From FT

Cyprus, Greece and Italy join $6bn-$7bn project to build world’s deepest subsea route

Israel on Monday formally signalled its ambition to become an exporter of energy to Europe, signing a preliminary agreement with Cyprus, Greece and Italy to pump natural gas across the Mediterranean via a planned $6bn-$7bn pipeline.

The proposed project would be the world’s longest and deepest subsea pipeline. Extending from Israeli and Cypriot offshore gasfields to Greece and Italy, it would run for about 2,200km and reach depths below 3km in places. Yuval Steinitz, Israel’s energy minister, said an initial study showed the project was technologically and financially feasible and could be completed by 2025.

“We are here to start a wonderful project of exporting natural gas from the eastern Mediterranean, mainly Israel and Cyprus, to western Europe,” said Mr Steinitz at a ceremony in Tel Aviv, where he and ministers from the three other countries signed a map of the proposed route and a joint declaration on moving ahead with discussions to build it.

“This is going to be the longest and deepest subsea pipeline in the world.”  However, the project is likely to face tough questions and possible skepticism from the business community amid low gas prices and concerns over political risk. Israel and Cyprus are promoting their gas reserves as an alternative to Russia and the North Sea, the EU’s two main gas suppliers. The bloc is trying to reduce reliance on Russian energy and North Sea reserves are depleted.

Israel launched the $3.75bn first phase of its Leviathan gasfield in February and Cyprus recently concluded its third licensing round for offshore blocks. The two countries had 400-500bcm of gas available for export between them, said Mr Steinitz.

The amount so far discovered was “just the tip of the iceberg” and Israel could potentially make more than 3,000 bcm of gas available for export within a few years, he added.

“We highly value gas supply from the region . . . that can make a valuable contribution to our strategy to diversify our sources and suppliers,” said Miguel Arias Cañete, the EU’s climate and energy commissioner, who attended the ceremony on Monday.

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