Energy Plans between Israel and Cyprus
Israel and Cyprus to be partners in European Energy Plans: Cypriots are one of the few citizens of the world that are paying the most expensive domestic electricity in the European Union. This is due to the low production of natural gas needed to supply the industries and households of the region resulting to increased amount of diesel importation to generate the needed electricity. Domestic consumers of the island are paying 0.2338 Euro per kWh and has been one of the deterrent reasons behind the hesitation of other companies to set up manufacturing industries in the region. Nevertheless,
it has maintained its position as one of the ultimate haven for IBC formation in the Mediterranean.
The End of the Drought: Discovery of Aphrodite Natural Gas Field
Cheers and smiles flashed in the faces of Cypriots when it was announced that their territory holds an abundant supply of natural gas, which is roughly estimated to hold 85-255 billion m3, enough to cover the region’s need for natural gas fuel and a signal that the expensive electricity rate will soon be decreased. Moreover, it could also easily be exported to Greece and Italy providing a lucrative income not only for Cyprus but also for any company who wishes to participate in this project.
Resolving the Problem of Natural Gas Field Development
Cyprus has a huge potential to become a major supplier of natural gas in the European Union. However, one of the biggest challenges that have to be faced is the development of these natural gas fields and the infrastructure that has to be built for it to be transported to the desired market. This is a very expensive enterprise to handle and requires financial assistance from prominent financial institutions of the world and countries. Therefore, it is important for Cyprus to find a partner that is willing to take part to the estimated cost of 1.6 billion Euros for the construction of the necessary subsea pipeline of the Aphrodite field.
Building an Alliance: Uniting Israel, Greece, Russia, and Cyprus
As mentioned earlier, Cyprus is not the only country expected to benefit from this project. Israel, Greece, and Russia have also shown interest in this enterprise in hope that they could share with the good fortune that has fallen under the hands of Cypriots.
Israel shares the treasures of the deep and the visits of the President of Israel to Cyprus and the visits of the President of Cyprus to Israel are clear indications that both countries are making efforts to develop a Cyprus-Israeli co-operation. Under the original plan, Israel will create a new gas pipeline and electrical lines coming from the Eastern Mediterranean region that will pass through Southern Greece. However, if this pushes through, then it would leave Turkey and Russia out of the share of the gas reserves.
This is the content of the proposed plan presented by Prime Minister Benjamin Netanyahu in his visit to Cyprus early February. Under this project, offshore natural gas fields will be developed in Cyprus as well as the construction of desalination plants. Israel has extended its hand to Cyprus by offering to build a state of the art plant that would desalinate water and extract the needed natural gas reserves resting under its seabed.
Greece is also actively participating in discussions concerning the construction of an LNG Terminal in Cyprus. It believes that this is one of the most economical ways of transferring the precious fuel from the territory of Cyprus to the European Markets. However, the options of a pipeline construction that will stretch directly to mainland Greece is being pushed by Greece’s DEPA due to the security concerns associated with vessel transfer of the gas. Nevertheless, the massive amount needed to build such an enterprise is creating a big problem for both countries. Noble Energy and Delek, both Leviathan partners, showed hesitation in supporting such a construction; thus, the bigger possibility of an LNG project to push through rather than a pipeline construction.
Russia is classified as a background player in this deal, but the strong relationship between Cyprus and Russia makes them a viable partner of Cyprus, too. Gazprom energy has its eyes on the project and some critics see the approved loan given to Cyprus by Russia as a hint that they too want to share in this pot of natural gas. This does not pose any problem between Israel and Cyprus because both share a large minority of Russian immigrants nestled in their territory, a huge contributor to the current economy both nations.
Construction of the project is expected to take three to four years before its completion. A detailed survey of the seabed has to be conducted, Geo-hazards have to be eliminated, and environmental study has to be evaluated before the Aphrodite gas field is to push through. Nevertheless, this discovery has come at no better timing because Cyprus is looking for the best financial collateral to lie on the table and with news of becoming the next natural gas hub of Europe; everything has been rightfully put in place.