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Israel wants to knock Russia out and export gas to Europe

Author : Georgiy Kuhaleyshvili

Leaders of Greece, Cyprus, Italy, and Israel have agreed on the implementation of an ambitious project - the EastMed gas pipeline
10:15, 3 December 2018

Reuters

Recently, the leaders of Greece, Cyprus, Italy, and Israel have agreed on the implementation of an ambitious project - the EastMed gas pipeline (abbreviated from the Eastern Mediterranean region). The pipeline is planned to be built until 2025. EastMed could become the deepest pipeline in the world and connect the Israeli gas fields Leviathan and Tamar on the shelf with the European market. The capacity of the new gas pipeline would be 20 billion cubic meters of natural gas per year and it will stretch for 2.2 thousand km, 170 km from the southern coast of Cyprus under the Mediterranean Sea, across the territory of Crete and continental Greece to the Otranto port in southern Italy. EastMed could become a panacea for reducing the EU’s dependence on the Russian gas and create competition for Gazprom’s offshore pipelines. Nevertheless, constructing a pipeline at the great depths of the Mediterranean Sea is a very complex process. Most importantly, there are pitfalls of a political nature for the supply of Israeli gas to Europe, due to the interests of third parties.

Related: Russian and Non-Russian pipelines to supply gas to Southern Europe charge ahead

Attempt to kick Russian gas habit

At first glance, the EastMed project might seem too fantastic. It significantly exceeds the length of Nord Stream 2 Russian gas pipelines along the bottom of the Baltic Sea (1,224 km) and the TurkStream through the Black Sea (1,090 km). The average depth of the Mediterranean Sea is 1,500 meters, and the maximum depth is over 5 thousand meters. The most difficult part of the TurkStream is at a depth of 2,200 kilometers. Nevertheless, the leaders of Israel and Greece are quite optimistic about the construction of the EastMed gas pipeline.

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Greek Prime Minister Alexis Tsipras called the project a landmark moment in his country's cooperation with Cyprus and Israel. Israeli Prime Minister Benjamin Netanyahu announced the construction of a "big alliance" of the three democracies, stressing that EastMed would reduce the influence of Arab countries that supply energy to Europe. According to Israel’s Energy Minister Yuval Steinitz, the project is estimated at $ 7.36 billion; marginally more than the declared cost of TurkStream ($ 7 billion) and significantly less than the price of the Nord Stream 2 ($ 11 billion).

Related: Who will get Ukrainian gas?
 

Surely, Brussels has a great interest to the EastMed project. According to the Israeli Hadashot TV channel, the EU agreed to invest $ 100 million in justifying the feasibility of the project even before an agreement on its implementation was reached. It is obvious that supporters of reducing the EU’s energy dependence on Russia and diversifying energy import destinations are interested in supplying Israeli gas. Russian natural gas accounts for 38% of EU gas imports. By 2030, natural gas imports to the EU could increase by 100 billion cubic meters. Last year, the Europeans imported more than 400 cubic meters. The interests of Germany, which wants to receive income from the transit of Russian gas, and investors, contractors from 9 EU member countries participating in the implementation of the Nord Stream 2 gas pipeline project, should not be extrapolated on the entire European Union.

Related: Turkey earns billions of dollars on gas transit, while Ukraine loses its chance

President of the European Commission Jean-Claude Juncker believes that there is no consensus on the construction of the Nord Stream 2 gas pipeline in the EU, and some countries are opposed to the project because of the unwillingness of Russia's increasing influence on European policy. According to him, no one should take a dominant position that damages competitors, and all countries of Central and Eastern Europe should have equal access to the energy supplies. Poland, Estonia, Latvia, Lithuania, Romania, and Denmark oppose the construction of the Nord Stream - 2. The European Parliament supports amendments to the gas directive on the regulation of offshore pipelines from third countries, such as Nord Stream 2 and TurkStream, prohibiting one legal entity to act as a supplier and seller of gas (namely, Gazprom). European Council President Donald Tusk is convinced that Nord Stream 2 is a mistake and does not meet the EU interests.

Perhaps, supporters of reducing gas dependence on Russia create obstacles to the construction of the second branch of the TurkStream to Europe with the help of the EastMed. In late November, the construction of the TurkStream offshore section was completed. Both branches are designed for the supply of 15.75 cubic meters of natural gas annually: first, to the Turkish gas market, and second, to Europe (through the territory of Greece and Italy). Earlier, Italy participated in the implementation of the Russian South Stream gas pipeline project canceled in 2014. Even the project of Poseidon Italian-Greek gas pipeline was developed, supposed to pass along the seabed to the port of Otranto thus transiting Russian gas.

