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23rd Sep 2018

Israel-EU gas pipeline to compete with Russia

  • Gas exploration ship at Israel's port of Haifa (Photo: Helix Energy Solutions Group)

The EU and three member states have backed a plan for Israel to reduce Europe’s gas dependence on Russia.

The European Commission and ministers from Cyprus, Greece, and Italy signed up to build a new gas pipeline from Israel to Europe at a meeting in Tel Aviv on Monday (3 April).

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  • Israeli gas considered safer than Russia's, which has been used for political blackmail (Photo: the half-blood prince)

The 2,200-km East Med pipeline would connect Israeli and Cypriot offshore gas fields to Greece and Italy.

It is designed to come online in 2025 with a capacity of up to 16 billion cubic metres (bcm) of gas a year.

It would be the longest and deepest ever built, but an EU co-financed feasibility study by Italian firm IGI Poseidon said the project should go ahead.

Speaking in Tel Aviv on Monday, EU energy commissioner Miguel Arias Canete took a swipe at a competing Russian project, Nord Stream 2.

"North Stream is a pipeline [that] adds nothing to the [EU’s] security of supply," he said.

He said the commission’s strategy was “to diversify sources, routes, and suppliers” and hinted that Israel was a safer partner than Russia, which has used gas to blackmail neighbouring countries.

“Cyprus and Israel are very reliable suppliers,” he said.

With Nord Stream 2 disliked by Baltic, central European, and Nordic states, Canete added that the Israeli project “is a pipe that unites and will have the full support of all the members of the European Union”.

Yuval Steinitz, Israel’s energy minister, said US investment banks, such as Goldman Sachs and JP Morgan, got excited about the €6 billion project when they learned that the commission was on board.

“When they heard that the European energy commissioner was behind it [and] ready to give some assistance, that was very helpful,” he said.

He said the amount of gas discovered for export so far, up to 500 bcm, was “just the tip of the iceberg”.

Carlo Calenda, Italy’s economic development minister, said Rome would seek the backing of the G7 club of wealthy nations, which includes Canada, Japan, and the US, for the pipeline at a summit in Sicily in May.

The Cypriot energy minister Yiorgos Lakkotrypis said the project would “showcase” the region’s potential as an alternative EU supplier.

The much bigger Nord Stream 2 pipeline is designed to pump 55 bcm of gas a year to Germany from 2020, concentrating EU imports in Russia and Germany’s hands.

It faces open questions on whether EU laws would apply to its offshore section, as well as complaints by the Polish energy regulator, but Russia has already started buying pipe segments.

Political risk

The East Med pipeline is to run through Cypriot waters to avoid disputed maritime zones with Turkey and Turkish-occupied Northern Cyprus.

But EU-Israeli cooperation carries other political risks.

According to Haaretz, an Israeli newspaper, the EU’s envoy to Israel delivered a stinging rebuke on Israel’s treatment of Palestinians last week.

He said Israeli evictions in the West Bank constituted “forced transfers” in violation of Israel’s “obligations” under the Geneva Convention as an “occupying power”.

The ambassador, Lars Faaborg-Andersen, read out the EU note, which had been approved by all 28 member states in the bloc's Political and Security Committee, at a meeting with Israel’s top foreign ministry official.

The EU foreign service had planned to call a summit with Israel in February to upgrade relations, but plans were put on hold after a surge in Israeli settlement expansion.

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