A feasibility study conducted by IGI-Poseidon, which was commissioned by the EU Commission, has found that laying a natural gas pipeline from the Leviathan offshore gas field via Cyprus to Greece would cost about $5.7 billion. This was reported by the Ministry of Natural Infrastructures, Energy and Water Resources director general Shaul Meridor who met in Athens with his counterparts from Greece, Cyprus and Italy and a senior official from the EU Energy Commission.
All the participants in the meeting expressed support for the project and decided to continue moving ahead with it, despite the major complexity of laying such a pipeline in deep waters. The pipeline would convey natural gas from fields in both Israel and Cyprus and potential discoveries in Greece's economic waters. The EU has recognized the project as a Project of Common Interest (PCI) and consequently financed the feasibility study.
Greece currently consumes 2.5 billion cubic meters (BCM) of natural gas annually while Italy consumes 60-70 billion BCM and it could be the main destination for most of the gas in the planned pipeline. Europe's overall annual consumption is 440 BCM, of which 160-165 BCM is supplied by Russia at a cost of $4.50 per thermal unit. Another 100 BCM is supplied annually by Norway.
Two other prominent countries which supply gas to Europe are the Netherlands and UK, which have gas fields that are being rapidly depleted. The price paid by Europe to these other countries per thermal unit is $5, while during winter the price on the spot market can rise to $5.5-$6 per thermal unit. Russia can increase production but the Europeans are loath to be dependent on the Russians and want to diversify supply sources.
Extending the pipeline to Italy and Bulgaria is also being examined
The length of the pipeline examined in the feasibility study would be 1,300 kilometers - 200 kilometers in deep waters from the Leviathan field to the Cypriot gas fields and Cyprus itself, 700 kilometers to Crete, and 400 kilometers to the Greek mainland. The pipeline's diameter would be either 24 or 32 inches in various sectors and it could supply 16 BCM annually.
It would cost $4.3 million per kilometer to lay, double the amount it cost to lay pipelines offshore from Israel. If the gas was sold for $5 per thermal unit, it would take two years of revenue to cover the cost of laying the pipeline, although some forecast that the price of gas could rise to as much as $8 per thermal unit.
The EU is also considering laying a further 600 kilometers of pipelines from southern Greece to northern Greece. In order to reach the heart of Europe, the feasibility of laying an additional 180 kilometer pipeline from northern Greece to Bulgaria was examined, and from there it would link up to the existing trans-European pipeline.
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2016
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