The East Mediterranean can play an increased role in Europe’s energy security as several resources in the region could be unlocked taking into consideration the ongoing war on Ukraine and the European Union (EU) intention to reduce reliance on Russian energy.

The EU imported almost 45 percent of its gas from Russia in 2021 before the war on Ukraine, accounting to 155 billion cubic meters (bcm) annually. Energy supply disruptions because of Russia’s war on Ukraine resulted in fourfold surge in energy market prices. A total cessation of Russian supplies could plunge Europe into recession. It is thus imperative that Europe identifies long-term solutions to ensure that it is not entrapped in a future energy crisis. Equally important, Europe will need gas as a backup for renewable energy.

Green hydrogen generated by renewable energy or from low-carbon power is also key for the energy transition. Transport pipelines would be a necessary component of a future hydrogen economy. Therefore, Europe must invest in new gas and green hydrogen development projects; the question is, “Where?”

The answer lies in that the European Union must make a “strategic decision” to invest in East Mediterranean gas. Investment in East Mediterranean gas has the benefit of encouraging and cementing regional stability, strengthening member states, and helping Europe transition from Russian to indigenous and other proximate sources of energy.  But Europe must commit to new long-term contracts despite its reluctancy to sign 15-20-year contracts for natural gas because of its declared strategy to be climate-neutral by 2050.

Egypt and Israel Serve as Credible Gas Suppliers to Europe

With an eye to importing regional gas, the EU has concluded a joint Memorandum of Understanding (MoU) with Egypt and Israel, whereby Egypt will liquify Israeli natural gas and ship it to the European Union. Per the terms of the MoU, supplies will increase from 5 bcm to 7 bcm in 2023 and subsequent years.

Quantities can increase further, as the utmost of Israeli and Egyptian production capacity has yet to be realized. Israel has an additional 500 bcm of gas available to export and can provide Europe with 10-15 bcm annually if new investment in pipelines and liquefaction facilities materializes. The dividends of the MoU’s execution are multifold ranging from Egypt’s economic recovery to Israel’s energy security.

The sale of gas provides the Egyptian government with the foreign currency it needs to sustain its 100-million population. The sale of gas also solidifies Israel’s relations with Europe at its time of need.  Overall, the tripartite MoU can prove to be a gamechanger in Israel’s and Egypt’s relations with the European Union.

Energy as a Golden Opportunity for Cyprus

Greece and Cyprus can also present alternative sources of energy supply to Europe. For its part, Cyprus can supply Europe with 8 bcm annually from Aphrodite gas field. American major Chevron announced the acceleration of development plans after the recent successful drilling of an appraisal well on the Aphrodite field offshore Cyprus. But this is the tip of the iceberg. Cyprus has discovered reserves of approximately 700 bcm in the Cronos–1 well drilled in Block 6; in Calypso within Block 7; and, in Glaucus find in block 10 of Cyprus’s Exclusive Economic Zone. 

Energy supplies from these discoveries should be either shipped to Egypt for liquefaction and export to Europe or directed at the Liquefied Natural Gas Receiving and Regasification Terminal in the Vasilikos area of Cyprus that is expected to be operational in October 2023.

An additional option is the construction of a subsea pipeline from gas fields in Israel to Cyprus where gas will be converted to LNG and then shipped to Europe. This has been a proposal initially made by Greek medium-sized energy company Energean Oil & Gas that owns several fields in Israel and has been embraced by the Israeli and Cypriot leaderships.

This project has all the components of a bankable deal, according to Vitol, the world’s largest independent oil, gas, and commodities trader that has expressed interest in exporting the LNG to Europe.

Greece is Set to Start off Gas Exploration

Greece is a prime regional player who can serve as an energy producer and transit hub. Greece is a country that has some promising energy resources that are documented in 3-D seismic surveys conducted in the Ionian Sea and in South and Southwest Greece back in 2013.

Estimates by petroleum geologists, engineers and energy economists indicate that a possible volume of 10 trillion cubic feet (tcf) of gas lies in the sea areas south and in south and southwest of Crete and other areas mostly located in deep and ultra-deep Greek sea waters.

The war on Ukraine triggered a decision by the Greek government for an action plan that centres on the completion of seismic surveys and on drilling at the offshore blocks in the Ionian Sea and south of Crete, that are already conceded to American Exxon Mobil and Hellenic Petroleum. The Hellenic Hydrocarbon Resources Management company (EDEY) estimates there is sufficient time for the development of the natural gas fields throughout Greece.

The case of the super-giant Zohr gas field in Egypt is cited as an example to emulate as its commercial utilization took less than two-and-a-half years after the completion of the seismic surveys. The geological structures in fields west and southwest of Crete resemble to those of Egyptian Zohr and the Israeli Leviathan gas fields.

Revithousa and Alexandroupolis as Primary LNG Hubs

Greece also aims to turn itself into an energy-transit county. It is an EU member state closest to the Caspian Sea’s gas reserves and the gate for Israeli, Egyptian and Cypriot gas reserves to continental Europe. With the deterioration of EU-Russian relations due to the war on Ukraine, Greece is the main entrance of alternative gas reserves to Europe.

The Revithousa LNG Terminal, located southwest of Athens, has been upgraded twice to manage bigger LNG volumes and maintain increased LNG gasification capacity in order to reinforce security of the gas supply for the country and the extended region. The terminal already receives American LNG shipments, highlighting the prospect of Greece becoming a bigger LNG importer than pipe-gas importer in accordance with the ongoing transformation of global LNG markets. Increased LNG shipments received at the Revithoussa terminal have maintained the energy market of Bulgaria since April 2022 when Gazprom decided to deprive the Balkan country by 90% of its gas needs. As consequence, Bulgaria searched for alternative sources of supply and currently receives quantities of 90,000-100,000 megawatt hours of natural gas through Greece.

In addition, the swift construction of the Offshore Floating Storage and Regasification Unit (FSRU) in the city of Alexandroupolis in Northeast Greece for the transfer of LNG to the Balkans and Southeast Europe has attracted American and European support. The reason is that it enhances the diversification of Europe’s energy supply and the funneling of American LNG to the wider region. Alexandroupolis terminal is expected to be operational in December 2023. The Alexandroupolis floating LNG terminal will provide 5.5 billion cubic meters (bcm) of natural gas annually to the markets of Greece, Bulgaria, Serbia, and North Macedonia. Evidently, this kind of infrastructure projects can change the energy map of Europe and turn Greece into a regional energy hub.

Energean Enters the Regional Energy Club