NICOSIA, Cyprus – Cyprus and Egypt signed Wednesday an agreement paving 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 the details 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.
The two officials said that talks with companies involved in developing Cyprus' offshore fields will determine 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 sources, adding that gas "is the energy of the future" and will replace other hydrocarbons, like coal, now being used.
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.
El-Molla noted that low prices on the international gas markets have forced energy companies to slash costs and pull back on investments. But he said that companies including Italy's Eni and Britain's BP have committed to developing the large new gas fields inside Egyptian waters.
Eni's discovery of Egypt's Zohr field last year has been touted as the largest ever gas find in the Mediterranean sea and has lifted hopes that more deposits could be found in Cypriot waters.
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 already 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 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.