Cyprus mulls options for East Med gas exports

Cyprus is considering different options for bringing gas supply from the East Mediterranean basin to demand areas.

One of the long-discussed options, the Eastmed gas pipeline — an EU project of common interest — poses challenges, but the markets and investors will decide its future, Cypriot energy minister Giorgos Papanastasiou told Argus.

Papanastasiou was referring to scepticism expressed by Italian firm Eni's chief executive Claudio Descalzi towards the project during a parliamentary hearing on the Eastmed pipeline earlier this month.

During his address to the lower house of the Italian parliament, Descalzi stressed that LNG infrastructure instead of the Eastmed project seems a more flexible option for market participants.

The chief executive argued that an agreement between Israel, Cyprus and Greece over the project would not be sufficient "without Turkey taking part in it", but that there are "disputes that are difficult to settle between Turkey and Cyprus".

"This is Mr Descalzi's judgement with which we do not agree but we respect," Papanastasiou said, highlighting that Italy's parliament decided to continue talks with involved parties on the project.

Cyprus is now working with Israel on another approach, which foresees a pipeline link that will connect gas fields in the Mediterranean basin with a proposed LNG export facility in Cyprus.

This approach has the advantage that "the gas can be sent anywhere where there are regasification facilities", Papanastasiou said. Such a project would "understandably" require some long-term contracts and bears an additional cost for liquefaction, but traders have already expressed an interest in buying all the LNG output, he said.

Traders have access to different markets and can move the gas to areas where there is demand at any given time, Papanastasiou said.

Eastmed option still on the table for Italy

The Italian parliament's foreign affairs committee approved a resolution last week which commits the Italian government "to continue the appropriate dialogue with the countries involved in the Eastmed project" in order to assess its development, despite Descalzi's critical assessment.

The Italian parliament sees the project as a way to further diversify the country's gas supply and reduce its dependence on Russian flows. The project can also "promote the renewable potential of the East Mediterranean" by allowing exports of green gases such as hydrogen from the region in future, according to the resolution.

The document stressed the "crucial" role of the East Mediterranean in Italy's energy mix and "global political and strategic balances". "There is a process of moderation in Turkish foreign policy towards Israel" which could become "a prelude to a sharper de-escalation of tensions between the Ankara and Athens governments", according to the Italian parliament.

By Eleni Charisi & Alexandra Vladimirova