Aiming to transform the Eastern Mediterranean into a regional energy hub, Israeli and European officials signed a joint declaration on Monday to promote construction of the world’s longest subsea natural-gas pipeline.
“This is the beginning of a wonderful friendship between four Mediterranean countries – Israel, Cyprus, Greece and Italy,” National Infrastructure, Energy and Water Minister Yuval Steinitz said at a press conference in Tel Aviv. “This is going to be the longest and deepest subsea gas pipeline in the world. It’s a very ambitious project.”
The unprecedented $6-7 billion plan involves building a privately funded 2,200- km. deep-sea pipeline linking Israeli and Cypriot gas to the shores of Greece and Italy.
After a recent feasibility study indicated the daunting project is technically possible, the energy ministers of the four countries and the energy commissioner of the European Union came together Monday for their first quadrilateral meeting to promote the plans. If all proceeds as expected, the ministers hope to see gas flowing through the pipeline by 2025.
“We strongly support the development of the region as a future gas supplier,” said European Commissioner for Climate Action and Energy Miguel Arias Cañete. “It is clear that the potential resources of this region are very significant.”
The EU currently receives its gas primarily from Russian and North Sea reservoirs – the latter of which are rapidly depleting. Europe could provide an attractive outlet for Eastern Mediterranean gas for decades to come due to its stable market for investors and geographical vicinity to the supplier, Cañete explained.
“We support the East Med project and look forward to the rapid completion of the study phase,” he said.
Cañete expressed his confidence that the plans would meet commission requirements and receive further financial backing for continued research but acknowledged that the European Commission cannot yet make definite commitments, Because the pipeline is considered an EU Project of Common Interest, the European Commission co-financed the project’s feasibility study, which was conducted by gas infrastructure developer IGI Poseidon – a 50-50 joint venture of Italian energy company Edison and the Greek DEPA Group.
IGI Poseidon has already committed millions of euros to studying the project in hopes that a final investment decision can be reached by 2020, according to IGI Poseidon CEO Elio Ruggeri.
Italy, in particular, he stressed, will have a shortage of gas supply contracts starting that same year, so “opening a new route adds reliability of supply to the Italian and European market.”
IGI Poseidon is open to potential new partners, though the company remains the project owner until a final investment decision occurs, he explained.
Italian Economic Development Minister Carlo Calenda said the pipeline is a priority project for his country as Italy works to phase out coal and build up a secure natural gas supply, “We think this project in the next decades can be a real pillar of our energy strategies,” he said. “Now, we need to speed up the project to realize it.”
Calenda said the pipeline plans will be presented at the G7 Summit in Sicily next month as a “clear example of how we can diversify the supply in Europe and in Italy.”
Echoing Calenda’s remarks, Greek Environment and Energy Minister Giorgos Stathakis emphasized the importance of not only diversifying gas sources, but also ensuring the security of supply.
“As a transit country and because of its geographical position, obviously, Greece has a central role in this diversification process,” Stathakis said.
“The next steps in the development of the project will need the full support of the ministers and the commission,” he continued.
“This meeting today is a major step toward this direction.”
As both a transit country and gas producer for the potential pipeline, Cyprus also has much to gain from partaking in this ambitious project, according to Cypriot Energy, Commerce, Industry and Tourism Minister Yiorgos Lakkotrypis.
“We consider the Eastern Mediterranean pipeline as a manifestation of our efforts over the past few years,” Lakkotrypis said. “We feel that this project can actually showcase the potential of the East Med to create another corridor into the European markets.”
Despite the expensive and complicated nature of the project, the ministers expressed confidence that private companies such as IGI Poseidon would deem the plans an attractive investment.
After a recent trip to the US, which included meetings with representatives from several large investment banks, Steinitz recalled that many were interested in this project and other potential gas developments in Israel and Cyprus.
“Especially when they heard that the European energy commissioner was behind it [and] ready to give some assistance, that was very helpful,” he said. “This is going to be a private business project, but, first, the four governments should agree on the basic terms and regulatory issues.”
Describing the pipeline as a “top priority for the four countries,” Steinitz said the partners decided on Monday to order their directors- general to meet every 60 days with the goal of shaping a quadrilateral memorandum of understanding by the end of 2017.
“It’s going to be a wonderful and very beneficial Mediterranean partnership,” he addedץ