The energy crisis, skyrocketing natural gas prices, and the EU’s new energy policy, aiming to end the continent’s reliance on Russian gas as soon as possible, are developments creating bigger prospects for the East Med pipeline, whose development could upgrade Greece’s role in the energy sector as well as geopolitically.
Importantly, higher gas prices have boosted the feasibility of the East Med pipeline project, a prospective 2,000-km pipeline planned to carry natural gas to Europe via Greece, Cyprus, Israel and Italy, as was supported yesterday by Edison CEO Nicola Monti.
The US withdrew its support for the project in January, citing technical and commercial sustainability concerns. Many analysts have forecast gas price levels will remain elevated for an extended period, which could make East Med a profitable investment for companies that construct and operate the pipeline.
Earlier this week, the European Commission announced its ambitious Repower EU roadmap, prioritizing the search for alternative natural gas sources and supply routes as a means of ending the continent’s reliance on Russian gas.
East Mediterranean gas deposits are well positioned, close to European markets. It remains unclear as to whether it would be more beneficial to transport these gas quantities in the form of LNG or via the East Med pipeline.
Given the bolstered bargaining power of gas producers and LNG exporters, the EU could be better off pursuing a pipeline solution. Also, Shell’s forecast of an LNG shortage in international markets from 2025 onwards should be kept in mind.