egypt

Egypt appears keen to accelerate plan for natural gas pipeline to Greece

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Egypt’s minister of petroleum and mineral sources Tarek El-Molla (photo, right) has underlined the potential of energy-sector collaboration between Cairo and Athens and the significance of an MoU signed by Egypt and Greece for joint development of energy infrastructure.

The Egyptian minister was speaking at the annual Egypt Petroleum Show, Egypts, before 2,000 attendants from 65 countries, among them top-ranked officials from multinational energy giants.

Agreements already signed between Egypt and Greece pave the way for the development of a subsea natural gas pipeline linking the two countries, El-Molla noted.

According to diplomatic sources, this special mention by the Egyptian minister highlights his country’s interest to push ahead with the natural gas pipeline project, which, on the one hand, would facilitate Egyptian natural gas exports to the EU and, on the other, help the continent further diversify its energy sources.

A further increase in activity between Athens and Cairo for an acceleration of procedures leading to the gas pipeline project’s development has not been ruled out by the diplomatic sources.

In addition, the potential of a subsea electricity grid interconnection between the two countries also seems to be gaining momentum, the diplomatic sources noted. Greek power grid operator IPTO and Egyptian counterpart EETC are collaborating on this latter project.

The current Russia-Ukraine problem once again highlights Europe’s need for further energy source diversification. Russia, through gas giant Gazprom, covers approximately one third of European natural gas consumption in the household and business sectors.

 

Emergency energy plan shaped should Russia invade Ukraine

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The government’s emergency energy sufficiency plan should a Russian invasion of Ukraine occur over the next couple of months and interrupt Russian gas supply to Greece, a worst-case scenario considered unlikely yet not impossible, includes at least three additional LNG shipments from Algeria and Egypt, a switch to diesel powering of natural gas-fueled powered stations, wherever this is technically possible, as well as increased inflow of natural gas from Azerbaijan through the TAP route.

The country’s energy planning authorities continue to believe there is no cause for alarm, despite being under no illusions that the quantity of Russian gas supply received by Greece could be fully replaced in the event of a disruption.

External factors beyond the control of the country’s energy officials will be crucial should  Russian forces invade Ukraine. The duration of any conflict, weather conditions over the next couple of months, as well as the availability of additional gas orders, in a market where demand levels are already breaking records, are all crucial factors that would shape the severity of yet another crisis.

Energean to ramp up natural gas production in Egypt

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Energean’s plans to develop and increase natural gas production from its concession areas in Egypt, have been discussed during a meeting in Cairo between H.E. the Minister of Petroleum and Mineral Resources of Egypt Tarek El Molla and Energean CEO Mathios Rigas.

During the meeting, Mr. El. Molla and Mr. Rigas discussed the company’s plan to link gas discoveries in North Idku and North El Amriya to the existing production facilities in Abu Qir, offshore Alexandria.

Mr. El Molla stressed the importance of the continuous cooperation and coordination between the ministry and international companies to speed up the implementation of new projects, aimed at increasing Egypt’s oil reserves and production.

“Energean is one of the foreign partners who invested in Egypt in the recent years after its acquisition of Edison’s assets worldwide”, the Minister of Petroleum and Mining Resources said. He added that the company has great potential and seeks to pump new investments to maximize the exploitation of gas resources from the Mediterranean region, which is a major center of its operations.

Mr. Rigas confirmed that Energean seeks to increase investments in natural gas development projects in the Mediterranean region. The company also focuses on implementing a plan for exploration and production activities in the deep layers using the latest technologies.

It should be noted that, in 9M 2021, Energean’s production from the Abu Qir fields averaged 4.3 million cubic metres and 4,000 barrels of oil (totaling app. 30,000 barrels of oil equivalent) per day. Production from the North Idku and North El Amriya fields is expected to commence in 2H 2022 and expected to average app. 2.2 million cubic metres and 2,000 barrels of oil (totaling app. 15,000 barrels of oil equivalent) per day.

 

DEPA Commercial, Egypt’s EGAS negotiating gas deal

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Gas company DEPA Commercial is negotiating an agreement with state-controlled Egyptian gas firm EGAS for LNG supply, just weeks after Greek and Egyptian officials established a joint technical committee as a first step for the development of a Greek-Egyptian electricity grid interconnection.

Energy dealings between the two countries will be discussed at a meeting today in Cairo between Greek energy minister Kostas Skrekas and Egypt’s minister of petroleum and mineral resources Tarek El-Molla. Also, DEPA chief executive Kostas Xirafas will meet with the EGAS administration.

The Greek energy minister is also taking part in today’s 6th EastMed Gas Forum, in Cairo, along with his counterparts from Egypt, France, Israel, Italy, Jordan and the State of Palestine.

An announcement of a Greek-Egyptian gas agreement, following today’s sessions, has not been ruled out.

The prospect, promising DEPA Commercial greater diversity of sources and lower costs for its customers, has acquired greater significance as the EU finds itself embroiled in an intensifying energy crisis.

Greece and Egypt have also established a joint Exclusive Economic Zone, the recent agreement for the development of a Greek-Egyptian electricity grid interconnection emerging as a first step.

Greek-Egyptian technical committee formed for grid link

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A joint technical committee has been formed as a first step for the development of a Greek-Egyptian electricity grid interconnection.

The working group’s formation was included in a Memorandum of Cooperation signed in mid-October by Greek energy and environment minister Kostas Skrekas and Egypt’s electricity and renewable energy minister Mohamed Shaker.

The establishment of technical specifications required by the grid interconnection project to ensure the project’s interconnectivity with the Geek and Egyptian grids is a key priority for the technical committee.

The committee will also explore the possibility of having the project included on the Projects of Common Interest (PCI) list, enabling EU funding support.

The interconnection project, whose development will entail the installation of an underwater cable linking the two countries, will exclusively facilitate transmission of renewable energy.

