Cyprus and Egypt signed an agreement Wednesday that paves the way for the supply of gas to the Arab nation via an undersea pipeline that officials hope will create a regional energy hub.
Cypriot Energy Minister Yiorgos Lakkotrypis and Egypt’s Petroleum Minister Tarek el-Molla said the deal sets the political framework for additional commercial agreements that will determine of how, where and when the gas will reach Egypt.
“This is part of the development of the east Mediterranean gas as a whole and I think our strategy optimally is to position ourselves as an energy hub in the region,” el-Molla said after signing the agreement.
It is yet to be determined whether the gas will be used for Egypt’s domestic needs or be liquefied at Egypt’s processing plants for export to other markets. El-Molla said Egypt’s large population and growing industry will need more energy, adding that gas “is the energy of the future” and will increasingly replace other hydrocarbons, like crude and coal.
Lakkotrypis said the first gas through the new pipeline should reach Egypt sometime between 2020 and 2022, but officials will try to speed up the timetable.
Hopes for energy finds in the region were buoyed last year when Italian firm Eni discovered in Egyptian waters what it touted as the largest ever gas find in the Mediterranean sea.
A field off Cyprus’ southern coast is estimated to contain over four trillion cubic feet of gas. Companies including Texas-based Noble Energy, Eni, France’s Total and South Korea’s Kogas are licensed to drill inside Cypriot waters.
Last month, ExxonMobil, Qatar Petroleum and Capricorn Oil were among eight companies that applied for a license to conduct more exploratory drilling off Cyprus.
Cyprus, Egypt and Greece are already in talks to expand energy cooperation. Cyprus and Greece are in separate talks on strengthening energy ties with Israel.
Meanwhile, breakaway Turkish Cypriots have objected to the deal, repeating that such “unilateral” actions by Cyprus’ internationally-recognized government ignore their rights to the ethnically-divided island’s potential mineral wealth.
Cyprus was split into a Greek speaking south and a Turkish speaking north in 1974 following a Turkish invasion triggered by a coup aiming at union with Greece. Turkey doesn’t recognize Cyprus as a state and is the only country to recognize a 1983 Turkish Cypriot declaration of independence.
Baris Burcu, spokesman for Turkish Cypriot leader Mustafa Akinci, last week dismissed any deal that violates Turkish Cypriot rights as “unacceptable.” He said actions that “increase tension and poison” ongoing negotiations aimed at reunifying the island should be avoided, adding that the feud over energy exploitation rights has harmed peace talks in the past.
The Cypriot government has said it’s within its sovereign rights to drill and that any oil and gas-generated revenues will be shared with Turkish Cypriots after a reunification accord is sealed.