$400m Natural Gas Pipeline Between Israel and Cyprus Awaits Government Approval

A $400 million pipeline to transport natural gas from Israel to Cyprus is awaiting government approval from both countries and Israel has expressed support, the head of Eastern Mediterranean focused gas producer Energean told Reuters on Tuesday.

Energean on Monday signed a letter of intent with leading Cypriot industrial and energy group Cyfield for the potential supply of natural gas from Israel to Cyfield's planned power plant via the new pipeline, said Mathios Rigas, CEO of the British firm.

Gas could flow through the pipeline within 12 months of the government approvals being granted, said Rigas, speaking in an interview on the sidelines of the ADIPEC energy conference in Abu Dhabi. Energean is awaiting a response from the Cypriot government, he added.

1 BILLION CUBIC METRES CAPACITY

"The pipeline would have the capacity of 1 billion cubic metres a year, enough to bring all the gas the Cyfield project needs, but also to give more to the island if others need to use the gas," Rigas said.

The project, which would cost $400 million, could be fully funded by Energean, but partners may also be brought in the future, Rigas said.

The company is also evaluating opportunities in West Africa, Rigas said.

Energean is also waiting on government approvals for another gas supply deal from Israel to Egypt, which Israel has not yet approved. Some of the gas would be transported via the planned Nitzana pipeline, which the company had signed a 15-year transmission agreement for.

The pipeline would ease an energy crisis in Egypt, which has spent billions of dollars on importing liquefied natural gas and is part of a concerted effort to boost Israeli gas exports to the Arab world's most populous nation.

The company in October signed a 15-year transmission agreement as part of $4 billion worth of Israeli gas offtake contracts.

EGYPT-ISRAEL GAS SUPPLY DEAL SUBJECT TO GOVERNMENTS

Commenting on delay of the Egypt deal, Rigas said the issue was between the governments of the two countries and not between the business partners.

"It is between the Israeli and Egyptian governments to decide what can happen," he said.

Israel's Energy Minister Eli Cohen has said he was holding up the approval for the $35 billion gas deal to secure better commercial terms for the Israeli market, Israeli media reported last week.

Rigas said that he still has confidence that obstacles could be removed.

"I believe that the obstacles will be removed because it makes sense for infrastructure to be placed to allow gas to be transported in the East Mediterranean," Rigas said.

"I paid $47 million already. If I didn't have confidence, it would not be a very wise decision," he added.

(Reuters)