 

IPTO seeking active role in Cyprus, Israel, Egypt grid interconnections

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Power grid operator IPTO is seeking an active role in the grid interconnections to link Greece with Cyprus and Israel, as well as Egypt, the company’s chief executive Manos Manousakis told yesterday’s Power and Gas Supply Forum, an online event staged by energypress.

Responding to questions as to whether IPTO is considering to acquire an equity stake in these projects, Manousakis noted that the operator’s role is to ensure the interoperability of the Athens-Crete and Crete-Cyprus power grid interconnections, a commitment made by the Greek government back in October, 2019.

The European Commission, engaged in ongoing exchange with IPTO in an effort to understand the level of maturity of these grid interconnection projects and, primarily, the interoperability of its systems, has mentioned that Brussels would be interested in the equity involvement of a European TSO, Manousakis informed.

Other priorities at IPTO include upgrading and expanding Greece’s grid interconnections with neighboring countries, which would boost cash flow in the domestic energy market through electricity exports, the chief executive noted.

A tender for the development of the local segment of a second transboundary grid interconnection linking Greece and Bulgaria, from Nea Santa, northeastern Greece, to Bulgaria’s Maritsa area in the south, will be completed this year, Manousakis informed.

New interconnections with Albania and North Macedonia are also being examined at present, he noted.

In addition, IPTO is close to signing a cooperation agreement with Italian operator TERNA for the development of a second Greek-Italian grid interconnection.

Furthermore, plans for an upgrade of the Greek-Turkish interconnection, a project linking the European and Turkish transmission systems, are also maturing, the IPTO chief informed.

 

 

Gas developments in the East Med

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The international oil companies (IOCs) are still reeling under the impact of low oil and gas prices and massive losses and asset write-offs during 2020. ExxonMobil, under increasing pressure, is considering further spending cuts and even a shake-up of its board.

The path to full recovery will be slow and at the end of it, in 2-3 years, the IOCs will be different, placing more emphasis on clean energy and renewables.

In the meanwhile, around the East Med, Egypt is forging ahead. It has signed a new exploration agreement with Shell for an offshore block in the Red Sea. This is in addition to the 22 agreements signed during 2020 that included major IOCs such as ExxonMobil, Chevron, Shell, BP, Eni and Total. Moreover, EGPC and EGAS are planning to offer onshore and offshore exploration blocks for bidding in February.

This continuing activity led to the discovery of 47 oil and 15 natural gas fields in 2020, 13% more than in 2019, despite Covid-19.

Tareq El-Molla, Egypt’s petroleum minister, signaled earlier this month Egypt’s intention to expand its petrochemicals sector to take advantage of the country’s expanding hydrocarbon resources. Egypt has updated its petrochemical national plan until 2023 to meet the increasing prospects in this industry.

LNG exports

Egypt has also benefited from the recent increase in LNG prices, resuming exports from its liquefaction plant at Idku, with most exports going to China, India and Turkey. The country is also ready to resume exports from its second liquefaction plant at Damietta starting end February. This has been lying idle since 2012 due to disputes that have now been resolved.

LNG exports will mainly utilize surplus gas from the Zohr gasfield and possibly imports from Israel, should prices allow it.

In fact, the resumption of LNG exports from Idku relieved some of the pressure on Egypt’s gas market, which is in oversupply partly due to impact of the pandemic, but also due to falling gas demand in Egypt’s power sector and growth in renewable energy.

El-Molla said that Egypt is planning a revival of its LNG exports. But this depends greatly on what happens to global markets and prices.

The International Energy Agency (IEA) said that the Asian LNG demand and price spike in January was a short-term phenomenon and it is not an indicator that global demand will rebound in 2021. The IEA expects only a small recovery in global gas demand this year, after the decline in 2020, partly due to the pandemic. But given ongoing concerns over the pandemic, the rate of gas demand growth will remain uncertain. The IEA said the longer-term future of LNG markets remains challenging.

Gas from Israel

Chevron – having acquired Noble Energy and its interests in the region last year – with Delek and their partners in Israel’s Leviathan and Tamar gasfields, signed an agreement to invest $235million in a new subsea pipeline, expanding existing facilities. According to an announcement by Delek, the pipeline will connect facilities at Israeli city Ashod to the EMG pipeline at Ashkelon, enabling Chevron and its partners to increase gas exports to Egypt to as much as 7billion cubic meters annually (bcm/yr).

The partners signed agreements last year to export as much as 85bcm/yr gas to Egypt over a 15 year period. Gas supplies from Israel to Egypt started in January last year.

It is not clear at this stage if new agreements will be reached to fully utilize the increased export capacity from Israel to Egypt, but given Egypt’s gas oversupply this may not be likely.

These developments, though, show the vulnerability of Cyprus and the weakness of relying on trilateral alliances with Egypt and Israel for its gas exports.

EastMed gas pipeline

This is being kept alive by regional politicians. Only this week, Greece, Cyprus, Israel, Bulgaria, Hungary and Serbia confirmed their support for the EastMed gas pipeline.

While such developments are good politically, bringing like-minded countries around the East Med closer together, they are not sufficient to advance the project. This requires private investment and buyers of the gas in Europe. None of these is forthcoming, because the project is not commercially viable. By the time the gas arrives in Europe it will be too expensive to compete with existing, much cheaper, supplies.

Europe is also moving away from gas and from new gas pipeline projects. Catharina Sikow Magny, Director DG Energy European Commission (EC), covered this at the European Gas Virtual conference on 28 January. Answering the question how much natural gas will the EU need in the future, she said ZERO. She was emphatic that with the EU committed to net zero emissions by 2050, by then there will be zero unabated gas consumed in Europe. In addition, with the EU having increased the emissions reduction target from 40% to 55% by 2030, the use of gas in Europe will be decreasing in order to meet the 2030 and 2050 climate targets. She said that ongoing natural gas projects are expected to be completed by 2022 – with no more needed after that.

With exports to global markets becoming increasingly difficult, there are other regional options to make use of the gas discovered so far around the East Med, including power generation in support of intermittent renewables and petrochemicals, as Egypt is doing. The newly constituted East Med Gas Forum (EMGF) should place these at the heart of its agenda.

