The East Mediterranean can enhance Europe’s energy security and reduce its dependence on Russian gas. Regional countries are strongly positioned to face oncoming challenges in the global energy markets and efficiently deliver on the European continent’s gas demands.
Egypt is well-situated to increase its gas exports to Europe, but one major constraint is that European countries either lack LNG terminals or existing terminals have a limited capacity to receive supplies. It is thus imperative for European countries to upgrade existing terminals or construct new ones to expand their capacity to receive LNG.
Egypt Dominates the Region’s Energy Successes
New gas findings in Egypt can turn into commercial discoveries that will be transported to Europe. The discovery of Nargis-1 exploration well, co-owned by American Chevron and Italian ENI in the Nargis Offshore Area Concession, is estimated to contain almost 200 net feet (61 m) of Miocene and Oligocene gas. Also important, German Wintershall Dea made a new gas discovery within the Disouq concession in the onshore Nile Delta region that has been tested at a peak production of 15 million cubic feet of gas per day.
Egypt has almost 2.21 trillion cubic meters of proven gas reserves, and it produced more than 95 billion cubic meters in 2021, with exports exceeding 12 billion cubic meters annually.
With an eye to regional energy cooperation that will benefit Europe, Egypt prioritized the demarcation of maritime boundaries with countries like Greece and Cyprus, aiming to extract greater volumes of regional gas through joint exploration and to link national pipelines. This is evidenced in the letter and spirit of the partial delimitation agreement that was signed between Egypt and Greece in August 2020.
According to Article 2 of the agreement “in case there are natural resources, including hydrocarbons reservoirs, extending from the Exclusive Economic Zone of one Party to the Exclusive Economic Zone of the other, the two Parties shall cooperate in order to reach an agreement on the modalities of the exploitation of such resources”. Overall, the Egypt-Greece demarcation agreement has created a positive precedent for other regional countries to emulate.
The Euro-Africa Interconnector, labeled as Project of Common Interest by the EU, supports Egyptian and Greek aspirations to become major energy hubs for Southeast Europe. The project aims to transport by a subsea cable renewable electricity generated in Egypt and other African countries through Greece to Europe. Already, Egypt has completed interconnection projects with Libya, Sudan, and Saudi Arabia.
Greece: An Active Player in Europe’s Energy Transformation
Greece is exploring ways to bring regional gas to Europe, as the proposed East Mediterranean Gas Pipeline may prove technically challenging and thus less likely to materialize. Athens accelerated efforts to execute projects of regional and European interest like the Euro Asia Interconnector, a key infrastructure project that links the grids of Israel, Cyprus and Greece with the European power grid delivering up to 2000 megawatts of energy and thus enhancing European energy security. Nexans, a global player in energy transition, has been recently awarded a contract valued at 1,6 billion dollars for the section of the Euro Asia Interconnector that will connect Cyprus to Greece via a subsea cable that will cross ultra-deep waters of over 3,000 meters.
Greece also pays high importance to other infrastructure projects, including an onshore 28-kilometer gas transmission pipeline that connects the National Gas Transmission System to the Alexandroupolis Floating Storage and Regasification Unit in northern Greece, through which 5.5 bcm of gas per year will be funneled to the Balkans and to Southeast Europe. Deliveries of 28 kilometres of pipes were completed in May 2023 by Corinth Pipeworks that was awarded a contract by Saipem S.p.A for the development of the offshore and onshore gas pipeline by Gastrade. An additional infrastructure project, with Greece at its epicenter, that will form the European Hydrogen backbone is the construction of a 160-kilometer gas pipeline in western Macedonia that can transport up to 100 percent hydrogen.
Regarding hydrocarbon exploration, the Greek government has compiled an action plan that centers on the completion of seismic surveys and drilling at the offshore blocks in the Ionian Sea and south of Crete, already conceded to oil majors. The Hellenic Hydrocarbon Resources Management Authority has identified more than 30 maritime blocks with a total estimated quantity of recoverable gas ranging between 2 and 2.55 trillion cubic meters. Significant volumes of gas, once extracted from Greek maritime blocks, will be funneled to Europe.
Israel’s Energy Independence Creates Opportunities
Israel, for its part, can export to Europe surplus gas of approximately 500 billion cubic meters (bcm) over the next two decades. Notably, Israel has achieved energy independence over the last years that created a shield against the energy crisis which was triggered by the war on Ukraine. Israel therefore accelerates efforts to identify new gas discoveries by offering 20 new exploration blocks in the context of its 4th International Offshore Licensing Round. As announced recently by Israel’s ministry of Energy, four consortia of companies submitted bids to obtain licenses for gas exploration within Israeli waters.
The Israeli aim lies in increasing gas volumes for export to third markets. According to the Israeli perspective, the war on Ukraine provides a golden opportunity for regional countries that are not aligned with radical Islam to produce and jointly funnel gas to Europe. The latter can also help regional countries come together and draft long-term energy cooperation agreements that will benefit the economies of all involved.
The Turkish dimension cannot be ignored in Israel’s regional calculations. The construction of a pipeline to transport Israeli gas to Turkey could help the latter diversify energy resources, especially considering that contracts with Russia and Iran will expire within the next four years. Even though the Turkey-Israel pipeline is technically, and financially feasible, political considerations have so far impeded its execution, namely Ankara’s regional revisionism and unpredictability towards Israel. Noteworthy, Turkey seeks to import East Mediterranean gas to meet its increasing domestic needs rather than export it to Europe.
Challenges and Policy Recommendations
Overall, there are several solutions to upgrading the supply of energy from the East Mediterranean to Europe, thus enhancing the latter’s energy security. Skepticism, however, prevails in European political circles regarding the likelihood of Libya 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 the prime factor impeding European energy operators from engaging with Libyan authorities.
It is with no doubt that East Mediterranean countries must be locked into a broader European strategy that provides a win-win situation by which cooperation profits every party. To this end, Egypt should expand its capacity for processing and exporting LNG to Europe, not only to offset a sharp decrease in gas imports from Russia, but also to increase revenues of the Egyptian state budget.
Hydrogen and renewables can prove to be game changers in the next two decades for Europe. It is in this context that Greece should swiftly proceed with cementing its energy partnership with Saudi Arabia so that Athens can facilitate massive imports of hydrogen from the Saudi Neom region to Europe.
Israel should explore the possibility of a floating LNG terminal in Israeli waters, as this option is feasible now that, due to the Israel-Lebanon demarcation agreement, the threat of naval escalation between the two countries has passed.
Evidently, East Mediterranean countries namely Egypt, Greece and Israel played an early role in reducing European dependence on Russian energy and can potentially play a larger role through coordinated efforts to becoming credible gas suppliers to Europe. It is in the hands of the three East Mediterranean countries to establish a rock-solid energy partnership that will benefit all.