Cyprus & Egypt sign agreement to ship Cypriot gas via pipeline (Update-1)

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(Adds comment by the two ministers in sixth paragraph)

By Stelios Orphanides

Energy Minister Yiorgos Lakkotrypis and Egypt’s minister of Mineral Resources Tarek El Molla on Wednesday signed an agreement for the transport of Cypriot natural gas to offshore and onshore installations in Egypt.

The agreement, which governs gas exports to the Arab country for domestic consumption and re-export, “is one of a series of legal arrangements which will further support the sale of Cypriot natural gas to buyers in Egypt, provide certainty to investors, and complement the relevant commercial discussions which are underway,” the ministers said in a joint statement.

The governments of the two countries also decided to speed up talks on an agreement regarding the construction of a pipeline linking Cyprus with Egypt, “which will facilitate the implementation of the project within the two countries’ maritime areas.”

“Cooperation in the oil and gas sector between the two countries will enhance the excellent relations between Cyprus and Egypt … and will also further unlock and promote the potential of the Eastern Mediterranean as a whole,” the statement said.

Cyprus is considering selling natural gas from its only offshore gas discovery so far when it begins production the earliest in 2020. Cyprus held a third oil and gas licencing round in July, after news of Egypt’s 30 trillion cubic feet gas finding in its exclusive economic zone a year ago increased energy companies’ interest in the Easter Mediterranean region.

The signing of the agreement “confirms” Egypt’s interest for Cypriot natural gas, El Molla told reporters after meeting with President Nicos Anastasiades. “Egypt is a large country with a large population, is a big market and also has a unique geographic position in global transit trade. We are talking about the development of the Eastern Mediterranean and the market in Egypt is rapidly growing”.

El Molla, who also described the agreement as a “milestone”, added that Egypt –whose two liquefaction plants in Idku and Damietta remain mostly mothballed on a raw material shortage– is taking steps to develop an independent gas market, which will need both Egyptian and Cypriot gas both for domestic consumption and export.

“In all cases it was a step that we were waiting for to happen,” the Egyptian official said. “We are looking forward to continuing with the next steps which are part of the commercial agreements that will be developed soon,” the Egyptian official continued. “We shall begin negotiations with the various stakeholders in both countries for the sale and transport of natural gas”.

“We have the support” of President Anastasiades and his Egyptian counterpart Abdel Fatah El Sissi,” El Molla said. “There is a big alignment, there is a big enthusiasm to pursue this opportunity to develop the gas, to bring it there, as part of a big cooperation between the two countries.”

He added that how quickly Cypriot gas will be shipped to Egypt will depend on when the construction of the pipeline will be completed and negotiations with interested parties, which prompted Lakkotrypis to say that while the time frame is placed between 2020 and 2022, Cyprus is trying to speed things up.

“We are in discussions to see if we can expedite it,” he said. The Cypriot minister added that the presence of the Egyptian minister in Cyprus and the signing of the agreement demonstrate the “close cooperation of the two countries sand their willingness to cooperate closely and help and support the operational framework of hydrocarbon companies in the eastern Mediterranean”.

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