Europe has a history of energy policy failures that it is showing few signs of correcting, according to Israeli energy expert Gina Cohen.
An over reliance on Russian gas has caught out Europe, Cohen said this week. The continent has “failed to do shale gas, is going back on nuclear, has failed to drill for conventional gas and is failing to enter long-term contracts with new suppliers”, Cohen said.
The emphasis on striking short-term deals only, for new supplies, rather than allowing a longer-term place for gas in the energy mix, has continued to hobble the continent.
“In my view it’s very likely that Europe will continue making the mistakes of the past,” Cohen said.
There is little the EU can do in the short term on its energy problems, beyond reducing use. “There will be higher prices and a lower standard of living. And next winter will be worse,” she said.
In the medium term, reconsidering domestic supply options and striking long-term deals for imports offers the most straightforward solution.
“The most reliable source of gas is via pipelines,” Cohen said. “A gas pipeline cannot be diverted somewhere else.”
One such source of additional gas would be the East Mediterranean, she said, with Israel host to a number of discoveries.
Cohen put the volume of gas available (for export) in the East Med at around 800 billion cubic metres, of which 400 bcm may lie in Israel.
To exploit this resource will need investment from the ground up, though. “There is no infrastructure to get this extra gas to Europe. It has not been developed – and will not be until it has a contract.”
Options on the table
Cohen set out two pipeline plans and two LNG plans.
“The easiest and quickest is to build a pipe from Israel and Cyprus to Egypt’s LNG facilities,” she said. A second LNG option would be to install a floating LNG vessel offshore Israel.
Alternatively, a pipe could run from the East Med into Turkey and then into Europe. Or, even more ambitiously, investors could build a pipeline direct from Israel under the sea into Europe.
For any of these plans to work, the Israeli regulators would need to approve, companies would need to invest and offtakers would need to sign long-term contracts. To build a subsea pipeline to Europe would be beyond a company’s resources so this would require major European financial support, Cohen said.
A pipeline might carry 10 bcm per year, perhaps ramping up to 20 bcm. An FLNG option might export 5 bcm. These volumes are not sufficient alone to turn the tide of Russian gas shortfalls. East Med exports could work as part of the solution, though.
“For sellers LNG is the better option as it’s less of a risk. For buyers, the better option is a pipeline. Will [Europe] take either? I don’t know.”