The eastern Mediterranean’s emerging energy powers are making significant headway with plans to export some of their massive reserves of natural gas to the EU, which could bolster the bloc’s efforts to diversify its supplies away from Russia, whose dominance of the market is a growing source of concern in Brussels.

With Russian president Vladimir Putin increasingly unpredictable, Russia subject to US and EU sanctions and North Sea gas reserves diminishing, energy-hungry Europe has been supporting the eastern Mediterranean’s gas exporting potential, which hinges on an ambitious subsea pipeline from Israel to Italy and the development of Egypt into a gas distribution hub.  


The development of these projects comes as Europe is set to see further efforts to diversify supply come to fruition. Gas deliveries from Azerbaijan will reportedly start arriving in 2020 via the recently completed Trans-Anatolian Natural Gas Pipeline, a key part of the Southern Gas Corridor, a network of pipelines supplying Europe with Caspian reserves.    

In recent years Israel, Egypt, Cyprus, Israel have discovered and begun to exploit considerable offshore gas deposits. With the reserves set to exceed their domestic energy needs, they have been co-operating closely on how best to distribute their finds to European and world markets. At a January 2019 meeting in Cairo they announced plans to set up an Eastern Mediterranean Gas Forum with Italy, Greece, Jordan and the Palestinian Authority, which aims to create a regional gas market and also help producing countries to distribute their reserves through existing and new infrastructure. 

Elements of the pipeline distribution infrastructure critical for Israel, Egypt and Cyprus to realise their exporting ambitions have begun to fall into place just as the Egyptians build up their hub potential, notably passing legislation permitting private companies to import and then re-export gas via its liquefied natural gas plants at Idku and Damietta, currently idle due to a combination of growing domestic demand and the country’s recent political turmoil. 

In September, Nicosia and Cairo signed a deal committing them to lay the groundwork for a pipeline carrying gas from Cyprus’s Aphrodite field to Egypt for liquefaction and re-export to Europe. The deal came just days before Israeli and Egyptian companies announced that they would buy a 39% stake in the East Mediterranean Gas Company (EMG) pipeline between Israel and Egypt, a move that will facilitate a landmark $15bn agreement, signed last February, to deliver gas from Israel’s Leviathan and Tamar fields to its southerly neighbour over a 10-year period, starting this year. President Abdel Fattah al-Sisi said the supply agreement would help fulfil his dream of Egypt becoming an energy hub.  

About half of the Israeli gas will be used to service Egypt’s domestic market, supplementing supplies from the country’s massive Zohr field, the largest in the region. The remainder has been earmarked for re-export via Idku and Damietta.

A much longer-term and considerably more ambitious export plan, given renewed impetus at the end of last year, will see the longest and deepest subsea pipeline in the world, the EastMed pipeline, transporting gas from Israel and Cyprus via Greece to Italy. It would reportedly meet as much as 10% to 15% of the EU’s projected gas needs. An agreement is expected to be signed soon in Greece after receiving European regulatory approval, according to the Wall Street Journal.

The EastMed pipeline, estimated to cost about $7bn and take six to seven years to complete, effectively closes the door on a separate long discussed but now unrealistic plan to distribute Israeli gas to Europe via Turkey, the shortest and fastest route to the continent.  The prospect of such an export route has waned due to deteriorating relations between Ankara and Jerusalem.

While all these recent developments are promising, the projects could be slowed or even derailed by a number of factors, with costs, competing interests and territorial disputes prime among them.

Arguably the biggest threat is from Turkey which is opposed to Cyprus exploring and drilling for offshore deposits without its agreement, as Ankara claims sovereignty over the northern part of the divided island. Other unresolved disputes include one over part of the Aphrodite field straddling Israeli maritime territory and another between Israel and Lebanon concerning fields overlapping their sea border.

There are also question marks about the pipelines themselves. The EastMed project may be subject to resistance from Turkey and could also face considerable engineering challenges that may ramp up costs. The EMG pipeline, which used to deliver Egyptian gas to Israel, was repeatedly sabotaged by Islamic militants several years ago.

Also while official relations between onetime enemies Egypt and Israel have improved markedly, ordinary Egyptians remain broadly hostile towards their neighbour.

Yet these concerns should be tempered by the growing levels of co-operation between the regional stakeholders and apparent European and US eagerness to turn the eastern Mediterranean into a major gas distributor. Brussels and Washington hope this will achieve twin goals: helping to stabilise a region that remains prone to volatility and reducing Russia’s domination of Europe’s energy market. The entry of eastern Mediterranean gas into European markets may be some way off, but progress on export and infrastructure deals suggests there is now real momentum behind the enterprise.

Yigal Chazan is head of content at Alaco, a London-based business intelligence consultancy.