Greek Prime Minister Alexis Tsipras plans to visit Cairo on October 11 to take part in trilateral talks with Cyprus President Nicos Anastasiades and Egypt’s President Abdel Fattah Al Sisi.
“I see these trilateral meetings very useful politically. In the longer term I hope these will lead to wider cooperation in the East Med,” Cyprus Natural Hydrocarbons Company CEO Charles Ellinas told New Europe. He noted, however, that any gas developments in the region are driven by international companies and will happen if the risks are low, finance is forthcoming and if they make sense commercially.
Cyprus has been considering exporting gas to Egypt since 2014, but has not yet entered into any commercial deals because global prices are too low and profits are difficult to make, Ellinas said.
“That’s why after three years of negotiations there is nothing concrete to show other than MoUs. The agreement signed by Cyprus and Egypt Energy Ministers end of August is a useful political agreement in that, if there will be a commercial deal in future, this agreement will facilitate the flow of gas from one country to the other. But on its own it cannot lead to gas sales,” Ellinas said.
Constantinos Filis, director of research at Institute of International Relations, told New Europe that Egypt is an alternative for Cyprus. If Nicosia wants to reach Europe, its options are limited between using liquefied natural gas (LNG) facilities in Egypt and including its gas with Israeli gas in the East Med undersea pipeline that will cross Greece, Filis said, adding that the latter has “an obvious geopolitical advantage as it involves two EU member-states and the most stable and prosperous state in the region, Israel”.
However, if the Cyprus issue is solved, Filis said, Tel Aviv and the joint government of Greek/Turkish Cypriots in Nicosia might prove less eager to continue supporting the East Med pipeline.
On the other hand, Egypt has not yet stabilised to the extent that Cyprus can put all its eggs in Cairo’s basket. The advantage here is the lower cost, although there are two potential disadvantages: the possibility that Egypt’s giant Zohr offshore field, which is developed by ENI, will have the necessary quantities to cover both LNG facilities and the de facto downgrade of Cypriot natural gas as it will only have a minor role in the final mix in supplying Europe, Filis said.
Ellinas told New Europe that when it comes to Cyprus, if Turkey continues to intervene, Egypt and Greece couldn’t help. “It will be good if between them they delineate their EEZs (Exclusive Economic Zones) west of Cyprus and enter into binding agreements, but even here they cannot. Turkey is in the way and it will be confrontational if faced with such decisions,” Ellinas said.
Turning to Israel and Egypt, he said that Tel Aviv and Cairo on and off have been talking about deals but no gas sales agreements have been signed due to low global gas prices.
“There is another problem. The dispute that arose end of last year as a result of the ICC decision to award $1.76 billion compensation to Israel Electricity Corp has still not been resolved. Egypt vowed not to continue any negotiations with Israel until this decision is reversed,” Ellinas said.
“I also believe that the recent strong reaction by the Jordanians to the agreement by Jordan to buy Israeli gas, may as a minimum have raised concerns in Egypt, that a deal with Egypt will be met with hostility by Egyptians,” he said.
In any case, with all new discoveries and gas field development activity Egypt expects to become self-sufficient by 2020 and will not need gas imports after that, Ellinas said, adding that between now and then it is importing spot LNG at very competitive prices. “As a result of the above, I believe Israel is looking to Turkey for its gas exports, not Egypt,” Ellinas said.
(Source: New Europe)