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Tuesday, 8 May 2018

Egypt’s LNG pipeline with Cyprus expected to cost USD 800 mn-1 bn, El Molla says

The pipeline connecting Cyprus’ Aphrodite gas field to Egypt’s liquefaction plants is expected to cost between USD 800 mn and USD 1 bn, Oil Minister Tarek El Molla said at a joint press conference with Cypriot Energy Minister Yiorgos Lakkotrypis yesterday, Reuters reports. No announcement was made on how both countries plan to split the cost of the pipeline. Cairo and Nicosia will sign a final contract for the pipeline “as quickly as possible,” Lakkotrypis said, but did not specify a date.

What we don’t use will be exported to Europe: The agreement for the pipeline will see some of the Cypriot gas used for Egypt’s domestic consumption, while the remainder will be exported back to Europe, according to a ministry statement.

Signing the agreement still hinges on Cyprus and Israel to resolve their territorial dispute over the Aphrodite field. Israeli Prime Minister Benjamin Netanyahu and Energy Minister Yuval Steinitz are flying to Cyprus today to discuss the dispute, whose resolution will unlock “multi-bn USD plans to turn the eastern Mediterranean into a major energy hub,” Reuters reports. Israel’s approval is necessary for Cairo and Nicosia to move ahead with the planned pipeline. Lakkotrypis had said that an expert would be called in to arbitrate if the two sides are unable to reach an agreement, as we noted previously.

Separately, El Molla announced that production from the Zohr gas field has reached 900 mcf/d after the second and third production units were recently launched, a ministry statement reads. Production is also expected to reach 1.2 bcf/d within the next few days as the units’ output is optimized ahead of Ramadan. Another two production units will be brought online by August.

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