Big decisions will soon be made about how to get Israeli gas to Europe. Israel, Greece, and Cyprus agreed yesterday to form a deeper trilateral energy partnership to export Israeli gas to Europe and connect their energy grids, Reuters reports. The leaders of the three countries held a summit in the Cypriot capital yesterday amid new momentum behind a proposal to establish a gas pipeline connecting Israel and Europe.

Remember: Greece, Israel and Cyprus are — individually and in combinations — both partners and competitors of Egypt when it comes to energy exports to Europe. There are multiple competing projects on the drawing board to build an electricity interconnector from Egypt to Greece. Egypt has for years been working to bring fresh stocks of natural gas from both Israel and Cyprus, and Greece has emerged as a key Egyptian partner on East Med energy policy.

Israel is clearly mulling its options: “We will have to decide soon about how Israel exports its gas and the same decisions have to be made by Cyprus. We are looking at the possibility of cooperating on this,” said Israeli PM Benjamin Netanyahu. “Those decisions will be made, I think, in the next three to six months, probably closer to three months.”

Egypt is currently the only way Israel can ship its gas out of the region: With no pipelines or LNG terminals of its own, Israel currently sells around 4.6 bcm of natural gas a year to Egypt, which then exports a portion to Europe via its LNG facilities and uses the rest for local consumption.

The problem: Declining natural gas production in Egypt means that less of this Israeli gas is going to be destined for the EU. That’s a problem for Europe, which is pushing hard to find new energy sources to replace Russian hydrocarbons — and a problem for Israel, which faces limitations on how far it can take its energy partnership with the Europeans. Increasing gas supplies to Egypt could help remedy the situation, something that Tel Aviv wants to do but likely won’t be able to achieve for at least another two years.

Israel + Cyprus have been looking for other options: Long-term plans for a direct, 2k-km pipeline between Israel’s gas fields and Cyprus have been dusted off in recent weeks despite concerns about the cost and technical challenges of the line, with officials from both countries discussing the idea and Italian energy firm Edison throwing its weight behind the plan.

The same debate is playing out in Cyprus right now: Whether to export its gas via Egypt or cut us out (in whole or in part) and get its own LNG terminal is currently being contested between the Cypriot government, the operating company of its biggest gas field, Chevron, and apparently Washington, where the Biden administration is reportedly backing Chevron’s bid to link the massive Aphrodite field to Egypt.

Tags: