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Thursday, 20 September 2018

Egypt, Cyprus sign agreement on USD 1 bn gas pipeline

**#7 Egypt, Cyprus sign agreement on USD 1 bn gas pipeline: Oil Minister Tarek El Molla signed an agreement yesterday with Cypriot Energy Minister Yiorgos Lakkotrypis that will see the two countries collaborate to establish a direct underwater pipeline connecting Cyprus’ Aphrodite natural gas field to liquefaction plants in Egypt, according to an Oil Ministry statement. The agreement sets the regulatory framework for the exchange of natural gas between the two countries, ensuring the “safe development, construction, and operation” of the pipeline, Lakkotrypis said yesterday, according to Cyprus Mail. The pipeline is expected to cost at least USD 1 bn to build. The story is getting positive mention from Bloomberg this morning.

The construction schedule is unclear, especially with Cypriot officials still in talks with the consortium holding the license for the Aphrodite field, after they requested amendments to their revenue-sharing agreement with the government. Cypriot officials had previously said that a stalemate or rejection of the request could risk delaying the project by up to a decade. Details on the cost and financing for the pipeline were also not disclosed.

Background: The new pipeline is a crucial milestone in Egypt’s goal of becoming the premier energy hub in the East Mediterranean. Egypt will re-export the LNG back to Europe after it satisfies local demand, calling on two liquefaction plants on the North Coast. Egypt will also be importing natural gas from Israel under a USD 15 bn pact.

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