What about Cyprus?

Hydrocarbon exploration activities around Cyprus are at a standstill, partly due to the continuing impact of Covid-19, but also due to the dire state of the IOCs and the challenges being faced by the natural gas industry in general.

This lack of activity in resuming offshore exploration may be a blessing, taking the heat off hydrocarbons, while priorities shift to discussions to resolve the Cyprus problem and the Greece-Turkey maritime disputes.

Dr Charles Ellinas, @CharlesEllinas

Senior Fellow

Global Energy Center

Atlantic Council

3 February, 2021

 

Prinos field threatened by poor results, decline projection

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Operations at the Prinos field, Greece’s only producing oil field, in the country’s offshore north, are in great danger of being disrupted following poor production figures in 2020 and a further decline predicted for 2021, a wider company update just delivered by Energean Oil & Gas, the field’s license holder, has suggested.

In 2020, production at the oil field reached just 1,800 barrels per day, while its inferior-quality output was sold at a discount price, between 7 to 8 dollars below Brent levels.

This level of output represents less than 4 percent of Energean’s overall production, which, last year, reached 48,000 barrels – mostly natural gas.

Output at the Prinos field is projected to drop below 1,500 bpd in 2021 as, even if a rescue plan for the facility is approved, related investments needed at the facility will take time to complete.

The rescue plan, announced last June by Energean and dubbed Green Prinos, envisions an adjustment for eco-friendly operations through a series of investments worth 75 million euros.

Energean’s administration, in its company update to analysts, expressed hope that a solution can be found in the first quarter of 2021 for its rescue plan, submitted to the Greek government, which then forwarded the plan to the European Commission.

The rescue plan has remained stuck at the European Directorate for Competition, whose approval is required.

Energean is considering the development of a carbon capture and storage project at its Prinos field, which would be the first in Greece, promising new life for the project, along with the support of investments at field E, whose development depends on the outcome of a financing bid, company officials informed.

Overall, the news for the Prinos field is not good. Losses incurred by this unit since September, 2019, when its crisis began before being further aggravated by the pandemic, have exceeded 100 million euros.

This loss, however, has not affected the overall financial results of Energean, generating significant earnings in Egypt, primarily. Israel, too, could become a major source of earnings for the company as of next year.

Brussels forwards new PCI list, to be finalized late this year

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The European Commission’s fifth PCI (Projects of Common Interest) list in the electricity and natural gas sectors, being forwarded for public consultation, features, for now, a number of project additions and removals, compared to the previous edition.

Market officials and state authorities will have the opportunity to offer their views and observations over the consultation procedure’s twelve-week period before the European Commission adopts a finalized version of the fifth PCI list towards the end of 2021, based on an existing Trans-European Networks for Energy (TEN-E) framework, focused on linking the energy infrastructure of EU countries.

PCI projects are entitled to EU funding support. Brussels authorities introduced selection criteria revisions in December, ascertaining, however, that the impact of all projects, especially on CO2 emissions, will be appraised when finalizing the PCI list’s fifth edition.

The provisional list includes a number of electricity and gas sector projects concerning Greece.

Electricity-sector projects involving Greece include: a Bulgarian-Greek grid interconnection, expected to be completed in 2023; an Egyptian-Greek-Libyan grid interconnection headed by Green Power 2020 and scheduled for delivery in 2025; as well as three Egypt-Greece interconnections, two of these featuring Kykladika Meltemia SA as project promoter and expected to be respectively completed in 2025 and 2028, and a third headed by Elica SA and scheduled for completion in 2028.

An energy storage project planned by Eunice for Ptolemaida, northern Greece, and scheduled for completion in 2022 is a new entry on the PCI list.

In the natural gas sector, the PCI list includes: the Alexandroupoli FSRU (2022); a subsea pipeline between Greece and Italy, known as the Poseidon Pipeline (2025); EastMed, a pipeline planned to carry natural gas from the east Mediterranean to European markets, via Crete (2025); a compressor station in Thessaloniki’s Nea Mesimvria area (2022); a metering and regulating station in Megalopoli, Peloponnese (2025); a compressor station in Abelia, in Greece’s mid-north (2023); a compressor station in Kipoi, northeastern Greece (2024); a pipeline link for the Alexandroupoli FSRU (2022); a TAP pipeline capacity increase (2025); and the development of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece (2023).

EuroAsia project moving again, Egypt present with EuroAfrica

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Development of the wider region’s two major electricity grid interconnections, the EuroAsia Interconnector, to link Greece, from Crete, with Cyprus and Israel, and EuroAfrica Interconnector, a complementary project to link Cyprus with the African continent via Egypt, was discussed at a meeting in Nicosia yesterday between Greece’s energy minister Costis Hatzidakis and his Cypriot counterpart Natasa Pilides.

Progress at EuroAsia Interconnector, whose launch is scheduled for late in 2023, was held back by a Greek-Cypriot dispute prompted by Greek power grid operator IPTO’s withdrawal of the wider project’s Crete-Athens segment from EuroAsia Interconnector, a consortium of Cypriot interests.

The Crete-Athens segment is now being developed as a national project by IPTO and subsidiary Ariadne Interconnection.

EuroAsia Interconnector and EuroAfrica Interconnector promise to develop Cyprus into an electricity hub. A 310-km cable from Israel and a 498-km line from Egypt will converge at coastal Kofinou, in Cyprus’ south. From this hub, an 898-km cable is planned to link Cyprus with Crete before reaching Athens.

At yesterday’s meeting, the Greek and Cypriot energy ministers primarily focused on EuroAsia Interconnector, the Crete-Cyprus-Israel project, at a more mature stage.

Budgeted at 2.5 billion euros, this project, regarded as an EU Project of Common Interest, will promote regional energy security and further RES penetration in all three participating countries, Hatzidakis noted. The EU, it is estimated, will need to contribute at least half the project’s value.

Cyprus is the only EU member state without electricity grid interconnections.

