, emphasizing the strong relationship between the two nations. The contract, expected to last 10 years, would facilitate the transportation of gas from the Karish and Tanin gas fields, operated by Energean, to Cyprus.

Energean has applied for an export license to Cyprus and proposed using a pipeline for gas transport. The gas, produced at the Energean Power FPSO with an annual capacity of 8 billion cubic meters, currently serves the Israeli domestic market.

As gas consumption continues to rise in Europe, prices have been trading around €40/MWh (about $44/MWh). Following the recent Hamas attacks on October 7, Israel temporarily shut down its Tamar gas platform for safety reasons.

Israel has emerged as a significant gas producer, exporting to Egypt and Jordan. In 2023, the country reached a record production level of 24.7 billion cubic meters. The Karish field, which began production in October 2022, contributed significantly to this output, producing 2.77 billion cubic meters in the first half of the year. Other operational gas fields include Leviathan, which started in 2019, and Tamar, which launched in 2013.