News Analysis: Experts divided over cost of ambitious EastMed gas pipeline project

0 Comment(s)Print E-mail Xinhua, January 7, 2020
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by Nathan Morley, Petros Petrides

NICOSIA, Jan. 6 (Xinhua) -- The ambitious agreement by Cyprus, Greece and Israel, concluded in Athens on Jan. 2, to construct the Eastern Mediterranean (EastMed) natural gas pipeline faces steep economic and political obstacles, according to Cypriot former energy minister.

The nearly 1,900- EastMed pipeline is expected to transfer liquefied natural gas from the region's reserves across the Mediterranean directly to mainland Europe.

Nicos Rolandis, who served as the Cyprus's minister of commerce, industry and tourism between 1998 and 2003, told Xinhua that he had reservations about the project.

"From a political and strategic point of view it is a good project because it strengthens relations between Cyprus and Israel and other countries, including Jordan, Egypt and Greece," he explained.

However, when it comes to practical problems -- and there are many such problems -- you have to take into account that the extraction costs of natural gas in Cyprus are higher than elsewhere because the gas deposits are buried deep under the seabed, he said.

Despite the obstacles, the supporters of the project insist that the six-billion-euro (6.72-billion-U.S.-dollar) venture will have vast geopolitical, economic and diplomatic significance.

During the signing ceremony in Athens, Cypriot President Nicos Anastasiades heralded the endeavor as a practical project with geopolitical importance.

Energy giants ENI, Total and ExxonMobil are carrying out exploratory hydrocarbons drilling off the coast of Cyprus, but are not currently pumping.

However, further east, Israel is already extracting gas from its largest offshore natural gas field.

Engineers say that when completed, EastMed will be able to transport 10 billion cubic meters of natural gas annually to Greece, Italy and other countries in southern Europe.

In addition, Rolandis questioned the cost of transporting a relatively small quantity of natural gas through the longest pipeline in the world.

Compared with other pipelines which transport five or six times as much gas in Europe, the accumulated cost of the EastMed project will be higher, he said.

Meanwhile, current Cypriot Energy Minister Yiorgos Lakkotrypis believed that the EastMed project was technically feasible and economically viable.

Lakkotrypis told Cyprus state radio that the preliminary results of EU-funded studies showed that EastMed was an economically beneficial project.

He also acknowledged that the actual construction will last up to seven years.

While the EastMed project enjoys the support of the United States and the European Union, it has angered Turkey, which argues that the scheme ignores the rights of Turkey and the Turkish Cypriots and that it unfairly excludes them from a potential energy bonanza.

To complicate matters, Turkey has recently concluded a maritime border deal with Libya in the Mediterranean that cuts through the planned route of the pipeline.

"The reaction of Turkey in this particular case was easily predictable," Rolandis said, recalling the long-standing tensions between Turkey and Cyprus.

In spite of the difficulties, Cyprus, Greece and Israel said they wanted to reach a final investment decision by 2022 and have the pipeline completed by 2025. Enditem

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