Germany’s Siemens was awarded a procurement contract last May for EuroAsia Interconnector’s HVDC converter stations, budgeted at 623 million euros.

EuroAsia Interconnector was initially planned to offer 2 GW but this capacity has been halved, for the time being, as the other 1 GW will be used for the Crete-Athens grid interconnection.

EuroAsia Interconnector’s Israel-Cyprus segment is budgeted at 900 million euros while the cost of the bigger Cyprus-Crete section is estimated between 1.6 and 1.8 billion euros.

 

Rescue talks for Prinos, Greece’s only producing field, making progress

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Talks between Energean Oil & Gas and officials at the energy and economy ministries for a solution to rescue offshore Prinos, Greece’s only producing field in the north, are making progress, sources have informed.

Heightened Turkish provocations in the Aegean Sea over the past few days – the neighboring country sent a survey vessel into Greece’s EEZ – and greater US presence in the wider southeast Mediterranean region, are two developments that have injected further urgency into the Prinos field rescue talks.

The east Mediterranean is at the core of geopolitical developments that promise to create new political and energy sector conditions.

US oil corporation Chevron, America’s second-biggest energy group, has joined fellow American upstream giant ExxonMobil in the east Mediterranean with a five billion-dollar acquisition of Noble Energy.

This takeover by the California-based buyer adds to the Chevron portfolio the gigantic Leviathan gas field in Israel’s EEZ, as well as the Aphrodite gas field, situated within the Cypriot EEZ and estimated to hold 4.5 trillion cubic feet.

It also offers Chevron prospective roles in the East Med pipeline, to supply Europe via the Leviathan field, and Egypt’s LNG infrastructure, all elevating the petroleum group into a dominant regional player.

Israel and Cyprus recently ratified the East Med agreement, as has Greece, while Italy appears to be examining the prospect.

In another regional development, the Total-ENI-ELPE consortium is preparing to conduct seismic surveys at licenses south and southwest of Crete, and an environmental study southeast of Crete has been approved by Greek authorities. Also, oil majors with interests in Cyprus’ EEZ have planned a series of drilling operations for 2021.

Meanwhile, Turkey, trespassing into both Greek and Cypriot EEZ waters, consistently cites a memorandum recently signed with Libya as support for its actions, as well as its refusal to sign the UN’s International Law of the Sea treaty, strongly disagreeing with an article that gives EEZ and continental shelf rights to island areas.

Greek government officials are well aware that closure of the Prinos field amid such precarious conditions would lead to major consequences, not just economic and social, as would be the case under normal conditions, but also geopolitical.

Turkey tensions will not be escalated, ‘aim achieved’

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Turkey will not continue intensifying its provocations in the East Mediterranean as the neighboring country has already achieved its main goal, a State Department declaration noting that the country is performing hydrocarbon exploration activities in disputed territory, Dr Konstantinos Nikolaou, a seasoned petroleum geologist and energy economist, supports.

Turkey’s provocations over the past few days – the country sent a seismic survey vessel into Greek EEZ waters for further exploration work following such initiatives in the past – represent part of a carefully planned strategy whose aim is to end Turkey’s East Mediterranean isolation of recent years and put the country back in the frame of the region’s hydrocarbon developments, experts believe.

Turkey has refused to sign the UN’s International Law of the Sea treaty, strongly disagreeing with Article 121, giving EEZ and continental shelf rights to island areas.

Instead, the country has followed its own rules, adjusting them as it pleases, to avoid giving any rights to island areas.

Besides seeking to reinforce the country’s position that rejects any EEZ rights for islands, the latest Turkish moves also aim to cancel EEZ agreements signed by Cyprus with Egypt, Israel and Lebanon.

Turkey has unsuccessfully sought to sign an EEZ agreement with Egypt, during Muslim Brotherhood times.

Dr. Nikolaou predicts that there will be no Turkish movement south of Crete as the transfer of an area by Libya, Turkey’s regional partner, would be required. The area of Benghazi is not controlled by Fayez al-Sarraj, the head of Libya’s UN-recognized government, but by renegade commander Khalifa Haftar.

Ultimately, the Turkish strategy in the wider region is aiming for co-exploitation of hydrocarbon deposits that may be discovered.

Chevron buys Noble Energy, US striving for regional control

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Energy corporation Chevron has become the latest American giant, following ExxonMobil, to establish itself in the east Mediterranean upstream market following a five billion-dollar acquisition of Noble Energy, a deal that adds the gigantic Leviathan gas field in Israel’s EEZ to the California-based buyer’s portfolio and elevates the petroleum group into a dominant regional player.

This latest development highlights America’s strategy for the region, aiming to establish US control of production at new gas fields as well as supply to Europe, analysts noted.

Chevron’s acquisition of Noble Energy, highlighting the upstream industry’s elevated interest in the east Mediterranean, comes amid increased regional tension prompted by Turkish provocation. Greece’s neighbor has just sent a seismic survey vessel into Greek waters for hydrocarbon exploration activities.

Besides the Leviathan gas field’s recoverable reserves, estimated at 22 trillion cubic feet, the Chevron portfolio now also takes on Israel’s Tamar field, whose gas reserves are estimated at 7.1 trillion cubic feet.

Noble has proved reserves of 2.05 billion barrels of oil and gas to add to Chevron’s reported 11.4 billion.

Chevron, whose earnings in 2019 reached 139.9 billion euros, also adds to its assets, totaling 237.4 billion dollars, the Aphrodite gas field, situated within the Cypriot EEZ and estimated to hold 4.5 trillion cubic feet. Noble Energy is among this field’s operators.

Chevron’s control of the Leviathan gas field also secures American influence over the EastMed gas pipeline planned by Israel, Cyprus and Greece.

Fellow American petroleum giant ExxonMobil recently discovered, within the Cypriot EEZ, the Glafkos gas field, estimated to carry between 5 and 8 trillion cubic feet of gas. ExxonMobil has also taken on major licenses in Egypt and is also a member of a consortium formed with France’s Total and Hellenic Petroleum (ELPE) for licenses at offshore blocks west and southwest of Crete.

