Greece's DEPA: Southeast Med gas challenges Shah Deniz
US-based Noble Energy drills to locate possible hydrocarbons in Block 12, some 180 kilometres off the south coast of Cyprus, 21 | EPA/CYPRIOT PRESS OFFICE
VOULIAGMENI - Cyprus and Israel should move fast to be the first to secure the lucrative southeast Europe gas market, the head of Public Gas Corporation of Greece DEPA told New Europe on 28 May.
Harry Sachinis discussed a scenario been considered by DEPA to carry gas from East Mediterranean to Europe. The proposed pipeline comprises of a pipeline from Israel’s Tamar, Leviathan and Cyprus Block 12 to Cyprus; a pipeline connecting Cyprus with Crete; and a pipeline from Crete to mainland Greece.
Sachinis said Italy and southeast Europe including the Balkans are attractive markets. “That should be an incentive for the Israeli and Cypriot governments to move faster because if they are first there with the gas, even earlier than gas that comes from Azerbaijan, they may be able to choose the market that will give them the better prices and the better opportunity. It’s in Cyprus and Israel’s hands to be first to the market in southeast Europe,” Sachinis told New Europe on the sidelines of the 2012 Mediterranean Oil & Gas Conference in a resort south of Athens.
“In terms of timing, we think that the first gas is going to be available from both Israel and Cyprus before 2017,” he said. “We believe that the reasonable scenario would be that around 16 bcm [billion cubic metres] of gas will be exported from Eastern Mediterranean around that time.” Given that Israel and Cyprus have said that they want to diversify their export options, Sachinis said 8bn cubic metres could be exported as liquefied natural gas (LNG) that would give Tel Aviv and Nicosia access to all markets, including Europe and Asia, and 8bcm could be exported through the proposed pipeline to Europe.
Sachinis noted that DEPA has conducted a market study that shows that Europe may indeed be a more attractive market in that timeframe rather than the market in Asia since prices would be the same. “There is obviously a case to be made for a pipeline of about 8bcm and we have also have made a technical study that actually proves that such a pipeline is feasible,” he said.
Greek MP Yiannis Maniatis, former deputy minister for energy, told New Europe on 28 May that the reserves that have been discovered in Israel and Cyprus and Greece’s possible reserves south of Crete, “creates a secure base to move in even more detailed studies for the creation pipeline”. He added that the studies show that the project is bankable compared to an LNG terminal and technical difficulties can be overcome.
The pipeline would also be able to use gas reserves that Greece is hoping to find south of Crete. Maniatis said that within 15-20 days the government may sign a contract with companies which can start the seismic studies. “We expect that by the end of the fall we will have located the reserves south of Crete more accurately,” he said.
But the DEPA CEO cautioned that it is too early to look at them in terms of the 2017-2018 timeframe. “We haven’t done the seismic studies yet. I think we’d be looking for something at the earliest in 2023 or definitely after [Azerbaijan’s] Shah Deniz gas and eastern Mediterranean gas is available,” he said.
Sachinis said that gas from southeast Mediterranean could also supply the Interconnector Turkey-Greece-Italy (ITGI). ITGI was dealt a blow earlier this year when the Shah Deniz consortium chose the Trans-Adriatic Pipeline (TAP) over ITGI for the southern branch of the so-called Southern Gas Corridor. But Sachinis reminded that the ITGI system is actually a set of two pipelines, one is IGB that connects Greece to Bulgaria and to the rest of southeast Europe, which will be ready by 2014 and the IGI pipeline that hopes to connect Greece to Italy. “Obviously it’s going to be an issue of supply and demand and who comes first and where the needs are in terms of what gets built, but I think that definitely the need for diversification in southeast Europe is really acute so the fact that IGB is going to be ready in 2014 gives the first opening into diversification into the growing southeast European market,” he said.
Maniatis said that he believes the pipeline would strengthen the EU’s energy security since the new sources of gas could come from two member states - Cyprus and Greece - as well as country that has close ties with the EU – Israel. “The European Union will have its own source in serious quantities. I believe that Europe should support those incentives geo-economically and geo-politically,” he said.
Meanwhile, Gulmira Rzayeva, an expert at Center of Strategic Studies under the President of Azerbaijan, brushed off any talk of competition between gas supplies in Azerbaijan and southeast Mediterranean. “[Azerbaijan’s state oil and gas company] SOCAR has a 5% investment in Cyprus. I think it is too early to talk about this. It has a long way to go. We don’t know if there is gas or not and, if yes, then what is the volume and when it will come on stream and when it comes on stream how it is going to be transported,” she told New Europe on the sidelines of the conference. “I think it’s too early to speak about Cyprus. But we have Shah Deniz consortium, PSA agreement ready on the table and Cyprus is not yet defined.”
Comments