"Gazprom" threatens "Leviathan"
Material posted: Publication date: 24-01-2017
Mediterranean gas could compete with the Russian market of Italy. We are talking about the fuel from the Israeli field "Leviathan", the Cyprus "Aphrodite" and a number of other deposits in the region. "Gazprom" will have at least to reduce the prices, experts warn. Risks for Russian gas holding could rise if the supply to the Italian market will be joined by suppliers from the fields in Egypt "Sohr", one of which is "Rosneft".

The Mediterranean countries are preparing the project of construction of gas pipeline from the field "Leviathan" offshore Israel to Brindisi, Italy. As reported by Greek newspaper "Kathimerini", the representatives of the ministries of energy of Italy, Israel, Greece and Cyprus on Monday in Brussels to discuss the implementation of the project on laying an underwater pipeline to a length of 2 thousand km, the Capacity will be 8-16 billion cubic meters of gas per year, the cost of the project is estimated at $5.5 billion. the Geneva Meeting will be just a preparatory stage for negotiations that is scheduled for February in Israel.

Inventory valuation "Leviathan" is much different. Company Noble Energy, involved in the field development, spoke about 450-620 billion cubic meters of gas. But the US Geological survey says that undiscovered, but technically recoverable reserves of the Leviathan reach almost 3.5 trillion cubic meters. For comparison, the Russian "Gazprom" its reserves estimated at 36 trillion cubic meters.

Earlier, Russian experts have assessed the possibility of supplies from the Leviathan in the 10-15 billion cubic meters per year. But if a pipeline from Israeli fields will be really laid, the supply of gas from the "Leviathan" will obviously be less. The fact that, according to "Kathimerini", the pipe needs to be connected to the Cyprus field "Aphrodite" and a number of other deposits in the region of Greece and Italy.

Italy is one of the main European consumers "Gazprom", and Mediterranean gas can compete in the fuel from Russia.

As reported, the Russian holding company on January 11, at the end of last year, shipments to Italy amounted to 24.7 billion cubic meters (+1,1% in comparison with year 2015). Large volume buying only Germany and Turkey.

Head of the sector economic Department of the Institute for energy and Finance Sergei Agibalov said that if the whole Europe is projected to at least maintain demand at current levels by reducing its own production, specifically in Italy, demand prospects are rather negative (by the way, for comparison, in Germany, "Gazprom" in the same 2016 put 10% more gas than in 2015).

"A General trend of decrease of demand, — says the analyst. — If on the peak of Italy consumed 79 billion cubic meters a year in 2015, the demand amounted to 61 billion cubic meters."

In such a situation, according to Agibalov, the emergence of a new provider with large volumes facing increased competition. "It is not excluded that "Gazprom" will have to reduce prices", — the expert warns.

Head East European Gas Analysis Mikhail Korchemkin believes that at the current price of gas the Israeli fuel in the near future is unlikely to come to Italy. Moreover, a significant increase of gas prices, according to experts, should not count as EU plans aim to reduce the combustion of hydrocarbons.

But, according to Korchemkin, the project of a gas pipeline from the "Leviathan" could become much more economically attractive if it is connected to Egyptian field "Sohr". By the way, discovered the field was the Italian Eni and developed her "daughter" IEOC. Stocks "Zohra" is estimated at 850 billion cubic meters of gas, it is at the moment officially is the largest in the Mediterranean sea.

There is an interesting point in the development of "Zohra" will participate "Rosneft". In December last year, the head of the company Igor Sechin reported that it has signed a deal to join Rosneft in the project development unit "Soruk" (included in "Zohr").

The Russian company acquired 30% concession agreement "Soroku" (also involved Eni and BP) and 15% in the project operator. The total amount of the transaction amounted to $2.8 billion.

If "Suhr" really connect to the planned tube, it may happen that in the Italian market "Gazprom" will compete with "Rosneft".

Mediterranean gas is not the only threat for "Gazprom". On the Italian market plans to deliver their fuel in Azerbaijan. It is about 10 billion cubic meters a year from the field "Shah-Deniz – 2". Last year it was reported that these volumes can cover about 17% of Italian demand (from this we can conclude that the consumption in Italy is projected at about 59 billion cubic meters per year. — "Газета.Ru").

In may last year the EU announced the beginning of construction of the TRANS Adriatic pipeline (TAP), which will be the last link in the chain of pipes of Baku – Tbilisi – Erzurum (South Caucasus pipeline) and the TRANS-Anatolian gas pipeline (TANAP), which will be held on the territory of Turkey. TAP needs to be laid from the Turkish-Greek border, through Albania and the Adriatic sea to southern Italy. The cost of TAP is estimated at €5.6 billion.

Aleksey Topalov

Source: https://www.gazeta.ru/business/2017/01/23/10489073.shtml

Tags: Russia , Europe , Israel , gaz