The Ukrainian-Russian crises created an unexpected opportunity to the East Mediterranean to supply Europe with gas and LNG. The high gas prices in Europe, makes the gas of the East Med very competitive and is seen as a potential key supply source for Europe as it looks to replace Russian gas. European gas prices are presently higher than anywhere else globally and are still trading at a premium to Asian spot gas prices.
Among the potential players is the US Oil Giant Chevron which has a large gas position in the East Mediterranean following its acquisition of Noble Energy fields in Israel and Cyprus in 2020. It operates the producing Leviathan and Tamar fields in Israel and is also operator of the license containing the Aphrodite discovery offshore Cyprus. Gas from Leviathan and Tamar is currently used to supply both the domestic Israeli market and export markets in Egypt and Jordan. Chevron is was looking at several options for monetizing those gas resources in the form of LNG.
The European Commission in June signed a memorandum of understanding with Israel and Egypt on the potential for Israeli gas to be piped to Egypt and then liquefied for supply to Europe. Another option for Chevron is a floating LNG liquefaction, which could be a good option as well.
Interest in East Mediterranean gas has spiked since the Russian invasion of Ukraine as an option for supply diversification and a way to help bring down prices.
But with LNG the response time is long as it takes time for new projects to reach final investment decision and then be developed.
Other oil majors are giving the East Med gas a priority in their future strategies, which will help boost swiftly the further development of the gas fields in Egypt, Cyprus, Israel and Lebanon. The proximity of these fields to Europe to satisfy a huge demand to the old continent is very helpful. Already oil companies are discussing seriously all options for shipping the gas to Europe including FLNG. Thus, the chief of the Italian Oil Major ENI announced that Italian his company will fully replace Russian gas by 2025 by using additional resources from the eastern Mediterranean, Reuters reported during a Gastech 2022 conference in Milan this week.
The Rome-based multinational oil and gas company, with interests in waters off Cyprus as well, had said in an April statement it would pump up the extra gas by this fall, adding up to 9 bcf of Algerian gas by 2023-24.
Cypriot Energy Minister Natasa Pilides, who also attended the conference, has been making the case for the Republic of Cyprus, saying the island’s offshore gas and latest discoveries could strengthen both Europe’s energy security and energy transition.
Pilides, who also sat on a ministerial panel titled “Unlocking and accelerating the natural gas potential of the Eastern Mediterranean basin,” has said that new gas discovered in the Cronos-1 well, in Block 6 of Cyprus’ exclusive economic zone, EEZ, could contribute to the revival of interest in the eastern Mediterranean energy corridor envisioned by the countries of the region.
The Cypriot minister mentioned during Gastech 2022 that floating liquefied natural gas “is one option, or the gas could go to Egypt.”
The Cypriot minister told delegates at the event that Nicosia had “very positive messages” from Eni as well as the Italian company’s French partner Total.
ENI, which operates the huge Zohr gas field in Egypt’s EEZ, reportedly has been looking to optimize its exploration campaigns in existing blocks as well as newly acquired acreage in the Nile Delta, Eastern Mediterranean and Western Desert regions.
Egypt has persistently emerged as the most likely hub best positioned to provide short-term exports to Europe, with Nicosia seeking to benefit from Cairo’s facilities and infrastructure that could receive Cypriot gas.
Minister of Petroleum and Mineral Resources Tarek El Molla held talks with Cypriot Minister of Energy, Commerce and Industry Natasa Pilides on the sidelines of his participation at the Gastech Exhibition and Conference 2022 in Milan, Italy.
During the meeting, the two ministers discussed joint cooperation projects and the conditions of the oil and gas market in light of the challenges that they face.
The two ministers highlighted the importance of continuing coordination and constructive cooperation between both sides in light of the increasing importance of natural gas, especially during the energy transition. They also discussed what task forces on both sides have accomplished to support the bonds of cooperation under the umbrella of the East Mediterranean Gas Forum (EMGF).
During his speech, El Molla noted that the east Mediterranean region became a trusted source of natural gas to the European markets. He added that the trilateral memorandum of understanding (MoU) that was signed between Egypt, Israel, and the European Union for trading and transporting natural gas is one of the most successful activities for the forum.
The important news from these latest developments is that the companies are moving seriously to make things happen and this is always much more efficient than the governments, which role should be offering the needed support to facilitate a swift implementation of the planned projects.