The urgent push to end dependency on Russian energy is creating new opportunities for the East Med and reviving projects previously considered unviable

By Charles Ellinas

A proposal by Energean at the last tripartite meeting of the energy ministers of Israel, Greece and Cyprus, held on April 11 has revived the idea of LNG exports from Cyprus. Mathios Rigas, Energean’s CEO, proposed to export natural gas from the company’s gas-fields in Israel to Cyprus for liquefaction using a floating liquefied natural gas vessel (FLNG) at Vasilikos and export to Europe.

The three energy ministers expressed their support for the project, with Energy Minister Natasa Pilidou subsequently confirming that she considers this to be a positive development.

It has all the ingredients required to make it a bankable project: access to natural gas, access to liquefaction facilities and an off-taker to market and trade the LNG. Commercially the project would still be viable even if gas prices come down to pre-energy-crisis levels. In addition, given that the gas comes from Energean’s reserves in Israel, it is free of regional geopolitics.

The project

Energean’s strategic focus is on natural gas exploration and production in the Mediterranean.

The company acquired gas-fields Karish and Tannin from Israel’s Delek in 2016, now estimated to hold 100billion cubic metres (bcm) gas reserves. Energean plans to produce this gas using a floating production storage and offloading (FPSO) – with about 8bcm/yr gas treatment capacity – to be positioned at Karish, 90km offshore Israel, and expected to start operations during the third quarter of 2022. About two-thirds of this gas is destined for the Israeli energy market, but Energean is free to export any additional discoveries.

In addition, the company acquired 100 per cent interest in adjacent exploration blocks 12, 21, 23 and 31 in 2020 – all in the prolific Tamar basin.

The new blocks are estimated to hold up to 110bcm gas. Based on this, Energean has embarked on a drilling programme with three to five wells to be drilled in 2022, starting with Athena-1 in block 12 in March. Results are expected in the second quarter of this year.

In 2018 Energean made an offer to supply Cyprus with 0,5-1,0bcm/yr gas from its Israeli gas-fields through a subsea pipeline. But, even though quite competitive, this was not taken up, with Cyprus preferring to proceed with its own plans to import LNG.

The prospect of new gas discoveries in Israel, the rapidly-changing global energy markets and Europe’s quest for alternative gas sources to replace Russian gas this decade, have prompted Energean to put forward its new proposal to Cyprus.


The use of FLNG to liquefy and export gas has always been an option for the East Med. The war has now brought it back on the table. It is also fortuitous that an eminently suitable FLNG vessel will be coming free in 2026.

The Hilli Episeyo FLNG, owned by Golar LNG, is currently on contract offshore Cameroon. Its full liquefaction capacity is 3.3bcm/yr, just about the right size for what Energean is proposing.

Golar designs, builds, owns and operates marine LNG infrastructure. The company has in fact produced more LNG from floating facilities than any other operator.

The timing of the end of its current contract in 2026 fits well with the timing of the development of Energean’s gas-fields in Israel. The plan is to moor Hilli in proximity to VTTI’s jetty at Vasilikos, for logistical and service support. It will be connected to the Karish FPSO through a 200km long subsea pipeline, with a capacity of about 4bcm/yr.

Vitol, the world’s largest independent oil, gas, energy and commodities trader – it traded 17.5bcm LNG in 2021 – has expressed interest to be the off-taker of the LNG, with likely exports initially to Europe, including Greece, but also to Vitol’s international clients. Greece is also interested in buying some of the LNG.

Energean and Vitol are already working together, having signed a preliminary agreement in March for the marketing of the Karish liquid hydrocarbons.

Once the results from the Athena-1 well drilling become known, it is likely that Energean, Golar, VTTI and Vitol will enter into an agreement to develop the FLNG project.

A formal application will then be made to Cyprus to secure the required licences for the pipeline and vessel to operate in Cypriot waters. It is hoped that these will be granted, making this Cyprus’ first LNG export facility, eight years after the missed opportunity to proceed with the Noble/Delek proposal to build a land-based liquefaction plant at Vasilikos.


Realisation of this project offers Cyprus a number of eminently advantageous opportunities and options.

The presence of the FLNG provides Cyprus with a ‘security-of-supplies’ back-up in case of serious disruptions to its LNG import project – a project already facing increasingly challenging problems. Even though it has been rescheduled for completion next year, it is highly unlikely that it will be ready before 2024. But even then, it is facing serious contractual, construction and cost-overrun problems that continuously erode the project’s efficacy.

Should the project be aborted, Energean could supply Cyprus with competitively priced gas through the proposed pipeline. Even though the company is focused on its FLNG proposal, I am sure it would not be averse to also supply Cyprus with gas, should the opportunity arise.

In fact, should Cyprus require gas earlier, Energean indicated that it could construct the pipeline and deliver gas to the island as early as 2024.

The presence of the FLNG vessel and pipeline infrastructure could also offer opportunities for future expansion, should other East Med gas-fields secure export markets.

Realisation of this project would also strengthen the Israel-Cyprus relationship, much as the export of Israeli gas has done to the Israel-Egypt relationship.

And with at least some of the LNG destined for Greece, the project would also strengthen the tripartite relationship between Israel, Cyprus and Greece. As would construction of the EuroAsia electrical Interconnector, linking Israel to Cyprus and then Greece.

Given global energy developments as a result of the energy crisis and the war in Ukraine, this is the right time for Israel, Cyprus, Israel and Greece to seize the opportunity and sanction these projects as soon as possible, moving away from talk into action. They contribute to the acceleration of energy transition and security of energy supplies, but also to the more widespread implementation of clean energy in the region.

The global energy crisis, the war in Ukraine, and the drive to wean Europe from its dependence on Russian oil and gas, are having a transformational impact on global energy. In the East Med they are creating new opportunities and are reviving projects previously considered unviable. The region must formulate new energy strategies to reflect these changes and their impact on regional geopolitics. Energean’s FLNG proposal is an outcome of this change.


Dr Charles Ellinas, @CharlesEllinas is senior fellow at the Global Energy Centre of the Atlantic Council