Estimated $2 billion construction cost for pipeline is far cheaper option than building a $10 billion onshore facility for liquefied natural gas in Cyprus.
The key stakeholders in Israel’s Leviathan offshore natural gas field are to discuss laying an undersea pipeline from the Mediterranean site to the southern Turkish coast, according to the Turkish daily Hurriyet.
The paper reported over the weekend that Delek and the American company Noble Energy, which hold 85 percent of the rights to Leviathan, are to discuss construction of the pipeline with the companies Calik, Turcas, Enka and Zorlu. The latter conglomerate already has interests in power plant development in Israel with a stake in two concerns, Dorad Energy and Edeltec.
According to the report, the estimated $2 billion it will cost to lay the pipeline will be much cheaper than the expected cost of, for example, building a liquefied natural gas facility in Cyprus – $10 billion.
An undersea pipeline to southern Turkey could provide between 8 billion to 10 billion cubic meters of gas per year, costing from $7 to $9 per million BTU. This makes the project of major strategic interest to Turkey, which has a great need of inexpensive natural gas.
According to a model under review for some time, the conglomerate would sell the gas to a consortium of Turkish companies. These would guarantee the laying of the pipeline, which would be done by a third party – a leading European firm such the Italian INI, or the French EDF – which would ostensibly limit the geopolitical risks to the project.
Cyprus’ energy minister, Yiorgos Lakkotrypis, said in response that Cyprus was continuing its plans to build a liquefied natural gas facility on the southern part of the island, for gas to be produced in the region.
According to a report in the Cyprus Mail, Lakkotrypis said Cyprus was studying other options, including laying a gas pipeline to liquefied natural gas facilities in northern Egypt, but the preference was for construction of the onshore terminal.
Cypriot Foreign Minister Ioannis Kasoulides, who visited Israel on Thursday, was quoted by The Telegraph as saying that Cyprus did not rule out the possibility of a pipeline to Turkey alongside a facility in Cyprus, but that this would require large gas reserves.
With regard to the recent incident in Cypriot waters, in which a Turkish warship expelled a Norwegian gas exploration vessel, Kasoulides said: “Groups like Noble Energy, ENI and Total would not be investing billions in exploration here if they really thought Turkey was going to stop them.”
View original HAARETZ publication at: http://www.haaretz.com/business/.premium-1.575805