Eastern Mediterranean countries have agreed to create a regional gas market in an effort to transform their part of the Mediterranean into a major energy hub.
Egypt, Cyprus, Greece, Italy, Israel, Jordan, and the Palestinian Territories founded on January 14 a forum to ensure supply and demand, cut infrastructure costs and offer competitive prices.
The East Med Gas Forum (EMGF), which will be based in Cairo, right now is in a transitional period, searching for synergies and open to ideas. This was the first meeting of this body and it is still to be decided what exact form it takes. The idea maybe is to turn it into an actual new international organisation. The members at the moment are the founding Member States while international organisations such as the European Union, will only have observer status.
Natural Hydrocarbons Company CEO Charles Ellinas told New Europe on January 16 that EMGF is a welcome development. “Even though it is a political arrangement, it can but only contribute to cooperation in the region. Natural gas could be crucial to the future of East Med countries and any such initiatives that could promote its development can only be helpful. All countries around the East Med can benefit,” Ellinas said.
European Commission representatives also attended the meeting on January 14 as observers.
In addition to its founding members, EMFG eventually could be joined by Lebanon and even Turkey, Ellinas said, noting that should be the ultimate goal, but it is not feasible at present.
Gas export projects could benefit from such cooperation, especially with regards to ensuring a conducive, regulatory environment, putting in place the required intergovernmental arrangements and removing political risk, he said, stressing that they must be commercially viable.
“This is not under the control of politicians. It is market driven. And this is where the challenge lies. With global economic growth slowing down and ample global supplies, gas prices are trending even lower. This is a challenge for expensive-to-develop East Med gas projects,” Ellinas said.
He explained that gas exports from Egypt’s liquefied natural gas (LNG) plants, Idku and Damietta, are possible because liquefaction costs are low. “But other projects face headwinds. This includes the East Med gas pipeline. It remains a political project and even though the formation of EMGF can provide it with strong and concerted political support, it is not enough,” Ellinas said.
The project still needs to secure buyers in Europe for its gas and companies prepared to invest in it, Ellinas argued. “That hat can happen only if it can deliver gas at prices that can compete with existing low prices in Europe,” he said.
According to the Greek Energy Ministry, EMGF will deepen the partnership and strategic dialogue between the countries involved, increase the cooperation in advancing joint infrastructure projects to transport regional natural gas, commercial development of natural gas reserves and increase the cooperation between countries that produce natural gas and consumers.
Greek Energy Minister Giorgos Stathakis said at the ministers meeting in Cairo on January 14 that natural gas plays a strategic role in the low-carbon energy transition of the Greek economy. Stathakis said the Greek government supports the liberalisation and strengthening of the Greek natural gas market.
Stathakis also said that the Greek market would connect with the markets of the Balkans, Europe and East Mediterranean through major infrastructure projects like the Trans Adriatic Pipeline (TAP), the Interconnector Greece Bulgaria (IGB) and the East Med pipeline. He said the government strives to make Greece not only an energy hub but also a possible natural gas producer if there are successful new discoveries in the Ionian Sea and South of Crete.
The latest discoveries of hydrocarbons in the East Mediterranean can help Europe diversify its natural gas resources, Stathakis said, adding: “The Forum will advance the strategic dialogue and cooperation of all the countries in the region in order to reach that goal.”
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