EastMed pipeline project to fend off Turkish hegemony bid

If completed, the project would supply the European Union with 4% of its annual gas needs — 10 billion cubic metres per year — by 2025.

Sunday 12/01/2020
Greek Prime Minister Kyriakos Mitsotakis (C), Cypriot President Nicos Anastasiadis (L) and Israeli Prime  Minister Binyamin Netanyahu pose for a photograph ahead of a  signing ceremony in Athens, January 2. 	                                    (AP)
Game changer. Greek Prime Minister Kyriakos Mitsotakis (C), Cypriot President Nicos Anastasiadis (L) and Israeli Prime Minister Binyamin Netanyahu pose for a photograph ahead of a signing ceremony in Athens, January 2.

In signing a natural gas pipeline deal that could be a game changer for Eastern Mediterranean gas producers and European energy markets, the Greek, Cypriot and Israeli governments are squaring off against Turkey’s efforts to press its hegemonic reach into the Eastern Mediterranean region and beyond.

Aside from drawing the ire of Ankara and Moscow, the EastMed pipeline deal is not without financial and technical challenges and needs the political and economic will of other players to succeed.

In a signing ceremony January 2 in Athens, Greece, Cyprus and Israel agreed to build a $6.7 billion pipeline that is to stretch 1,900km from Israeli and Cypriot gas fields in the Eastern Mediterranean to Italy via Greece.

If completed, the project would supply the European Union with 4% of its annual gas needs — 10 billion cubic metres per year — by 2025, enabling European countries to diversify from their heavy reliance on Russian gas supplies. That pipeline volume could potentially double through new compression technology.

The pipeline would link the Leviathan field in Israeli waters to the Aphrodite field in Cypriot waters, transporting that gas to Greece and then on to Italy. Supplies could continue to Central and Western Europe, using existing pipeline networks.

The Leviathan field was discovered in 2010 about 120km off Israel’s coast and is considered one of the world’s largest gas finds with estimated reserves of 16 trillion cubic feet (Tcf).

Environmental concerns raised over the possible toxicity of emissions from the field’s production platform located 10km offshore delayed the start-up of Leviathan but gas from the field officially began flowing in late December.

The Aphrodite gas field, 30km north-west of Leviathan in the Cypriot Exclusive Economic Zone, was discovered in September 2011 and is estimated to contain more than 4 Tcf of gas. Production is expected to start in 2024-25, following delays in renegotiations of a production-sharing agreement between the field’s stake holders and the Cypriot government.

Some 1,300km of the EastMed pipeline would run in subsea depths of up to 3,000 metres.

This will prove to be a considerable technical hurdle to overcome for developer IGI Poseidon — a 50/50 joint venture of Greek state gas supply company Public Gas Corporation of Greece and Italian energy firm Edison. IGI Poseidon also faces the challenge of securing the funding for the project, which is to be privately sourced. The consortium said in December it would reach a final investment decision by 2022.

Cypriot President Nicos Anastasiades, who attended the Athens ceremony alongside Greek Prime Minister Kyriakos Mitsotakis and Israeli Prime Minister Binyamin Netanyahu, said the pipeline agreement “supports a common aim for peace, security and stability in the particularly vulnerable region of the Eastern Mediterranean.”

The signing of the EastMed pipeline project came just weeks after Turkey and Libya agreed to a controversial memo of understanding demarcating maritime zones in the Eastern Mediterranean, posing a major obstacle for the proposed line because it would have to cross through the newly established Turkish-Libyan economic zone.

Ankara is strongly opposed to the EastMed pipeline project. Turkey says it is being intentionally excluded from the wealth potential of gas developments by its rivals in the Eastern Mediterranean.

Turkish Foreign Ministry spokesman Hami Aksoy said: “Any project disregarding Turkey, which has the longest coastline in the Eastern Mediterranean, and the Turkish Cypriots, who have equal rights over the natural resources of the island of Cyprus, cannot succeed.”

Ankara is equally concerned that its influence in meeting European energy demand would be diminished by the EastMed project. The European Union imports 40% of its gas needs from Russia, with Turkey the vital transit route for most of those supplies.

The signing of the EastMed pipeline accord was notable for the absence of Italian representation, which is a significant factor given that it will play an important role as both a market for the gas supplies and a transit country for volumes moving elsewhere in Europe.

Italian Minister for Economic Development Stefano Patuanelli sent a letter to his Greek counterpart, Kostis Hatzidakis, in support of the project but the pipeline agreement won’t be concluded until Italy signs off on it.

An Italian media report suggested there was internal division within the coalition parties of the recently formed Italian government over the merits of the EastMed pipeline versus the Trans Adriatic Pipeline project that is to begin carrying Azeri gas across Turkey and Greece to Italy and the broader European market this year.

The European Union has actively supported the EastMed pipeline to diversify Europe’s energy supplies and fast-tracked the permitting process for the project.

That being said, an EU spokesman in a Greek One TV channel interview emphasised that, while the January 2 agreement was a welcome development, “the pipeline should be seen as one option of tapping EastMed gas supplies for the European Union alongside shipping it to the European Union by tankers in the form of LNG [liquefied natural gas]. It’s important to explore further the costs and benefits of both main options.”

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