The war on Ukraine has revived interest in the development of natural gas resources and the execution of infrastructure projects that can bring energy to consumers across Europe. The East Mediterranean can play an increased role in European energy security as several resources in the region are unlocked. Egypt and Israel can prove to be prime exporters of surplus gas to Europe and compensate for the losses they incur due to the war on Ukraine, like wheat taking into consideration the increased prices and a global supply shortage of the commodity.
The Memorandum of Understanding (MoU) on energy cooperation that was recently signed between the European Union (EU), Israel, and Egypt at the East Mediterranean Gas Forum headquarters foresees the supply of Israeli gas through Egyptian LNG facilities to Europe. As provided in the MoU, the EU is committed to encourage European energy companies to engage in gas exploration tenders in Israeli and Egyptian maritime areas. To meet however enhanced export goals for Europe as Israel brings new fields online, Egypt should expand the capacity of its LNG facilities in Damietta and Idku by adding new liquefaction trains, a cost-effective enterprise that can be fulfilled within three years. Notably, Israel is estimated that it can export to Europe surplus gas of approximately 500 billion cubic meters (bcm) over the next two decades.
It is with no doubt that Egypt can help Europe face the oncoming challenges in the global energy market and meet its gas demands. Cairo is well-positioned to increase its gas exports to Europe, but one additional constraint is that LNG terminals in European countries have a limited capacity to receive supplies. Thus, European countries should either upgrade existing terminals or construct new ones to expand their capacity to receive LNG from the East Mediterranean.
The war on Ukraine provides a golden opportunity for regional countries to produce and jointly funnel gas to Europe. The latter can help East Mediterranean countries come together and draft long-term energy cooperation agreements that will benefit the economies of all involved. In addition, the EU can help East Mediterranean countries develop resources that are locked due to unresolved maritime disputes that can be settled with direct talks or other avenues like mediation. The Israel-Lebanon maritime dispute falls in this category. Agreements on the demarcation of maritime boundaries signed between Egypt and regional countries like Greece and Cyprus allow extraction of greater volumes of regional gas through joint exploration and the linkage of national pipelines. These demarcation agreements have created a positive precedent for other regional countries to emulate. It is known that long-standing maritime disputes in the East Mediterranean currently impede gas transmission by pipeline, which is cheaper for relatively short distances.
Countries, like Greece, are exploring ways to bring regional gas to Europe, as a proposed East Mediterranean gas pipeline could prove expensive and is thus less likely to materialize. Alternative solutions focus on the LNG Terminal in Vasilikos, south of Cyprus, already under construction, which is scheduled to receive gas in mid-2023. The war on Ukraine has accelerated efforts to execute projects of regional interest like the Euro Africa Interconnector, a 2,000-megawatt electricity highway connecting the national electricity grids of Egypt, Cyprus, and Greece through a 1,396 kilometer subsea High Voltage Direct Current (HVDC) cable. This would create a reliable alternative route for the transfer of electric energy to Europe.
Additional infrastructure projects of regional importance include but are not limited to an onshore 28-kilometer gas pipeline that will connect the Greek National Gas Transmission System to the Alexandroupolis Floating Storage and Regasification Unit (FSRU) in northern Greece, through which 5.5 bcm of gas per year will be funneled to the Balkans and to Southeast Europe. Alternative solutions for bringing Cypriot and Israeli gas to Europe take note of Revithousa LNG terminal in southwest Athens that receives LNG shipments. These shipments are partly funneled to Bulgaria after Russian major Gazprom cut the Balkan country off its gas due to Sofia’s refusal to pay in Russian roubles. Bulgaria currently receives 90,000-100,000 megawatt hours of natural gas through Greece.
Skepticism, however, prevails regarding the likelihood of other countries, most prominently Libya to serve as a feasible energy supply option for Europe, despite the low extraction cost of Libyan gas and oil compared to other East Mediterranean countries. The highly unstable situation in Libya is considered as a prime factor impeding European energy operators from engaging with Libyan authorities. The Government of National Unity’s (GNU) recent decision to reshuffle the National Oil Corporation’s (NOC) board and replace its chairman has accelerated these considerations and led to the suspension of operations by German oil major Wintershall and American oil services Halliburton from western and eastern Libya.
Overall, the Mediterranean must be locked into a European strategy. Countries from across the region advocate that LNG, accepted as an eco-friendly fossil fuel, should substitute Russian energy supplies in the mid-term. The war on Ukraine has triggered intensive discussions and initiatives that have been undertaken in Brussels for joint procurement of energy resources in a relatively short time. The American commitment to supply Europe with 15 bcm of LNG this year and 50 bcm in 2023 will practically replace one-third of Russian supply to Europe, thus enhancing the transatlantic partnership.
In the next two decades, hydrogen and renewables can prove to be game changers for Europe. Projects like Green Hysland in Spain’s Balearic Islands, WhiteDragon in Greece’s Western Macedonia region, and NEOM on the Read Sea coast of Saudi Arabia are expected to funnel hydrogen to Europe and help the continent reduce greenhouse gas emissions by at least 55% by 2030 and achieve the goal of net zero emissions by 2050.
Evidently, the East Mediterranean’s gas and hydrogen projects lie at the epicenter of the EU’s energy security that is built through accelerated energy transition. It is all about a pathway where the East Mediterranean and Europe interact aiming to transform the energy sector and build a carbon-free future for current and upcoming generations.
