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Israel-Italy natural gas pipeline MOU signed, 2025 startup targeted

Tel Aviv (Platts)--6 Dec 2017 924 am EST/1424 GMT


The energy ministers of Israel, Cyprus, Greece and Italy have signed a memorandum of understanding for constructing an underwater pipeline from Israel's Leviathan natural gas field to Italy via Cyprus and Greece, Israel's Energy and Water Ministry said late Tuesday.

The ministry said the project could be up and running by 2025.

The MOU was signed by the four ministers in Nicosia following a meeting which also included senior European Union representatives.

"This is a major step in realizing this project and it will turn Israel into a major player in the European energy market," predicted Israel's Energy and Water Minister Yuval Steinitz.

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He said that the project would allow Israel to eventually export gas to Greece, Italy and other European countries.

The proposed project calls for construction of a 2,100 km pipeline to deliver gas from Israel's Leviathan field, now in the process of being developed, and from the yet to be developed Aphrodite field off southern Cyprus.

The Energy and Water Ministry statement said the four ministers plan to meet again to finalize a final agreement, which should be signed in 2018.

IGI Poseidon has estimated the cost of building a pipeline with a 12-16 billion cubic meter/year capacity at $6 billion.

Israeli energy industry sources said that if further offshore gas deposits are discovered an additional pipeline could be built to double capacity.

The first stage of the development of Israel's Leviathan field is currently underway and calls for production of 12 Bcm/year for the domestic market, Jordan and the Palestinians.

The cost of the first phase is put at $3.75 billion and is due to be completed at the end of 2019. The second stage would increase capacity to 21 Bcm/year exclusively for export.

Meanwhile, Israel's Energy and Water Ministry recently completed a tender for 24 offshore blocks.

Two bids were received from Greece's Energean, which already has rights to Israel's Karish and Tanin fields and a consortium of Indian companies including ONGC, Videsh Bharat PetroResources, Indian Oil Corp and Oil India.

The ministry is planning another bidding round next year.

--Neal Sandler, newsdesk@spglobal.com
--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com




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