By SONIA GORODEISKY/ GLOBES
The plan pipeline for transporting gas from Israel to Italy via Cyprus and Greece will be 2,100 kilometers long, making it the world’s longest undersea pipeline.
(Tribune News Service) – “The possibility of having the Israel Natural Gas Lines Company take part in building a pipeline for exporting gas to Europe is being considered,” Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz told the company’s management and board of directors, headed by chairperson Eitan Padan. “The project of exporting gas from Leviathan to Europe is making progress, and the possibility of including Israel Natural Gas Lines in the work of building the undersea export pipeline is under consideration. The company has a significant role in continuing to promote connection of the economy to natural gas, and it is good that there are efficient, lean, and successful government companies like Israel Natural Gas Lines.” Steinitz was speaking at the presentation of Israel Natural Gas Lines’ multi-year strategic development plan. The involvement of a government project in this giant project increases the chances that it will materialize.
The plan pipeline for transporting gas from Israel to Italy via Cyprus and Greece will be 2,100 kilometers long, making it the world’s longest undersea pipeline. The cost of construction, slated for completion in 2025, is estimated at NIS 25 billion. Six weeks ago, the energy ministers of Cyprus, Greece, Israel, and Italy signed a memorandum of understanding for construction of a gas pipeline from Israel to Italy.
This ambitious project, however, is far from being realized. The engineering difficulty in this difficult infrastructure project lies in its undersea route, which reaches a depth of 3.3 kilometers, and in volcanic sea bottom between Cyprus and Greece. This feature is liable to cause damage to the pipeline that will be very difficult to repair. Another difficulty of no less importance is the project’s economic viability. The average natural gas price in Europe over the past year was around $5.40 per BTU, while the average price in Israel is not much cheaper — $5.30.
In order to justify the considerable cost of laying a pipeline, a difference of $2-3 per BTU is needed. This is probably possible at the current market prices. The prices in the recent gas deals signed with Energean, owner of the Karish and Tanin gas reservoirs in Israel, were lower than $4 per BTU, compared with the prices that Europe is paying Russian gas company Gazprom, which are in the $6-7 per BTU price range. Even after the pipeline is laid, Israel will not replace Gazprom, which is supplying an estimated 200 BCM of gas a year, but it will make Israel a significant supplier of gas in the region. The pipeline will be able to transport 5-10 BCN of gas a year.
Israel Natural Gas Lines has invested over NIS 6 billion to date in building and developing the gas transportation system, and is scheduled to invest over NIS 2 billion in developing the transportation system in the coming years, even before the investment in the international pipeline. The company plans to hold its fourth financing round soon.
Israel Natural Gas Lines, which is fully government-owned, was founded in 2003. Upon its founding, the government granted the company a 30-year license to build and operate the natural gas transportation system in Israel. Under the terms of its license, Israel Natural Gas Lines transports natural gas to consumers seeking to consume high-pressure gas, including Israel Electric Corporation power stations and private power stations.
(c)2018 the Globes (Tel Aviv, Israel). Distributed by Tribune Content Agency, LLC.