The diversification of Europe's sources of natural gas is an important opportunity for taking advantage of the gas discoveries in Israel. The energy ministries of Israel, Cyprus, Greece, and Italy have been conducting frequent talks with the European Commission DG Energy about exporting gas from Israel to Europe for the past six months. European Commissioner for Climate Action and Energy Miguel Arias Canete is visiting Israel today in order to attend an event tomorrow in Tel Aviv with Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz, Italian Minister of Economic Development Carlo Calenda, Greek Energy and Environment Minister Giorgos Stathakis, and Cypriot Minister of Commerce, Industry and Tourism Yiorgos Lakkotrypis. The background to the meeting is a report that the European Commission has withdrawn its opposition to building two additional gas pipelines for transporting gas from Russia to Europe.
According to the Israel Ministry of National Infrastructure, Energy, and Water Resources, the purpose of tomorrow's event is to present the international partnership initiated by Israel for construction of a 1,300-kilometer undersea gas pipeline, the longest in the world, from the area of the Leviathan reservoir, passing through the Cypriot gas reservoirs, Cyprus, Crete, Greece, and from there to Italy. An initial survey estimated the cost of the undersea segment of a pipeline with an annual capacity of 12-16 BCM at $5.7 billion. As in the case of the Nord Stream, it is possible that if additional large scale gas fields are discovered in Israel and Cyprus, it will be worthwhile laying two parallel pipelines capable of transporting 30 BCM of gas a year.
The Achilles heel of exporting Israeli gas to Europe is the high cost of the gas at the reception point in Europe. This cost is estimated to be at least $7 per heating unit, $2.50 more than the price of Russian gas. Another difficulty is the undersea route, which reaches a depth of 3.3 kilometers, and volcanic activity on the seabed between Cyprus and Greece. This feature is liable to cause damage to pipelines that will be very difficult to repair.
Tomorrow's visit is taking place in the shadow of the European Commission DG Energy announcement that it is withdrawing its opposition to laying two more pipelines in the Baltic Sea between Russia and Germany with an annual capacity of 55 BCM, at an estimated construction cost of €9.9 billion. The project, called Nord Stream 2, is strongly opposed by Poland, Ukraine, and the Baltic Republics. Poland and Ukraine are concerned about the loss of the commission paid to them by Russia for the gas passing through their territory to Western Europe, while the Baltic states are alarmed about Moscow accumulating too much power. For its part, Russia is saying through its state-run RT network that the projects is strictly commercial in essence.
Published by Globes [online], Israel Business News - www.globes-online.com - on April 2, 2017
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