One step for East Med gas but no giant leap

An Israeli gas company with Greek interests wants to lay a subsea pipeline from Aphrodite natural gas field to a facility in Egypt, a proposal potentially seeking to reduce time and cost but also bypassing the issue of Turkey.

NewMed Energy officials, who met on Monday with Cypriot Energy Minister George Papanastasiou, have reportedly submitted with partners Chevron and Shell an official development plan for Nicosia’s approval regarding a short pipeline from Aphrodite offshore Cyprus to an existing processing and production facility in Egypt.

The proposal, which mirrors revised EastMed gas language adopted by the newly-elected government in Cyprus, had been floated around previously but reports said a formal request made things official.

NewMed, formerly Delek Drilling that sold all its Israeli stakes to Greek company Energean,is seeking to export natural gas through a short pipeline to Egyptian liquefaction facilities to Europe and other markets. Additional reports say Nicosia would also favor plans that seek to supply natural gas from Aphrodite to the domestic market in Cyprus.

NewMed Energy CEO Yossi Abu described the developments as a “significant progress.”

“The regional ties that we have forged create possibilities for regional and global collaborations and infrastructure-sharing, which will help meet demand for natural gas anywhere around the globe,” Abu said.

But the proposal, which emerged officially out of a government-sponsored energy conference in Nicosia this week, did not provide answers to the big questions about the island’s overall strategy.

Local media questioned whether Nicosia had an overall strategy, amid reports that Egypt and Israel were warming up to Turkey.

Ankara, a big energy player in the region that has been left out of eastern Mediterranean gas plans, is reportedly rekindling relations with Cairo and Tel Aviv.

Cyprus, a divided island between a recognized Greek Cypriot south and a Turkish Cypriot north that is not recognized by other countries except Turkey, has been playing an active role in the East Mediterranean Gas Forum that was created in January 2020.

Room for speculation

But energy experts have questioned the neutrality of the EMGF, while lawmakers in Italy, a member of the forum that has been hesitant to join voices with Nicosia, recently called on Rome to “recalibrate energy supply choices” while industry officials in that country called for Turkey to play a role.

While there are no current plans publicly being discussed for eastern Mediterranean gas to go through Turkey, NewMed’s proposal focused on the southern leg of the massive project, with the Cyprus News Agency saying the company was “immediately promoting the plan for the exploitation of the Aphrodite field.”

But the drilling of a crucial exploration well that could play a pivotal role in further steps is not expected to be over until after summer, leaving experts and pundits with more room for speculation.

Chevron, which had previously delayed development plans while hinting at geopolitical unknowns in the region, said in a statement it was "currently working to progress the Aphrodite project."

"Beyond this, it is not our policy to comment on commercial matters," it said.

According to earlier reports, many companies attending the energy conference this week said they would provide feedback to the government but privately.

Story has been updated to reflect Chevron had previously delayed development plans