Deal agreed for EastMed undersea gas pipeline to Europe

The race for offshore energy deposits in the southern Mediterranean has created tensions between Greece and Cyprus, on the one side, and rival Turkey. Ankara has raised the stakes with claims to areas under Greek control. (AFP)
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Updated 02 January 2020

Deal agreed for EastMed undersea gas pipeline to Europe

  • The 1,900 km EastMed pipeline has a budget of $6 billion

ATHENS: The leaders of Greece, Israel and Cyprus met in Athens on Thursday to sign a deal for an undersea pipeline that would carry gas from new offshore deposits in the southeastern Mediterranean to continental Europe.

The 1,900 km EastMed pipeline is intended to provide an alternative gas source for energy-hungry Europe, which is currently largely dependent on supplies from Russia and the Caucasus region.

As now designed, the pipeline would run from Israel’s Levantine Basin offshore gas reserves to Cyprus, Crete and the Greek mainland. An overland pipeline to northwestern Greece and another planned undersea pipeline would carry the gas to Italy.

The project, with a rough budget of $6 billion, is expected to satisfy about 10 percent of the EU’s natural gas needs. But it also is fraught with political and logistical complexities.

The race to claim offshore energy deposits in the southern Mediterranean has created new tensions between Greece and Cyprus, on the one side, and historic rival Turkey.

Ankara has raised the stakes with recent moves to explore waters controlled by the two EU member countries. Cyprus and Greece are particularly disturbed Turkey sent warship-escorted drill ships into waters where Cyprus has exclusive economic rights.

Cypriot President Nicos Anastasiades said the EastMed pipeline, while not aimed against Turkey, affirms that Greece and Cyprus hold sovereign rights to the waters they control.

Anastasiades, Greek Prime Minister Kyriakos Mitsotakis and Israeli Prime Minister Benjamin Netanyahu were to meet in Athens to sign an agreement on building the pipeline.

Before departing for the Greek capital, Netanyahu said the three countries have established ”an alliance of great importance” that would bolster regional stability and turn Israel ”into an energy powerhouse.”

Israeli Energy Minister Yuval Steinitz has said the EastMed pipeline would take up to seven years to build and that its advantages include being less vulnerable to sabotage and not crossing many national borders to reach markets.

Anastasiades said in an New Year’s Day interview with Cyprus’ Phileleftheros newspaper that the construction agreement’s signing “sends messages in every direction.”

“Especially under current conditions, it demonstrates the strong political will of the countries involved, as well as the European Union, that they don’t accept Turkey’s unlawful actions,” Anastasiades said.

Cyprus is divided into a Greek Cypriot south, where the island nation’s internationally recognized government is located, and a breakaway Turkish Cypriot north backed by Turkey. The split followed a 1974 Turkish invasion after an aborted coup aiming to bring Cyprus under Greek rule.

Turkey is also laying claim to large tracts under Greek control in the Aegean Sea and off the Greek island of Crete.

Turkish President Recep Tayyip Erdogan has said that no project can proceed without his country’s consent following a maritime border agreement that Ankara signed with the Libya’s Tripoli-based government.

The Cypriot government has licensed Italian energy company Eni, France’s Total, ExxonMobil and Texas-based Noble Energy to carry out exploratory hydrocarbons drilling in the country’s offshore economic zone.


Saudi Arabia can bridge budget gap through debt, says Citi Bank chief

Updated 02 July 2020

Saudi Arabia can bridge budget gap through debt, says Citi Bank chief

  • Kingdom’s status as the largest regional economy would give it good access to debt markets
  • Possibility that the Middle East might come out of recession later than some other parts of the world

DUBAI: Saudi Arabia has the capacity to help fund its budgetary needs during the COVID-19 crisis via a mixture of local and international capital markets, according to a senior banker.

David Livingstone, chief executive officer for Europe, Middle East and Africa at American bank giant Citi, told Arab News that the Kingdom’s status as the largest regional economy would give it good access to debt markets.

“I would say being the biggest economy and having lots of investable wealth in the Kingdom gives Saudi Arabia access to capital liquidity to fund the government budget. Certainly, international capital markets will continue to play a role. It’s not a sole reliance on international capital markets - it’s a combination of domestic also,” he said.

Citi has been involved in some of the big bond issues Saudi Arabia has raised, including the record-breaking $12bn Saudi Aramco bond last year. Livingstone highlighted the growing sophistication of the domestic debt markets as a fund-raising resource.

“The domestic market in the Kingdom continues to mature, and with it the ability to be able to balance funding, and not always rely on international capital markets. That is a very good strategy,” he said.

Livingstone was speaking ahead of a two-day webinar forum by the bank under the theme “Navigating the Future: What’s next in a post-covid world?”, along with other top Citi executives.

He downplayed suggestions that the Kingdom’s policymakers had resorted to austerity measures in their response to the economic crisis resulting from pandemic lockdowns.

“I would say that austerity is not a given, because ultimately the big challenge with COVID is the damage that’s been done to the economic actors in the economy - to individuals, to small businesses, to the corner shop, and enterprises and larger organizations. That’s where the balance lies between the livelihoods and economic balance that governments are having to make, and it’s not easy,” he said.

“There is a judgment that has to be made based on the national economy, because ultimately the way to get out of this is for governments to measure their domestic policy against their domestic ability to absorb those policies,” he added.

On the question of timing and shape of the economic recovery, Livingstone said there was a possibility that the Middle East might come out of recession later than some other parts of the world.

“Most people are expecting a sharper recovery in the Middle East region in 2021, which is somewhat delayed. But we think the global recovery can get shifted,” he said.

He also said it was “appropriate activity” for Saudi Aramco to consider funding its ambitious dividend policy partly through debt issuance.

“I think capital markets are for funding the needs of corporates, and the wholesale funding of corporate balance sheets, whether it’s for its own capital expenditure or organic growth or to fund shareholder return,” he said.

On economic growth in the region, and on the prospects for global trade, he warned against taking too pessimistic a view in the current depressed climate. “I think we need to be careful about making assumptions at the trough,” he said.