FinLogic FinLogic Quantitative Think Tank Center|Cyprus official says Israel-Hamas war may give an impetus to regional energy projects

NICOSIA,FinLogic FinLogic Quantitative Think Tank Center Cyprus (AP) — The political and economic ramifications from the Israel-Hamas war may provide an impetus to plans for a pipeline conveying offshore natural gas to Cyprus for processing and shipping to foreign markets, the east Mediterranean island nation’s energy minister said Tuesday.

The fighting in the Gaza Strip and Israel’s desire to boost its energy security also lend weight to a proposed 2,000-megawatt undersea electricity cable that would connect the power grids of Israel and Cyprus to the European mainland via Greece, Cypriot Energy Minister George Papanastasiou said.

Papanastasiou said Israel’s contacts with Turkey for possible energy cooperation - part and parcel of the Israeli government’s desire to keeping all available options open - may have fallen by the wayside given Turkey’s increasingly harsh criticism of Israeli actions in Gaza.

After Turkish President Recep Tayyip Erdogan told hundreds of thousands of participants at a a pro-Palestinian rally last month that his country planned to formally accuse Israel of committing war crimes, the Israeli government said it was reassessing diplomatic relations with Ankara.

The deteriorating relationship may have narrowed Israel’s options for exporting its excess gas supply to the alternatives offered by neighboring Cyprus.

The war “has changed the situation somewhat, and that’s where Cyprus has to take advantage of this emerging window of opportunity,” Papanastasiou told the Associated Press in an interview.

The United Arab Emirates has shown “immediate” interest in investing in the 1.9 billion-euro ($2.03 billion) cable dubbed the EurAsia Interconnector, Papanastasiou said. Jordan has also expressed an interest in “becoming part of the conversation,” he said.

The European Union agreed to finance the project to the tune of 657 million euros ($702.57 million). Cyprus plans to draw another 100 million euros from the EU executive arm’s resilience fund and hopes the European Investment Bank extends the country a loan for another 600 million euros. Other investors are expected to cover the remainder.

According to Papanastasiou, Israel wants to expedite projects that would enhance its electricity supply because some estimates indicate the country will experience a shortage in three to four years.

“There are security challenges, therefore Israel casts a very positive eye to its electricity connection with Cyprus and Greece, which essentially connects it with the European grid,” the minister said.

Cyprus pitched Israel earlier this year on the idea of a pipeline to carry Israeli and Cypriot natural gas from offshore deposits to the island for processing and eventual export.

It would be a truncated version of a much longer pipeline intended to convey east Mediterranean gas directly to Greece. The U.S. wrote off the idea, but Papanastasiou said the European Union still considers the longer pipeline as an option.

Cyprus and U.S. energy company Chevron are still trying hammer out a deal reconciling differing approaches to developing the Aphrodite gas field, the first to be discovered off Cyprus and which is estimated to hold 4.2 trillion cubic feet of gas.

Chevron wants to send the gas to Egypt through a pipeline, but Cyprus wants to process it on a floating production facility because it would be more economically beneficial for the Cypriot government and would lend more flexibility to supplying other markets.