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Joint interview of the Cypriot and Israeli gas regulators on their national latest gas developments

Held the day after a workshop on the “Future of the Gas in the Mediterranean Region” organised by MEDREG on 4 July in Lisbon, MEDREG’s 25th General Assembly offered the opportunity to hold a joint interview of the Cypriot and Israeli regulatory members, CERA and NGA.

The two gas regulators highlighted the role they play in supplying their domestic market in gas in the context of the significant gas discovery currently being exploited in those two Mediterranean countries. 

Mr. Philippos Alkis Philippou, Vice-Chairman of the Cyprus Energy Regulatory Authority (CERA) said that Cyprus, along with Israel, plays its part in the gas development efforts in the region.  As regulator, CERA is responsible for the local gas market.  However, Cyprus does not currently have a local gas market, so CERA is in the process of creating the regulatory environment to prepare the local market for the introduction of gas.

Initially, natural gas will be used for electricity generation.  Once that is done, then we will seek to expand the gas market to cover other areas. Sourcing natural gas will be done in stages, as well.  At the beginning, the plan is to import gas in the form of LNG and to do that the necessary infrastructure for LNG imports and regasification needs to be built.  At a later stage, depending on developments and economics we will explore the possibility of joining a pipeline network in the region for direct natural gas imports.

Concerning the development of the market and expanding the distribution of gas to the industrial and residential sectors, Mr. Philippou stated that although this is important and necessary, at present the country remains focused in developing the infrastructure for LNG imports, as mentioned earlier.

Asked if CERA regulates the gas infrastructure, Mr. Philippou stated that the companies that are now involved are State owned and will be regulated.

Mr Alexander Varshavsky, Director General at the Israeli Natural Gas Authority (NGA) also provided an update on the gas regulator’s activities to accompany the development of natural gas in Israel and beyond.  

Exchanging with MEDREG Secretariat, Mr Varshavsky indicated that as a result of giant gas fields that were discovered in the Israeli exclusive economic zone, like Tamar, Leviathan and smaller gas fields, Israel is in the process of converting its power generation and industry into natural gas. In the recent years, the country converted most of its power generation into natural gas. At present 65% of all power generation in the country is from natural gas as well as all the major industrial facilities are working on natural gas. 

Mr Varshavsky added that Israel is currently continuing the process of bringing natural gas to the industry and households and the next stage is the development of the distribution network. 

As a regulator, NGA is working in accordance with the gas market law, which was established in 2002 and gives a regulatory framework for natural gas usage in the Israeli market. “The Israeli gas regulator is also learning from the experience of the European countries, as a new comer to the gas industry, it is important to understand and to learn from countries that have experience in that field”, stated Mr Varshavsky. He added that “currently, NGA has a major challenge in the distribution sector as it is not easy to bring gas to consumers and we are learning from the European experience”. 

Regarding the export of gas, as national gas regulator, NGA is responsible for parts of the exports that are going through the Israeli gas transmission system operated by a TSO, which is a government-owned company, to the neighbouring countries. Currently, there are four agreements for gas export from Israel to Jordan and Egypt.

Israel is building a major extension of the transmission system through which it currently supplies gas to Jordan, to export substantial quantity of gas to Jordan in the near future as well as to Egypt.

As for the possibility of exporting gas to Europe, there is a framework - an MoU- signed by Israel, Cyprus, Greece and Italy to supply gas to Europe, from Leviathan gas field in Israel, and Aphrodite gas field in Cyprus. Directors of Energy Ministries of Cyprus, Greece, Israel and Italy had a meeting in Athens on 5 July in the framework of this MoU, added Mr Varshavsky 

Talking about the possibility of exporting gas from those major Mediterranean fields to Europe, it is necessary to create a political and regulatory framework, involving technical and financial requirements, stated Mr Varshavsky. He concluded saying that this represents a challenge that we will have to solve.