Greek energy company Energean has signed a Letter of Intent with Power Energy Cyprus (PEC), a Cyfield group company, to construct a natural gas pipeline from Israel’s exclusive economic zone to Cyprus for electricity generation.
PEC Managing Director George Chrysochos confirmed the agreement to Phileleftheros, saying the collaboration aims to build a pipeline, financed by Energean, from the Karish gas field in Israel’s EEZ to Vasilikos in Cyprus.
Energean operates a floating production, storage and offloading (FPSO) unit at Karish, producing natural gas for the Israeli energy market, Chrysochos said.
While the agreement primarily concerns PEC’s needs for its power station under construction at Vasilikos, the pipeline specifications would allow transport of additional gas quantities for other interested producers, according to Chrysochos.
Preliminary estimates suggest the gas delivered through the pipeline could be 30-40% cheaper than regasified LNG transported by carriers to the Vasilikos terminal once completed by ETYFA, Chrysochos told Phileleftheros.
The companies estimate pipeline construction would take approximately 14 months from project commencement.
However, permits will be required for laying the pipeline, exporting gas from Israel, and establishing receiving facilities at Vasilikos, processes that will require additional time.
A significant obstacle remains Cyprus’s current legislation, which grants monopoly gas import rights to state-owned DEFA under an EU derogation for emerging markets.
This legislation would prevent Energean or PEC from importing natural gas unless the government and parliament amend the law or DEFA collaborates with the companies.
Chrysochos said the Energy Ministry has been informed about the Letter of Intent and the companies await the ministry’s position on the project to begin necessary procedures.
Regarding pending permits for PEC’s power station infrastructure at Vasilikos and the coastal pumping station for cooling the electricity generation units, Chrysochos said procedures have advanced and he expects these issues to be resolved soon.
PEC is also proceeding with modifications to its Siemens generators to enable diesel use in the absence of natural gas.
Chrysochos said the company would be ready to produce electricity using diesel in 3-4 months while awaiting gas supplies, adding that the generators could easily switch to natural gas when it becomes available.
Meanwhile, state-owned ETYFA is awaiting a Gap Analysis from project manager Technip Energies for its LNG regasification terminal at Vasilikos.
The analysis will determine compatibility between existing constructions and the original design, helping decide next steps for finding a contractor to complete the project. The study is expected in approximately one month.
