Cyprus LNG plant vs EastMed pipeline

4 mins read

Proponents of the East Med pipeline unrealistically believed the project would forge an economic alliance and create vested interests to leverage the defence and security of Greece, primarily, and Cyprus.

This belief emanated from the heartland-rimland theory (Mackinder-Spykman) and a hope/desire to create a regional geopolitical structure or security sub-system that overlooked the complexity and fluidity of power competition.

In addition, this view ignored the interaction between internal and external politics, changing priorities and superpower geopolitical and geoeconomic objectives that would render the EastMed obsolete even within the logic of the theory above.

Moreover, this opinion ignored the maxim that no country will fight another’s war, especially in the case of Greece and Cyprus when the assumed “partners” refuse even to impose sanctions on Turkey.

Ukraine was left alone to fight against Russia, even though it was encouraged to provoke the Russian bear proves the point.

Both Israel and Egypt have their own national and energy interests, and it is not inconceivable that Israel may switch camps if Turkey delivers a better deal. There are already indications in this direction.

Given the special relationship between the US and Israel and the significance of Turkey for America, the EastMed gas pipeline never had a chance despite the persistent efforts of its advocates to salvage it with “hydrogen fuel”, which is not yet cost-effective with current technology.

Developments in Iran and Syria, where Russia has established a warm-waters presence, the security of Israel, and keeping Turkey content in the western camp, against the backdrop of the wider geopolitical game playing out over Ukraine, are major parameters in the American strategy.

As for the perfidious Albion, its anti-Hellenic policies, dating back to its duplicitous change of camps in 1922 against its first-world-war ally Greece, notwithstanding the latter’s self-destructive blunders and misjudgments, surpass even its age-old anti-Russian sentiment and stance.

The United Kingdom led the NATO effort to offer Ukraine military assistance and guarantees and impose harsh sanctions on Russia.

In contrast, it never considered honouring its guarantees and legal obligation to protect Cyprus against the Turkish invasion in 1974.

The United Kingdom is currently promoting the legalisation of the de facto partition of the Republic of Cyprus, even though partition is prohibited by the constitution of the country and the London-Zurich Agreements.


In the light of the above, the best monetisation option for Cyprus natural gas is constructing a land-based LNG Plant.

This is where the true interests of the country and its people lie in all the project dimensions, social, economic, and financial, including maximal geopolitical leverage and effective deterrence.

First, LNG has the characteristics of oil, and therefore it can be sold in markets all over the world where there is demand and better prices.

Expert projections show rising world demand for LNG. Natural gas and LNG will be in demand far beyond 2050.

LNG use as a fuel in road (heavy truck traffic) and maritime traffic has been rising rapidly, gradually entering railroad traffic.

It is not only cost-effective but also an environmentally friendly substitute for diesel.

Thus, EU policies on gradual decarbonisation and promotion of renewable energy sources will not affect the development of Cyprus gas reserves, which is a matter determined by the companies involved based on economic criteria.

In any case, gas is a greener fuel.

Second, the energy sector development around the LNG plant with the necessary infrastructure and ancillary industries will create thousands of high value-added jobs across the entire industry value chain that will increase the gross domestic product (GDP) while diversifying the economy.

Diversifying the economy is frequently raised by the credit rating agencies, the necessity of which became all too clear with the severe impact of the Covid-19 pandemic on the tourist sector.

Third, a dynamic energy sector will create inter-sectoral synergies, multiplier effects and economies of scale.

Fourth, it will provide a much-needed industrial base and infrastructure, rendering the economy more competitive and less vulnerable to external shocks.

Moreover, the power generation sector will produce cheaper electricity with a greener fuel of lower energy intensity (consumption) and higher energy efficiency and productivity, contributing to a carbon-neutral, net-zero economy and EU environmental targets.

Gas-produced electricity may also be sold in the future through the pan-European electricity transmission network highways (EuroAsia and EuroAfrica interconnectors).

In addition, the cost of the LNG plant is lower than the discarded EastMed pipeline and of comparatively much lower investment risk.

Furthermore, the LNG terminal combined with LNG bunkering for fuel supply to ships will help the Cypriot economy take off.

Finally, the LNG plant will enable regional cooperation by creating common economic, commercial, and strategic interests among neighbouring countries (Syria, Jordan, Lebanon, Israel and others) and other international actors than the East Med pipeline ever could.

In this respect, effective economic diplomacy can be pursued through the East Med Gas Forum.

The Russia-Ukraine war, pointing to the evident geopolitical and geoeconomic disadvantages of piped oil and gas, favours the construction of a land-based LNG plant and offers convincing justification and arguments for it, especially in the light of the increasing LNG import terminal capacity in Europe and the expected further diversification away from Russian energy dependence.

ExxonMobil expressed its interest in constructing an LNG plant.

Other multinational energy giants already involved in the Cyprus gas exploration and development programme, like Total, ENI, Qatar Petroleum, Chevron and Shell, could be interested.

These highly promising prospects require the government to pursue fast and with determination its exploration and production programme, avoiding the dithering, ambivalence and hesitation of the last decade that have caused missed opportunities ever since the discovery of Aphrodite in 2011.

Certainly, Turkey, the Turkish Cypriots and neighbouring countries can become shareholders in the Cyprus LNG plant.

The US Geological Survey estimated that the Levant Basin contains mean recoverable resources of 1.7 billion barrels of oil and 122 trillion cubic feet (tcf) of natural gas.

According to the US Energy Information Administration, these prospects underscore that Cyprus, given its substantial EEZ in the Levant Basin, “has the potential to significantly alter its energy sector”.

The LNG plant is a winning strategy that embodies all the features of long-term viability.

If managed with wisdom, it will turn Cyprus into an energy centre and possibly even a hub.

The LNG plant is not just a project. It is a survival strategy, both national and economic.

The Cyprus government must now redesign its energy policy and summon the will, the vision and the courage to place the interests of the Cypriot people above all.

Panayiotis Tilliros, senior economist at the Ministry of Finance, and Research Associate at the Cyprus Center for European and International Affairs, affiliated with the University of Nicosia