NICOSIA, Cyprus — Cyprus and Egypt signed Wednesday an agreement paving the way for the supply of gas to the Arab nation via an undersea pipeline that officials hope will create a regional energy hub.
Cypriot Energy Minister Yiorgos Lakkotrypis and Egypt’s Petroleum Minister Tarek el-Molla said the deal sets the political framework for additional commercial agreements that will determine the details of how, where and when the gas will reach Egypt.
The deal marks a further step in the creation of a network of gas pipelines in the region that will also involve Israel and Greece.
Cyprus, Egypt and Greece are in talks to expand energy cooperation, while Cyprus and Greece are in separate talks to strengthen energy ties with Israel.
“This is part of the development of the east Mediterranean gas as a whole and I think our strategy optimally is to position ourselves as an energy hub in the region,” el-Molla said after signing the agreement with Lakkotrypis.
The two officials said that talks with companies involved in developing Cyprus’ offshore fields will determine whether the gas will be used for Egypt’s domestic needs or be liquefied at Egypt’s processing plants for export to other markets.
From 2005 to 2014, Egypt was a net exporter of liquid natural gas until political instability forced it to use fuel it had been selling overseas.
However, substantial discoveries of gas off the Egyptian coast hold out promise for the resumption of exports and have lifted hopes that more deposits could be found in Cypriot waters too.
El-Molla noted that low prices on the international gas markets have forced energy companies to slash costs and pull back on investments. But he said that companies including Italy’s Eni and Britain’s BP have committed to developing the large new gas fields discovered inside Egyptian waters.
El-Molla said Egypt’s large population and growing industry will need more energy sources, adding that gas “is the energy of the future” and will replace other hydrocarbons, like coal, now being used.
Lakkotrypis said the first gas through the new pipeline should reach Egypt sometime between 2020 and 2022, but officials will try to speed up the timetable.
A field off Cyprus’ southern coast is estimated to contain over four trillion cubic feet of gas.
Companies including Texas-based Noble Energy, Eni, France’s Total and South Korea’s Kogas are already licensed to drill inside Cypriot waters.
Last month, ExxonMobil, Qatar Petroleum and Capricorn Oil were among eight companies that applied for a license to conduct exploratory drilling off Cyprus.