Rome hits pause on East Med gas pipeline

Italian media La Stampa, in an article, notes that the EU is ready to finance the 2,200 km long project to unite the gas reserves of Israel and Cyprus with Greece and Italy, but the Italian government is bulking.

Regional tensions between Cyprus, Greece, Italy, and Israel are growing over ownership of offshore fields in the eastern Mediterranean. In December 2018, the four countries signed a $7 billion agreement to provide Europe with natural gas. The deal, known as “East Med”, would help Europe diversify its energy portfolio, while simultaneously reduce its reliance on Russia. The pipeline linking these eastern Mediterranean gas resources will cross from Israel and Cyprus into Greece and Italy, and would be about 2,200 kilometer long. The pipeline is expected to reach Otranto, Italy, via Crete and the Greek mainland. The town is about 30 kilometers south of Melendugno, near the controversial TAP gas pipeline project.

The “EastMed-Poseidon” project (Poseidon is the name of the stretch between Italy and Greece) has already been approved by the previous Italian governments: the former Minister of Economic Development, Carlo Calenda, had signed a joint declaration with colleagues in Greece, Cyprus and Israel. The European Commissioner Miguel Arias Cañete also blessed the agreement, given that the EU has committed itself to co-financing the construction. The signing of the definitive agreement was expected by the end of March, but now Italy has said it wants to take some time. Matteo Salvini initially supported the project during his visit to Israel last December : “I believe in this project and I invite Italian companies to participate,” he said. “There is no environmental impact. Having greater supplies of gas helps reduce the cost of the bill for Italians”. Meanwhile, Five Star Movement has come under fire from environmental activists after endorsing the TAP gas pipeline project. About 30 associations have signed a letter to Conte, Di Maio and the Minister for the Environment Costa asking to block the work, and as such, this is why government has decided to hit pause on the project. Italy’s Minister of Environment has ordered a new environmental impact assessment.

“The Italian government has not given us concrete reasons,” a diplomat working with for one of the other countries tells La Stampa anonymously. “Our impression is that there are electoral reasons behind this stop and reconsideration of the merits. But we don’t know yet if after the elections if something will be unblocked”. The works were expected to begin this year and conclude five years.

For Cyprus and Greece, the work is of strategic importance, not only from an economic point of view, but because it would seal a much wider regional partnership with Israel. The governments of the three countries are in a hurry because they want to go into elections with the project already underway. This is why the hypothesis of a preliminary three-way agreement has also been made, with Italy following in the race. But it would be difficult to start the works without an agreement with Rome.

The project is opposed by Turkey (who sees its regional influence and role as an energy hub diminish) and Egypt (who instead aims to sign an agreement with Nicosia to transfer the natural gas extracted off the island to its shores). In reality, Egypt, with its large deposits could later be associated with East Med. Meanwhile, Exxon Mobil announced the discovery of a natural gas field off the coast of Cyprus, a basin that would have a capacity of 200 billion cubic meters. Obviously, Russia, Europe’s main supplier, does not look favorably on the new pipeline. The EU Commission has declared that the EastMed pipeline is a “project of common interest”. It has already allocated about €100 million for feasibility studies and is now waiting for final approval on financing. “The decision is scheduled for the autumn of this year,” explains an EU official.

There was a meeting this Monday in Brussels with 28 energy ministers. Undersecretary Andrea Cioffi attended the conference on behalf of Italy. When contacted for clarification on Italy’s position, the newspaper was advised to contact upper echelons in the Ministry of Economic Development. But despite repeated requests, no official explanation has arrived.

At the end of January, Prime Minister Conte and the Cypriot president Anastasiadis spoke at the length about the project during the Med7 summit in Nicosia, as well as Netanyahu and the Minister of Foreign Affairs, Enzo Moavero Milanesi, during his recent visit to Israel. But for the time being, the agreement is put on hold.

source: La Stampa