* ITGI sees Eastern Med gas by 2018/2019
* Political, technical hurdles to slow development
* ITGI could also part of Russia’s South Stream pipeline
By Michael Kahn
VIENNA, Sept 11 (Reuters) - The ITGI pipeline project, which lost out in the race to carry Caspian supplies to Europe, could find a new role in transporting eastern Mediterranean gas through Greece, the pipeline’s director of international activities said on Tuesday.
“By 2018-2019, gas from east Med may find its way to Greece and through Greece to the rest of Europe, providing diversification and security of supply as well diversification of routes,” ITGI’s director of international activities Dimitris Manolis told Reuters on the sidelines of an energy conference in Vienna.
“The new fields in eastern Mediterranean - Tamar, Leviathan and Block 12 - are three of the (world’s) top five largest discoveries of the decade.”
Pipeline projects such as ITGI are hot topics as western European users seek to reduce their dependency on Russian gas supplies.
Yet the costly development of new pipelines remains subject to political and geological factors and the Nabucco West pipeline and the TAP project, rivals to ITGI, were picked as favoured possible routes to carry Caspian gas to western Europe by Azerbaijan’s Shah Deniz II consortium, led by BP and Statoil.
The decision was part of a long process of elimination to choose a new pipeline to reduce Russia’s dominance of the European Union natural gas market, forcing ITGI to explore other opportunities.
“(The project) remains open to export natural gas from Shah Deniz II, however, due to the latest selection choices by Shah Deniz II we are forced to consider in parallel alternative sources of gas,” Manolis said.
One of these options could be transporting gas from new fields in the eastern Mediterranean, with proven reserves of around 940 bcm, enough to meet Europe’s gas demands for over 18 months.
Manolis said DEPA, Texas-based Noble Energy, Israel’s Delek Group and the Cypriot government had looked at whether building such a pipeline to transport eastern Mediterranean supplies was possible.
ITGI (also known as TGI or IGI) is an upgrade and extension of existing gas connections which should cost around 1.25 billion euros ($1.6 billion) and be ready by 2015.
The operator’s main partners are Italy’s Edison, Greece’s state-controlled DEPA and Turkey’s Botas.
Developing gas production and exports in the eastern Mediterranean will pose technical and political difficulties as the waters between Israel, Cyprus and Greece are among the deepest in the Mediterranean Sea.
“Despite technical difficulties, the construction and operation of such a pipeline is do-able,” he said, adding technical feasibility had been confirmed by projects with similar characteristics, such as the Medgaz pipeline between Algeria and Span and the Galsi pipeline between Tunisia and Italy.
While cooperation between Israel and Cyprus works well, with the two governments having joint exploration agreements, experts say developing Israel’s and Cyprus’s gas fields will be further complicated because of deeper regional conflicts.
Analysts have said it would be easier to run a pipeline from Cyprus to Turkey, but political disputes over the division of Cyprus have so far prevented joint development. The Turkish government has said any Cypriot gas revenues would have to be shared with Turkish-speaking northern Cyprus.
Turkey does not recognise the Republic of Cyprus, which along with the European Union does not recognise northern Cyprus.
Additionally, the Lebanese government has said that some of Leviathan’s gas may be in its waters, a claim Israel rejects.
ITGI could also become the European leg of the Gazprom-backed South Stream project, which plans to transport up to 63 bcm of gas to central and south Europe, bypassing countries such as Ukraine.
TAP’s partners are Norway’s Statoil, Swiss firm EGL and Germany’s E.ON Ruhrgas. Nabucco’s main stakeholders are OMV, German utility RWE, Hungary’s MOL, Romania’s Transgaz, Bulgaria’s Bulgargaz and Turkey’s Botas. ($1 = 0.7821 euros) (Additional reporting by Henning Gloystein in London; Editing by David Holmes)