Energy group Edison plans to take the final investment decision on a proposed pipeline to deliver east Mediterranean gas to European markets by the end of this year, the Italian project developer told Reuters.
The EastMed-Poseidon pipeline, which would initially connect several gas fields offshore Israel to Italy and have an annual capacity of 10 billion cubic meters (bcm) of gas, could be ready by 2027, Edison said.
The project, supported by Israel, Cyprus, and Greece, would guarantee alternative supplies for Europe, which is weaning itself off Russian piped gas. In addition, it would better connect Cyprus to its EU partners.
For these reasons, the European Commission could be interested in partly funding the project, whose cost is estimated at around 6 billion euros ($6.4 billion), Edison said.
"We expect to take the final investment decision (FID) by the end of this year. With a FID in 2023, the project would be realized by 2027," Fabrizio Mattana, Edison's executive vice president for gas assets, told Reuters in an interview.
The European Union imported 155 bcm of natural gas from Russia in 2021, equating to about 45% of its gas imports, according to the International Energy Agency. Italy's Edison, a subsidiary of France's EDF and Greece's DEPA International Projects are promoting the project through their joint venture IGI Poseidon.
Last year, they received independent positive assessments over the feasibility of the pipeline, which would be 2,000 kilometers (1,243 miles) long, with at least 800 km offshore.
The pipeline would be fed by Israeli gas fields already in production and others under development. These are Leviathan, Tamar, and also the Tanin & Karish fields that have additional reserves to be developed, Mattana said.
These fields produce around 28 bcm a year, with about a third exported to Egypt and Jordan. Production is expected to climb in the coming years as current projects are expanded and any discoveries are brought online.
"If we take into account the regionally unconsumed share plus the additional amount expected from the developments of these fields, we will have 20 bcm more per year for at least 20 years that could pass through the pipeline," Mattana said. The capacity of the pipeline could increase to 20 bcm in a second phase.
It is also designed to transport hydrogen. Edison aims to launch the first, non-binding, market test to assess gas producer and buyer interest for gas transport capacity soon after the summer and, if the outcome is positive, will seek EU funds.
"Europe should have a strategic interest in financing it... institutional investors, infrastructure funds, and transmission system operators from Israel, Greece, and Italy could also find interest in financing the pipeline," Mattana said. The EastMed-Poseidon pipeline is on the list of EU Projects of Common Interest published in 2021. However, it has also drawn criticism, and Greenpeace has asked Brussels not to fund it for both environmental and geopolitical reasons. Edison is seeking explicit support from Rome.
"Our hope is that Italy will sign the intergovernmental agreement [inked by Israel, Cyprus, and Greece in 2020] on the pipeline. We have asked for it, we are having positive contacts with the government," Mattana said.
($1 = 0.9411 euros)
(Reuters - Reporting by Francesca Landini Additional reporting by Marwa Rashad, Ari Rabinovitch and Michele KambasEditing by Nina Chestney and Mark Potter)
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