Baku, Azerbaijan, Nov. 25
By Aygun Badalova - Trend:
Israeli proposal for a massive gas pipeline project for the EU has a political component, Andrej Tibold, analyst at Eurasia Energy Observer believes.
"The project would strengthen the political relation between EU and Israel by turning it into an energy partner," Tibold told Trend.
Israel made a proposal under which its gas will be transited to the EU through a new pipeline, according to Israeli media.
The idea includes a route going across the Mediterranean's seabed to reach Cyprus and then Greece and Italy. A proposal was introduced by Israel's Energy Minister Silvan Shalom during the meeting of energy ministers from Euro-Mediterranean countries in Rome earlier this week.
Tamar field, which was discovered by Israel in 2010 is supposed to be a source for the project. In 2013 the country started producing gas from that field.
"Of course the EU wants to become less dependent on Russian gas and therefore diversify supplies. However, in the end it is the market that decides," Tibold said.
With regard to the perspective for these plans to be realized, Tibold said that purely from a cost perspective, having a pipeline across the Mediterranean would be very expensive.
The overall project costs would definitely overrun those of the Southern Corridor, Tibold believes.
The overall cost of the South Corridor project is expected to reach nearly $50 billion.
"So from an economic point it's more expensive, but nevertheless doable. The length of the subsea pipeline would be in the range of Nord Stream pipeline project," Tibold said.
He believes that if oil prices continue to stay low, this will change the economics of many planned projects, in particular, the economics of onshore production and transportation will be more profitable.
And with regard to the Israel's proposed project, Tibold said, the bottom line is that the price for East-Med gas should be competitive.
The EU, which is currently highly dependent on Russia's gas is keen to diversify its supplies sources and routed, which will contribute to increase its energy security.
The priority project now from these perspectives is the Southern Gas Corridor, which envisages the transportation of the gas from the Caspian region to Europe. Gas which will be produced within the second stage of Azerbaijani Shah Deniz field development will be initial source for the project.
Azerbaijan's gas supplies to Europe will open the "Southern Gas Corridor", which will allow Europe to diversify its sources of hydrocarbon supplies and boost energy security. It will be the first time ever when Caspian region's resources will reach European markets.
In order to ensure the gas supplies to the new market, a final investment decision was made Dec. 17, 2013 on the Stage 2 of development of the Shah Deniz field.
Some 10 billion cubic meters (bcm) of the field's total gas output will go to Europe, while 6 bcm will be annually delivered to Turkey.
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