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Exxon potential gas find in East Med boosts EU pipeline hopes

Israel, Cyprus, Greece and Italy are expected to sign an intergovernmental agreement for the EU-backed EastMed pipeline project in March.

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Israel, Cyprus, Greece and Italy are expected to sign an intergovernmental agreement for the EU-backed EastMed pipeline project in March to transport natural gas from Israel’s Leviathan field and Cypriot fields via Crete to Italy, and then onward to the rest of Europe.

According to the European Commission, EastMed is a PCI (Project of Common Interest) in the current 3rd union list of PCIs. They have received a Connecting Europe Facility (CEF) grant to carry out a number of studies. “They applied to the 4th list the preparation of which is on-going. Adoption is foreseen by the Commission in late 2019,” a Commission spokeswoman told New Europe on February 22.

Meanwhile, the exact announcement date for the signing of the intergovernmental agreement is expected to follow an announcement reportedly this week by US energy giant ExxonMobil and Qatar Petroleum of the results from two-test drills offshore Cyprus for hydrocarbons. Media has speculated that ExxonMobil could announce a “sizeable find” similar to Egypt’s Zohr in Block 10 following exploration drills at wells Delphine-1 and Glafcos-1 in Cyprus’ Exclusive Economic Zone (EEZ).

After working the Delphine-1 well from November, the Stena Icemax drilling rig relocated to a second well, Glafcos-1, in early January also in Block 10, which ExxonMobil and Qatar Petroleum have a license to explore and exploit, Cyprus media reported.

Turkey has opposed drilling by foreign energy companies off Cyprus and Turkish President Recep Tayyip Erdogan has reportedly warned international oil and gas companies not to “overstep the mark” in disputed waters off the Cypriot coast or face retaliation. Italian energy major ENI had to abandon a planned exploration for gas south of Cyprus in February 2018 after Turkish naval ships blocked the way of a drillship. ENI is developing the major Zohr gas field offshore Egypt where Russian oil major Rosneft holds a 30% stake.

Egypt’s Petroleum and Mineral Resources Minister Tarek El Molla, in a recent interview with the Cyprus News Agency (CNA), said there are many options for Eastern Mediterranean gas exports. Regarding the EastMed project, the minister said that the feasibility study for the project would take up to two years, “which in itself is a luxury the region can’t afford anymore”. He argued that Egypt is the best choice both economically and politically.

Existing facilities and infrastructure for liquefied natural gas (LNG) processing and storage provide Egypt with a competitive advantage, as each existing facility will cost about $10 billion to be realised, thus making it the most economical option, Molla was quoted as saying.

The EastMed pipeline is expected to diversify gas supplies and routes to Europe, something that reportedly runs counter to the interests of Russian and some Arab gas suppliers. Russia has also recently boosted its regional cooperation with Turkey.

Turkey’s Foreign Minister Mevlut Cavusoglu was quoted as saying on February 21 that his country would begin drilling for oil and gas with two ships near Cyprus in coming days. “In the coming days we will start drilling with two ships around Cyprus,” Cavusoglu was quoted as saying in a speech to a business conference in western Turkey’s Aydin province, Reuters reported.

“Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing at all can be done in the Mediterranean without Turkey, we will not allow that,” Cavusoglu said.

Turkey reportedly launched its first drillship “Fatih” in October to drill off the coast of Turkey’s southern Antalya province. It said a second ship that it purchased would operate in the Black Sea, but was diverted to the Cyprus area.

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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