 

Greece looks to build on Italian East Med interest at Cairo event

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Energy minister Costis Hatzidakis will be looking to build on yesterday’s interest expressed by Greek gas grid operator DESFA’s main shareholders – Snam, Enagas and Fluxys – in the planned East Med gas pipeline project, especially Italy’s Snam, when he meets with regional counterparts at the Eastern Mediterranean Gas Forum in Cairo, an event encouraging collaboration on gas trade in the region.

The energy ministers of Greece, Cyprus, Egypt, Israel, Italy, Jordan and the Palestinian Authority are scheduled to participate at the Cairo event.

Snam chief executive Marco Alvera expressed particular interest in the East Med gas pipeline at a meeting yesterday involving Greek Prime Minister Kyriakos Mitsotakis and the chiefs of the Italian company’s DESFA partners, Enagas and Fluxys.

Snam’s interest in the prospective East Med gas pipeline, to carry natural gas from Cypriot and Israeli fields to the EU via Italy, follows that of Energean and represents further investor confidence in the sustainability of the pipeline as it possesses commercial appeal for gas producers in the east Mediterranean as well as gas sales.

Participants at the Eastern Mediterranean Gas Forum are hoping the event is upgraded into a transboundary organization for gas cooperation. If an agreement on a forum charter is achieved, a signing ceremony will take place in Cairo tomorrow.

Besides participating at the forum, Hatzidakis, Greece’s energy minister, has also lined up meetings with his Cypriot, Israeli and Egyptian counterparts, Giorgos Lakkotrypis, Yuval Steinitz and Tarek el-Molla, respectively, for talks on the next steps needed to develop the East Med pipeline.

In addition, Hatzidakis will discuss prospective electricity grid interconnections between Greece and Egypt and also meet with Italy’s economic development minister Stefano Patuanelli, responsible for the country’s energy portfolio, who recently forwarded a letter of support for the East Med project to his Greek counterpart.

East Med, IGB, Alexandroupoli FSRU upgrading Greek role

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Three major energy projects of international dimension, the East Med and IGB natural gas pipelines, as well as the Alexandroupoli FSRU (Floating Storage Regasification Unit), all once seeming distant prospects, are now gradually turning into a close reality.

Their development promise to transform Greece into an energy hub and upgrade the country’s geopolitical standing in the fragile southeast Mediterranean and Balkan regions.

The leaders of Greece, Cyprus and Israel are set to sign a trilateral agreement for East Med, to carry natural gas to Europe via these countries and Italy, at a meeting in Athens on January 2. The transmission capacity of this project, measuring 2,000 km, will range between 10 to 20 billion cubic meters. Italy is also expected to eventually join the partnership for this project.

Its development prospects have been further propelled by a decision from Poseidon, a 50-50 joint venture involving Greek gas utility DEPA and Italy’s Edison, to accelerate the completion of all pending issues needed for the project’s maturity.

The trilateral agreement promises to further bolster ties between Greece, Cyprus and Israel amid a period of heightened regional intensity. Turkish provocation has escalated. An East Med Gas Forum to take place in Cairo January 15 and 16 with participation from the energy ministers of Greece, Cyprus, Israel, Egypt, Jordan and the Palestinian Authority should help expand the alliance.

The Greek-Bulgarian IGB gas pipeline is expected to have begun operating far sooner, in July, 2021. DEPA holds a 25 percent stake in ICGB, the consortium overseeing the IGB project, whose initial capacity will be 3 bcm. Through this pipeline, DEPA plans to supply the Bulgarian market with Azeri gas hailing from the TAP route, and, as a result, break, for the first time, the existing Russian monopoly in the neighboring market.

The IGB will not only be fed by TAP, running westwards across northern Greece for Azeri supply to Europe. The Alexandroupoli FSRU to be anchored off coastal Alexandroupoli, northeastern Greece, will also feed the IGB, enabling an alternative gas supply source for Bulgaria, other east European countries, and Ukraine.

DEPA is also involved in this project. The gas utility has just decided to acquire a 20 percent stake in Gastrade, the company developing the FSRU project in Alexandroupoli.

Leading Washington officials have expressed their support for the East Med, IGB and Alexandroupoli FSRU projects. Prime Minister Kyriakos Mitsotakis will be seeking confirmation of this backing on an upcoming official trip to the US from President Donald Trump himself.

 

Continuation of energy strategy minister’s guide at Cairo forum

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Recently appointed energy minister Costis Hatzidakis will formally commence work on promoting Greece’s international energy relations at his first meetings abroad, today and tomorrow, at the East Med Gas Forum in Cairo.

The minister, in recent speeches, has already made clear his interest in supporting a national strategy shaped to bolster the country’s energy security, elevate its geopolitical role and fuel economic growth.

Strategic partnerships with Cyprus, the USA, Israel and Egypt will play a pivotal role in this effort.

Greece, Cyprus, Egypt, Israel, Italy, Jordan and the Palestinian Authority will all be represented at the Cairo forum.

Hatzidakis, Greece’s energy minister, is also expected to discuss energy partnerships and regional security with US energy secretary Rick Perry, who is in the Egyptian capital as part of a tour of the east Mediterranean.

Development of the submarine East Med gas pipeline, a project promising security and stability for the wider region, is a leading priority  for Greece.

On a wider level, the minister can be expected to carry on supporting a national strategy pursued over the past decade to establish Greece as a pivotal energy player in the region and key problem solver of regional energy partnership issues.

As for other major energy infrastructure projects, the new Greek government will continue to provide national support for the swift completion of the Trans Adriatic Pipeline (TAP), planned to transport Caspian natural gas to Europe, and the Greek-Bulgarian IGB gas grid interconnector. Other investment plans such as the Alexandroupoli FSRU and the Kavala underground gas storage facility will also keep receiving the support of Greece’s administration.

