The energy ministries of Israel and Cyprus are engaged in discussions on “issues of mutual interest and possible cooperation,” following a report indicating that they are close to signing a contract allowing Israel to supply Cyprus with natural gas via a pipeline. This initiative would represent the first sale of Israeli gas to Europe.
The contract, valued at $1.5 billion, is expected to span ten years, with the gas coming from Israel’s Karish and Tanin platforms, as reported by ynet.com on October 9. Energean, the company operating the Karish gas field offshore Israel, has submitted a request for an export license to Cyprus and had previously proposed a pipeline solution, a spokeswoman said on October 13, referring all contract-related questions to Israel’s Ministry of Energy.
Gas production from the Karish field is carried out via the floating production, storage and offloading (FPSO) unit Energean Power, with a capacity of 8 billion cubic meters per year (Bcm/y) for supply to the Israeli domestic market. Gas from Karish reaches land to the north, near the border with Lebanon.
Gas consumption in Europe is rising, with European gas prices trading around €40/MWh. Platts, a subsidiary of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at €39.55/MWh on October 11.
Context of Energy Cooperation
Following the attacks on October 7, 2023, against Israel by Hamas, the Israeli government ordered the closure of the Tamar platform as a precautionary measure. Operations resumed one month later. Today, Israel has become a major gas producer, with exports to Egypt and Jordan. The country’s production reached a record high of 24.7 Bcm in 2023, according to data published by the Israeli Ministry of Energy in May.
The Karish gas field, which began production in October 2022, produced 2.77 Bcm in the January-June period, an increase from 1.97 Bcm during the same period last year. The country’s other two gas fields include Leviathan, which has been in operation since 2019, and Tamar, which started in 2013.
Implications for the European Market
The export of Israeli gas to Cyprus represents a strategic diversification for European suppliers, seeking to reduce their dependence on traditional suppliers. This contract could strengthen economic and political ties between Israel and European countries, while meeting the growing demand for natural gas in Europe.
Future Perspectives
The signing of this contract could pave the way for similar agreements, fostering broader energy cooperation in the region. Energean, by obtaining the export authorization, could play a key role in supplying natural gas to other European countries in the future.
