The Leviathan reservoir partners have submitted a bid to supply gas through a pipeline from the Israeli Eastern Mediterranean basin to Cyprus, they announced in a Tel Aviv Stock Exchange report on Wednesday.

Responding to a tender issued by Cypriot Natural Gas Public Company (DEFA), the partners submitted their bid on Monday, they said. The tender calls for the supply of between 0.7 and 0.95 billion cubic meters of natural gas annually to the Cypriot market through two delivery routes, one that will begin supplying the resource in early 2016 and the other in no later than the second half of 2017. Initially concluding at the end of 2022, the tender includes a possibility of three one-year extensions through the end of 2025.

Although Cyprus has a natural gas reservoir of its own in the Eastern Mediterranean and further exploration is ongoing, the tender allows for a short-term supply of gas needed at the Vasilikos Power Station, according to DEFA. The Vasilikos Power Station is located on Cyprus’s southeastern coast, between Larnaca and Limassol and has an installed capacity of 640 megawatts. All in all, DEFA has received four proposals for the tender.

The offer of the Leviathan partners is contingent upon, among other things, a binding agreement occurring between the bidders and the Cypriot government no later than August 21, 2014, the TASE report said. Financial close on both the Leviathan reservoir’s development and the pipeline construction, as well as receipt of necessary Cypriot government approvals, would also need to occur by this point, the report said.

Houston-based Noble Energy owns a 39.66 percent portion of the 535-billion cubic meter Leviathan field, while Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67% and Ratio Oil Exploration owns 15%.

Australian hydrocarbon firm Woodside Energy has long been expected to acquire a $2.71b. chunk of the reservoir, but negotiations have been delayed due to disagreements with the Israeli Tax Authority.

If the partnership does pan out, however, Woodside will hold 25%, Noble Energy will own 30%, Delek Drilling and Avner will each own 16.93% and Ratio will hold 11.12%.

Appraisal drilling on the neighboring Cypriot Aphrodite reservoir concluded during the summer, indicating that the basin likely contains between 102 and 170 billion cubic meters of gas. Noble Energy holds a 70% share of this Cypriot reservoir, while Delek Drilling and Avner Oil Exploration each hold 15%.

“The Cypriots want to have a supplier that will provide an allin- one solution, namely including gas and any infrastructure if required,” Gina Cohen, a lecturer at the Technion’s Natural Gas and Petroleum Engineering Graduate Study Program and a consultant in the gas industry, told The Jerusalem Post on Wednesday.

This goal, she explained, could be accomplished by constructing a pipeline or by importing liquefied natural gas (LNG) via a floating storage regasification unit similar to the one off of Israel’s shores.

“The only pipeline option is from Israel, so in this aspect, Israel is in a unique position to be able to compete to supply this, although it will not necessarily be easy for any entity to meet this timetable, including not for Leviathan,” Cohen added.

At the Leviathan reservoir, exporting gas is necessary in order justify the huge expenses associated with the field’s development, Cohen stressed. The Cypriots are facing a similar quandary with their Aphrodite reservoir, and because they require less than 1 billion cubic meters per year of gas domestically – and it is not economically feasible to develop a field for such small volumes – they have chosen to import gas, she said.

Although the Israeli government approved a policy capping natural exports at 40% on June 23, 2013, the question remains to whom the Leviathan partners will export the gas that has not been reserved for the domestic market. A medley of export options are under exploration – such as a pipeline to Turkey with or without distribution to the European market, usage of a future Cypriot onshore LNG facility, usage of largely abandoned Egyptian LNG facilities, establishment of a floating LNG facility off of Israel’s shores and various combinations of all of the above.

Officials for the Delek Group and Noble Energy had no further comment on the Cypriot pipeline bid beyond what appeared in the TASE report, nor did they comment on what such an agreement might mean for future export deals.

When asked by the Post if the construction of a pipeline from Leviathan to Cyprus for small annual imports on the island might pave the way for larger opportunities, Cohen said that the Leviathan partners “may want to try get a foot in the door.” Supplying some gas from Leviathan to Cyprus could serves “as the first step to having this added option of piping more gas from Leviathan there for a potential future export facility,” she added.

In the meantime, however, Cohen said that the small sale of gas to Cyprus could show “goodwill” by Noble Energy and the Delek Group to the neighboring country. Additionally, the companies could potentially receive high prices for the gas from Cyprus, as the island is operating on very expensive oil to generate electricity, she explained.

“But building an expensive LNG facility to export gas to the wider world from Cyprus is – in my opinion – an altogether different issue,” Cohen stressed.

While Delek and Noble will want to monetize the gas in the Aphrodite field through an export facility, at this point more gas is required in order to justify constructing such a facility – either from Leviathan or from future discoveries off Cyprus’s shores, she said.

Yet Cohen approached even the current gas supply tender with caution.

“This is the third time that Cyprus has tendered to buy gas, and so far they have failed in each tender, so there is no guarantee this tender will succeed and/or if it does succeed, that Leviathan will win the tender.”

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