EDEY to drum up Greek oil, gas hopes at Italy, Romania events

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Spurred by recent significant gas field discoveries at Cypriot and Egyptian offshore blocks and the favorable prospects these have generated for the wider region, top officials at EDEY, the Greek Hydrocarbon Management Company, will be looking to attract major foreign investors to new Greek blocks at two industry events in Italy and Romania.

EDEY chairman Yiannis Basias, who is in Ravenna, Italy today to attend the Offshore Mediterranean Conference & Exhibition, a leading industry event, will be exploring the potential interest of oil majors, including Italy’s ENI, for new offshore blocks in the Ionian Sea and off Crete to soon be licensed out.

EDEY chief’s deputy Spyros Bellas will follow up this effort in Bucharest at the Balkans & Black Sea Cooperation Forum, scheduled to take place April 4 and 5.

Tristan Aspray, ExxonMobil’s Vice President of Exploration for Europe, Russia, and the Caspian, hailed the wider region’s prospects at the recent Delphi Economic Forum in Greece. ExxonMobil is currently involved in exploration work being carried out in Romania.

Speaking earlier this month at London’s Global APPEX (Prospect & Property Expo), an event organized by the American Association of Petroleum Geologists (AAPG), Bellas, EDEY’s deputy, presented a road map of Greece’s hydrocarbon plans for 2019 to officials of foreign companies as well as latest and more detailed geological data on the Ionian Sea and Cretan regions. This data was processed by Norway’s PGS.

The strategy adopted at EDEY is to plan tenders for offshore blocks based on the interest expressed by foreign investors at this series of meetings.

Besides ENI and ExxonMobil, EDEY is seeking to convince Repsol, Shell and other US majors of Greece’s hydrocarbon prospects.

 

 

Three-way summit to support ambitious East Med project

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The leaders of Greece, Cyprus and Israel are expected to unite for a joint statement in support of the East Med natural gas pipeline’s development as well as the reinforcement of regional energy security at a summit in Jerusalem this Wednesday, where they will be joined by US Secretary of State Mike Pompeo.

The anticipated declaration by Greek Prime Minister Alexis Tsipras and his respective Cypriot and Israeli counterparts, Nicos Anastasiades and Benjamin Netanhyahu, will represent yet another step towards the development of East Med, promising a transportation route for regional natural gas to  EU markets.

Pompeo’s presence at the forthcoming three-way summit, combined with ExxonMobil’s recently declared intention to take part in a new round of Israeli tenders offering licenses, make clear Washington’s determination for a leading role in the Mediterranean.

Discoveries of major natural gas fields in the region and plans for EU-bound transportation routes have increased US interest.

However, many obstacles still lie ahead for the East Med pipeline. These include Italy’s step back as a result of objections expressed by Italy’s Five Star Movement, a member of the country’s far-right coalition. Italy’s environmental ministry has ordered a new environmental impact study for Italy’s Otranto seaside location, where East Med is planned to reach.

Greece, Cyprus and Israel now appear to be examining alternative East Med routes towards Europe, the most favorable option being North Macedonia.

Though Egypt expressed support for East Med last week, Cairo plans to utilize the country’s LNG terminals with the aim of exporting gas in liquefied form. This infrastructure would have an advantage over East Med.

East Med’s commercial feasibility is another concern. Quantities and customers still need to be assured.

 

 

East Med pipeline prospects bolstered by Egyptian support

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Egypt’s constructive participation in talks for the development of the East Med natural gas pipeline, planned to carry Cypriot, Israeli and, possibly, Egyptian natural gas to the EU via Greece and Italy, has created favorable prospects for the realization of a project promising to play a pivotal role on the southeast Mediterranean energy map.

US support for the project and an effort by participating countries to ensure ExxonMobil’s involvement are also bolstering the East Med’s development prospects.

Last month, Egypt’s petroleum minister Tarek El-Molla had told Cyprus News Agency his country is not interested in participating in the East Med project with its Zohr natural gas deposit.

However, the Egyptian minister changed his tune yesterday at Ceraweek 2019, an international energy in Houston, Texas, noting Egypt will support the East Med project.

Quite clearly, Egypt is looking to establish yet another alternative supply route for its Zohr field, an enormous natural gas discovery, to major consumer markets of the west.

Prior to expressing support for East Med, El-Molla took part in a meeting with his Greek, Israeli and Cypriot counterparts – Giorgos Stathakis, Yuval Steinitz and Giorgos Lakkotrypis, respectively – and US energy under secretary Mark Menezes, at the Houston event.

All four officials confirmed their support for the East Med gas pipeline, according to a statement released by Greece’s energy ministry.

Stathakis, Greece’s energy minister, also held a separate meeting yesterday with ExxonMobil officials for talks on developments concerning the oil major’s hydrocarbon exploration interests at offshore blocks west and southwest of Crete – through a consortium established with Total and ELPE (Hellenic Petroleum) – and the East Med project, energypress sources informed.

 

Greek-Cypriot-Israeli deal for East Med pipeline likely this month

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A three-way agreement between Greece, Cyprus and Israel for the development of the East Med natural gas pipeline, planned to carry Cypriot and Israeli natural gas to the EU via Greece and Italy, appears increasingly likely to be signed by the leaders of the three countries at a Tel Aviv summit scheduled for March 20.

A draft of the planned agreement is currently being fine-tuned in Brussels.

Despite the emergence of a growing number of reports contending an agreement is near, objections expressed by Italy’s Five Star Movement, a member of the country’s far-right coalition, could turn into a problem for the East Med pipeline plan.

Italy’s environmental ministry has ordered a new environmental impact study for Italy’s Otranto seaside location, where East Med is planned to reach. Incidentally, the TAP project to carry gas from Azerbaijan to the EU is also planned to reach this spot. The Five Star Movement has also raised environmental concerns over this project.

Lebanon is another country in the region opposing East Med as a result of its ongoing EEZ dispute with Israel. Turkey, not on good terms with Israel and unsettled by the evolving Israeli-Cypriot cooperation, also opposes the project. Cyprus is continuing its hydrocarbon exploration activities, adding to Turkey’s concerns.