Related: Ukraine's Government continues discussion with IMF on gas prices hike, - Finance Ministry

Side effects

The construction of the EastMed gas pipeline is at odds with the interests of Russia and Turkey, which might lose their source of profits from the supply of natural gas to Europe. Israel, Cyprus, and Greece should prepare for the provocations of the Turkish Navy in the Eastern Mediterranean, aimed at disrupting the project. In October, Turkish President Recep Erdogan announced that his country intends to assert its sovereign rights in the Aegean Sea and the Eastern Mediterranean, where it has territorial disputes with Greece and Cyprus. Turkey opposes the exploration of natural gas reserves by the Republic of Cyprus in its exclusive economic zone on the shelf of the island since it allegedly violates the rights of Turkish separatists from the unrecognized state of the Turkish Republic of Northern Cyprus. The other day, Erdogan carried out another anti-Israeli demarche: he called on Muslims to protect mosques in Jerusalem and support Palestine.

Reuters

Related: Russian Gazprom finishes construction of TurkStream sea gas pipeline

Turkish Minister of Defense Hulusi Akar believes that his country will not tolerate the intervention of Greece in the Eastern Mediterranean. In February 2018, Turkish warships blocked the access of a research vessel of the Italian oil and gas company ENI to gas fields on the Cyprus shelf. Although the Israeli fields Leviathan and Tamar are not subject to the Greek-Turkish contradictions, the EastMed gas pipeline will run close to a potential zone of escalation of tension. Turkey might carry out military provocations at the coast of Cyprus in order to increase the risks of project implementation.

Ambiguous consequences for the US

It is doubtful that US President Donald Trump would be pleased with the prospect of exporting natural gas from the Israeli shelf will. Former President Barack Obama and the Democrats supported initiatives like EastMed, such as the idea of building the Qatari gas pipeline or the Trans-Adriatic pipeline to reduce the dependence of the EU’s energy dependence on Russia. Trump is not just interested in the reduction of the supply of Russian natural gas to Europe, but also in taking this vacated niche.

Reuters

Nord Stream 2 and TurkStream gas pipelines are perceived in the White House as competitors to US natural gas. The EastMed project creates competition for Republican gas interests in Southern Europe. Last year, American suppliers exported liquefied gas to Italy, Spain, Portugal, and also to Israel.  

Related: TurkStream: Who profits, who loses out?
 

The states are not interested in their old military-political ally taking away their profits in the European Union. On the other hand, reducing the volume of Russian natural gas supplies to southern Europe in the case of the EastMed project implementation will allow Russia to stop Russia's efforts to gain a foothold in this region. Russia flirts with the ruling parties in Italy, the League of the North and the Five Star Movement. The Kremlin can increase influence in the Balkans. One of the routes for supplying natural gas to Europe via the TurkStream is the territory of Macedonia and Serbia. The Israeli-European gas pipeline might be disadvantageous to the United States due to the economic reasons, but it might have some political interest.

Ukrainian dilemma

The emergence of Israeli gas in Europe might have ambiguous consequences for Ukraine. On the one hand, the transit of natural gas from Russia replenishes the treasury. Last year, 93.5 billion cubic meters of natural gas were supplied to Europe through the gas transmission system of Ukraine. Ukraine’s revenues from the transit of Russian natural gas amounted to $ 3 billion. Regardless of whether Russian gas pipelines are built to bypass our gas transportation system or projects aimed at ousting Russian gas from the European market, transit through Ukraine will be reduced. According to the expert in the field of energy Leonid Unigovsky, the transit of natural gas through the territory of Ukraine will be reduced by 12 billion cubic meters, and the annual loss in monetary terms will amount to $ 500 million.

Related: 'Why so expensive?' How much does Ukrainian gas really cost?
 

On the other hand, we would prefer the implementation of the EastMed project purely for political reasons. In the event of a reduction in the share of Russian gas in the European market, if Gazprom gets new competitors, the inflow of funds into the Russian economy will decrease, which will increase the effect of anti-Russian sanctions. The oil and gas industry remains one of the most profitable for the Russian Federation. Energy exports are one of the main sources of replenishment of the Russian treasury.

Read the original text at 112.ua.  

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