East Med 1900-km-long pipeline will export Israeli offshore natural gas to Europe in project estimated at almost $7 billion.
By Paul Shindman, World Israel News
The government on Sunday approved the advancement of the Eastern Mediterranean gas pipeline project, a massive 6 million Euros ($7 billion) venture that will carry gas from Israel’s offshore oil fields to Europe, the news website The Marker reported.
Following two years of negotiations, in 2018 Israel signed an agreement with Italy, Greece, and Cyprus to lay the mostly underwater gas pipeline that will traverse a distance of 1,900 kilometers (1,242 miles).
Energy Minister Yuval Steinitz, who promoted the project, said that “the approval of the framework agreement in the government is another historic milestone in our efforts to make the State of Israel an energy exporter – a move that will generate tens of billions in revenue for the state and its citizens in the coming years.”
Although still in the initial planning stages, the pipeline is expected to generate a new gas supply route from Israel and Cyprus to Europe in order to reduce European dependence on Russian gas. The project gained momentum after Turkey, the largest gas consumer in the region, balked at purchasing the gas from Cyprus, with which it is in conflict, and also from Israel, the report said.
Exporting gas from the eastern Mediterranean to Europe is an ambitious project, whose economic viability is still in doubt in light of high cost and currently depressed energy gas prices due to the corona pandemic. The main challenge is the economic one: low gas prices may make it difficult to market gas in Europe at competitive prices. That means the cost of infrastructure, treatment facilities and transmission pipelines require the sale of gas at a relatively high price – probably $ 8-9 per unit of heat – while gas prices in Europe have now dropped to $ 1.7 per unit of heat.
The project also faces geophysical challenges of passing through very deep water, about 3 kilometers (1.8 miles) deep, in an area know for its seismic activity. Despite the challenges, the lack of customers in Israel and Cyprus for gas discovered in the eastern Mediterranean is now pushing the project ahead.
A feasibility study of the project, which enjoys EU support, should be finished by 2021, and a final decision to approve the pipeline is expected by 2022 with pipeline completion currently scheduled for 2025.