Meanwhile, Greek energy minister Giorgos Stathakis arrived in Houston, Texas yesterday to take part in Ceraweek 2019, an international energy conference running until Friday.

Stathakis is scheduled to take part in a panel discussion tomorrow on east Mediterranean developments following recent natural gas discoveries by Cyprus and Israel. His Cypriot, Israeli and Egyptian counterparts will also join this panel.

Sideline talks, by these officials, on regional energy matters are expected.

East Mediterranean action suggests gas export boundaries stretchable

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Heightened natural gas sector activity witnessed in the east Mediterranean region over the past few days, combined with various other moves, including changing regional market conditions, to a certain degree, suggest gas exports to more distant markets beyond the east Mediterranean are possible.

Developments in recent days have included the establishment of an agreement for Israeli gas supply to Egypt, which coincides with an increased drive by Greece’s Energean to finance an ambitious investment plan.

The Israeli firms Delek Drilling and Noble Energy have just signed two binding agreements to export gas to Egyptian company Dolphinius Holdings Ltd. The energy companies will supply 64 billion cubic meters (bcm) of natural gas from the Tamar and Leviathan gas fields over ten years.

The two sides will, as a first objective, seek to transport the gas via the existing EMG pipeline, which previously transported gas in the opposite direction, from Egypt to Israel.

If this is not possible, other options include exporting the gas via pipeline to Jordan and then to Egypt or via a new pipeline linking Israel to Egypt.

The Israeli gas will be directly aimed at the Egyptian market, not Egypt’s two LNG terminals for liquefaction, meaning the agreement does not represent an additional step for Delek Drilling and Noble Energy. For the time being, both firms are continuing to eye regional markets ahead of more distant ones.

This agreement, in an indirect way, should facilitate the export of Cypriot gas for liquefaction at the Egyptian plants, as it leaves unutilized larger production capacities at the terminals.

A recent move by Greece’s Energean into the Israeli gas market with gas sales and purchase agreements for natural gas supply from its Karish and Tanin fields, offshore Israel, at price levels 33 percent less than those paid by Israel’s power utility for supply from the Tamar gas field, has prompted the utility to react and request a price reevaluation from its suppliers. They have remained adamant, noting no changes will be made until at least 2021, based on supply contracts already signed.

Energean’s entry into the Israeli market has certainly not gone by unnoticed. The increased level of competitiveness resulting from this entry vindicates Israeli government and market officials who, in the past, had backed competition and the  division of gas fields so as to enable the entry of new players.

The maintenance of low prices in Israel could eventually make exports to more distant markets, such as European markets, more viable.

Minister heading to Nicosia for EuroAfrica Interconnector

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Energy minister Giorgos Stathakis is scheduled to attend a trilateral meeting in Nicosia next Tuesday where Greek, Cypriot and Egyptian officials will discuss the development of the EuroAfrica Interconnector, a 2,000-MW submarine cable project planned to link the electricity networks of Greece, Cyprus and Egypt with the European system.

Next week’s meeting comes follows a Memorandum of Understanding signed with the Egyptian electricity company EEHC in Cairo last February.

The ambassadors of Greece and Cyprus, as well as top officials from Egypt’s electricity and energy ministry, attended February’s signing ceremony, during which Egyptian president Abdel Fatah al-Sisi expressed personal interest for the interconnection project’s development.

The EuroAfrica Interconnector promises to provide considerable economic and geopolitical benefits to the countries involved, Greek, Cypriot and Egyptian officials have pointed out.

Sector experts will also attend next Tueday’s meeting to offer their views on the project’s prospects and sustainability, and also present the results of studies called for by the MoU.

If officials reach a consensus on the findings, prospects and sustainability, then procedures leading to the project’s actualization are expected to gain momentum.

According to initial estimates, the interconnection project will require 36 months to develop once all related studies have been completed.

Greece is also involved in another prospective international interconnection project, the EuroAsia Interconnector, along with Cyprus and Israel.

Development of both projects promises to establish Cyprus as a hub linking the electricity networks of three continents.

According to reports, a further extension of the EuroAfrica Interconnector, to incorporate other African and Middle East countries, is also being looked at. Such a prospect would greatly increase the significance of both projects and their combined role in the transmission of electricity from various sources to Europe’s network.

 

RAE completes Egyptian twinning project, more contracts likely

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RAE, the Regulatory Authority for Energy, has succesfully completed a twinning project in Egypt, carried out with the intention to help reshape the country’s electricity market.

An official ceremony was staged in Cairo just days ago to mark the project’s successful completion. Egyptian officials expressed their full satisfaction of RAE’s work and noted that it could represent the beginning of an ongoing association, according to diplomatic sources at the Greek Embassy in Egypt.

Future projects could include the implementation of a Technical Assistance and Information Exchange (TAIEX) plan, whose aim would be to steer Egypt’s electricity market towards liberalization, as well as development of interconnection projects with neighboring energy networks, especially those of EU member states.

The European Commission developed the TAIEX plan as a funding tool to promote  European practices and help neigboring countries implement European institutional frameworks in various domains. Egypt is one of the countries targeted through the TAIEX system.

‘Realism, win-win approach key for gas developments, exports’

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Realism, a gradual and more practical approach are needed in order to ensure that natural gas exports from the East Mediterranean may commence, Israeli gas expert Gina Cohen, in the Greek capital for last week’s Athens Energy Forum, told energypress in an interview.

The Israeli energy authority believes that export activity concerning the region’s natural gas may begin on a regional basis, to surrounding countries, where trading can be conducted more competitively. Mrs. Cohen also pointed out that Greece and Cyprus will potentially need to begin with smaller-scale plans before moving ahead with the development of more ambitious gas transmission projects, failing which they may lose out on all fronts.

  • Last year, two major developments took place in Israel’s natural gas market. Firstly, the Greek company Energean Oil & Gas entered Israel’s Exclusive Economic Zone (EEZ) by acquiring licenses for the Karish and Tanin natural gas offshore fields and, secondly, the Israeli government announced a new international tender for re-opening the sea for exploration. Are you optimistic about the prospects of this tender or do you think that the government should have waited until a final investment decision was taken on the Leviathan deposit?

