The Ministries of Energy of the Israel and Cyprus are holding talks “on issues of mutual interest and potential cooperation,” S&P Global reported Monday, citing a report that the two countries are close to signing a contract to supply natural gas from Israel to Cyprus via pipeline, which would mark the first sale of natural gas from Israel to Europe.

As reported by the Cyprus News Agency, in a post titled “Israel in talks with Cyprus on ‘possible cooperation’ in energy sector”, the contract, worth $1.5 billion (equivalent to about €1.3 billion), to be signed is for 10 years and the gas will come through a pipeline from the Israeli rigs Karish and Tanin to Cyprus.

“In the context of the strong relationship between Cyprus and Israel, the (Israeli) Ministry (of Energy) is holding ongoing discussions with the Cypriot Ministry of Energy on issues of mutual interest and possible cooperation,” an Israeli Ministry of Energy and Infrastructure spokesman said in an October 14 statement to S&P Global Commodity Insights.

According to S&P Global, Energean, which operates the Karish gas field, offshore Israel, has applied for an export license to Cyprus and previously proposed a solution of transporting the gas by pipeline, a company spokesman said on October 13, referring questions about the contract to Israel’s Energy Ministry.

It said the gas from Karish is produced through the Energean Power FPSO, with a capacity of 8 billion cubic meters, annually, for supply to the domestic Israeli market. Gas from Karish is transported to onshore areas in northern Israel, near the border with Lebanon, he adds.

He notes that gas consumption is increasing in Europe, with European gas prices trading around 40 euros/MWh ($44/MWh).

It also reports that Platts, part of S&P Global Commodity Insights, estimated the European gas (Dutch) TTF benchmark price on 11 October at 39.55 Eur/MWh.

It added that immediately after the 7 October 2023 attacks on Israel by Hamas, the Israeli government ordered the closure of the Tamar platform as a precautionary measure, with the platform’s operation beginning a month later.

According to S&P Global, Israel is currently a major producer of natural gas with exports to Egypt and Jordan.

The country’s production reached a record high of 24.7 billion cubic meters (bcm) in 2023, according to Israeli Energy Ministry data published in May.

It notes that Karish, which began production in October 2022, produced 2.77 bcm in the January-June period, compared with 1.97 bcm in the same period last year.

Finally, S&P Global says the country’s other two gas fields are Leviathan, which began operations in 2019, and Tamar, which began operations in 2013.