Royal Dutch Shell Plc is looking to bring natural gas from Israel and Cyprus to market, a step that could help turn the Mediterranean region into a major gas-producing hub.

According to sources, Shell is in talks to buy natural gas from Israel’s Leviathan field and combine it with output from Cyprus’ Aphrodite field – in which has a 35% stake – and pump it to an LNG plant in Egypt.

Israeli and Cypriot gas finds, together with the giant Zohr field off Egypt and reservoirs off Lebanon, could create a centre of gas production right on Europe’s doorstep.

Combining output from the fields, which share some major investors, could potentially improve the economics of the projects.

The developments have been facilitated by Egyptian President Abdel al-Sisi, who amended legislation allowing energy companies in Egypt to import natural gas.

Al-Sisi passed the law at the beginning of August and is expected to be implemented before the end of the year although some companies, like Shell, have already started negotiations with Israel to purchase natural gas from the Leviathan gas field.

Leviathan’s partners, led by Noble Energy Inc. and Delek Drilling LP, are looking at various shipment options as they face an estimated development cost of $3.75 billion.

Shell, following its purchase of BG Group Plc, is considering purchasing some 5 billion cubic metres of gas per year from Israel’s Leviathan.

Delek owns a 45.3% stake in Leviathan – set to start production in 2019 – while Noble holds 39.7% and Ratio Oil Exploration 1992 LP owns the remainder. Noble also has 35%t of Aphrodite and Delek 30%, along with Shell.

The two sites lie just 20 miles apart.

The issue of transporting natural gas reserves to Egypt has been at the forefront of the Cyprus government’s planning which had already submitted a plan, in the event of political difficulties, to transport the natural gas from Israel’s Leviathan gas field to Cyprus and subsequently along with the natural gas from Cyprus to be transported to Egypt.

The opening of direct imports by Egyptian companies from Israel has made things easier and the government sees the move as an important step for Cyprus’ exposure to the international gas markets.

The British ‘Economist’ has also pointed out that Israel no longer needs to pipeline its natural gas reserves to Turkey as Egypt offers a better solution noting that the Egyptian LNG plants offer Israel the opportunity to offer its natural gas to the European market from Egypt.

Considering the latest developments and the previous cooperation between Israel and Egypt, it almost seems certain that the Israeli-Turkish pipeline will be shelved.

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