When staging a tender, it is important to select the appropriate time, blocks and number of blocks offered. I believe that this was not the right time because one needs to have previously identified one’s markets and, in addition, natural gas prices are currently low, while there is an oversupply, internationally. In addition, I think that the Ministry in Israel should have first completed matters of greater importance locally such as providing small field incentives, developing the transmission and distribution infrastructure and ensuring that there is sufficient demand in the local market to enable to develop those gas fields that have already been discovered (Leviathan, Tanin and Karish). Israeli officials may have decided that this was the right time to go ahead because Cyprus, Egypt and Lebanon had proceeded with respective tenders of their own. Israeli officials may have feared being left behind. Also, the tender’s staging also offers a case with regards to the liberalization of the domestic market, otherwise how could there be complaints of an oligopolistic market. However, the purpose of the tender will be defeated if it proves to be unsuccessful. We shall see in March, when it is completed.

  • As for Cyprus, do you believe natural gas export developments can be expected prior to the completion of new drilling ventures that will result from the third licensing round?

What should have taken place long ago is for the island to supply itself with natural gas. This would have offered multiple benefits, both economically and geopolitically. If natural gas discovered is a good enough product and fuel to be exported, then it is also surely appropriate for the domestic market. Therefore, it is not important as to when Cypriot exports will begin because the natural gas must first reach Cyprus. In my opinion, exports will not begin before the drilling efforts of the third licensing round. The fact that Cyprus is an island is forcing authorities to wait. The natural gas amounts are too modest for supply as LNG to Europe or the Far East and market prices are currently too low. If, in the future, authorities determine that greater gas amounts are possessed, then a better decision can be taken.  The Aphrodite partners have long ago offered to do a one well development and a small 12-inch pipeline to bring gas to the Island, but the government of Cyprus refused, wanting to wait for a more grandiose LNG export option.

  • Given the current environment and prevailing prices, is it possible for East Mediterranean natural gas to become internationally competitive?

Natural gas can be feasible for regional use. In Israel, it is cheaper than all other energy sources. Also, gas export activity to Turkey, where demand exists, is certainly feasible as Turkey has no indigenous reserves and has often had to pay excessively high gas prices. Egypt possesses great amounts of natural gas but also needs a lot of gas and is in fact still importing 10 bcm a year. Exporting natural gas to this market would be viable, as this country pays 5.8 dollars per mmbtu to purchase gas from its local suppliers and a higher price for its LNG imports. However, issues do exist, such as a 3.5 billion-dollar debt owed by the country to energy corporations. The other problem is that Egypt has announced it will become self-sufficient, in terms of energy needs, by 2020, so such statements cause misunderstanding, especially as I somehow doubt they will achieve this and so they should clearly leave all options open.

Egypt’s LNG terminals possess an annual capacity to export 17 billion cubic meters, but export activity, either from Cyprus or Israel, needs to be sustainable. Seventy percent of the world’s natural gas is traded regionally. Egypt is located 450 km from Cyprus whilst Turkey is only 100 km away from the Island, which increases gas transmission costs, in the former case, as well as its liquefaction, so Cyprus should certainly keep in mind the Turkish export option.

  • In your opinion, what is the optimal way to export Israel’s natural gas?

Egypt and Turkey are the two options. Contrary to Cyprus, Israel is located roughly midway between Egypt and Turkey. So both options are on the agenda, sometimes one becomes more prominent than the other. If the Egyptians settle their debt issue, Egypt would become an ideal preferable option, as it would mostly entail dealing with strong credit worthy international entities such as Shell. When BG controlled the liquefaction facilities in Egypt, the possibility of exporting from Israel was easier, whereas now that this company has been acquired by Shell, the prospect has become a little more difficult as Shell has a more extensive presence in many Arab countries. Things have now become easier in Turkey following the improvement in bilateral ties with Israel. Turkey also experienced a very harsh winter and realized that it lacked gas to supply for both heating purposes and for electricity generation. However, the conditions concerning both options are constantly changing. Israel’s relations with Turkey and Egypt are very important for Israel. Ultimately, one of the two options will be carried out. I believe that Cyprus will need to consider Turkey as an option, even though Cyprus has declared that it does not want to do so at present.

  • How do you assess the situation concerning Greece’s hydrocarbon prospects?

Greece will need to base its efforts on its own companies, such as Energean, or companies with a presence in the region, such as Repsol, in order to carry out drilling ventures. LNG is also important and the country already possesses one LNG terminal. I was surprised to find out that the Greek islands are not interconnected with the Greek mainland’s electricity network. The prospect of transmitting electricity from Israel and Cyprus to Greece and Europe is widely discussed but the Greek islands have yet to be interconnected. Start with smaller, more realistic plans, such as the interconnection of the Greek islands, the mobilization of local corporate groups, such as Energean, or the upgrade of the country’s natural gas network so that gas can be transmitted bidirectionally from and to Bulgaria for example. Greece should examine the prospect of upgrading the transmission of natural gas from Turkey via Greece (a 7 bcm a year pipeline already exists but needs better compression and higher capacity), as new natural gas sources will be added along this axis in the near future, hopefully including also East Med gas going into Turkey. Greece should, for now, leave aside overambitious plans such as the East Med offshore pipeline and focus on more immediate and achievable projects.

 

 

 

 

RAE team in Egypt for twinning project talks

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A team of five RAE (Regulatory Authority for Energy) officials visited Egypt over the past few days to take part in talks on a twinning project concerning the restructuring of the country’s electricity market.

RAE is collaborating with its Egyptian counterpart on the development of Egypt’s Electric Utility and Consumer Protection Regulatory Agency and with the Italian regulatory authority for the development of an Electricity, Gas and Water system.

The program being pursued concerns development, not research, the objective being to transfer scientific knowledge, other forms of technical assistance, and also aim for administrative and legal collaboration.