Cyprus Urges Israel to Export its Gas Via the Island

A memorandum of understanding was signed by Cypriot Energy Minister George Lakkotrypis, his Greek counterpart Yannis Maniatis and Israel's Silvan Shalom to cooperate over energy and secure Europe's energy supply. The three countries supported the EuroAsia Interconnector project, which aims to link the three countries with an electricity cable.

The president of Cyprus Nicos Anastasiades urged Israel to seriously consider exporting its gas via Cyprus. Talks over the building of an LNG terminal in Vassilikos Cyprus have currently reached final stages in Cyprus and a final decision is expected to be taken by December 2013. Anastasiades stressed on his government’s commitment to move ahead and finalise the project in order to turn Cyprus into an Eastern Mediterranean energy hub that would supply energy to Europe and East Asia. According to the Cypriot president, not only is Cyprus Israel’s ‘most stable partner’ in the region, but such a cooperation would also attract substantial foreign investment, ensure the region’s energy security and create thousands of jobs in the Eastern Mediterranean countries that would boost their economies. Anastasiades also said that energy could play a vital role in restoring the peace and stability of the region. He believes that the newly found riches should not lead to further conflict but instead be the source of a new regional cooperation.

Israeli Minister of Energy and Water Resources Silvan Shalom responded by saying that Israel sees Cyprus as a strategic partner and that the importance of the relationship between to two countries is not only of an economic nature but is also geopolitical and strategic.

The three-train LNG terminal could be expanded to up to eight trains if Cyprus’ neighbours decide to process their gas via the island and as more discoveries are made offshore Cyprus, said Charles Ellinas, CEO of Cyprus’ National Hydrocarbons Company. The Aphrodite field, estimated at 7 tcf,  is the first discovery made by Noble in Cyprus’ exclusive economic zone in late 2011. An appraisal drilling is being carried out by the Texas-based company with results expected to be announced by September. Noble’s partner, Delek Drilling and Avner Oil Exploration have signed an MoU with the Cyprus government to plan the onshore LNG gas terminal. France’s Total and the Italian-Korean consortium ENI-Kogas who are expected to start exploratory drilling in their respective blocks within Cyprus’ exclusive economic zone by 2014, have also expressed an interest to participate in Cyprus’ LNG terminal.

Israel is still debating how much gas to export and how much gas to leave at home. The Tzemach Committee originally recommended that Israel should reserve 47% of its 950 bcm resource base - the number was achieved on the basis that Israel’s gas demand will average an 18 bcm a year over the next 25 years (current consumption is 6.5 bcm a year)^[1]. The public expressed its discontent via a series of street protests. The cabinet then reduced the export quota to 40%. The decision still caused political uproar and opposition politicians petitioned Israel’s High Court of Justice against the cabinet’s decision. The case is still in the hands of the court and a final ruling is expected soon as a result of an open, public and transparent debate. It is only until then that it will become clearer whether Israel will decide to join forces with the Cypriot island to monetize its offshore riches or whether it will decide to go solo instead.