(Ecofin Agency) - Cyprus is to start supplying Egypt with gas as the Egypt’s Minister of Petroleum, Tarek el-Molla (photo), plans to sign a bilateral agreement with the country by early next week.

Under the agreement, Cyprus will provide gas for Egypt’s domestic market as well as its LNG export facilities at Idku and Damietta.The European country plans to supply the gas to Egypt via a proposed pipeline. This plan is good news for the partners on Cyprus’ deepwater Aphrodite field, which have been in search of a market.

Cyprus has examined more than a few gas export options, but pipelines to Egypt and Turkey have appeared to be the most viable option. Exporting gas to Egypt is more beneficial for the Cypriot government than Turkey.“Egypt is a better option in terms of feasibility and building a pipeline or using the Egyptian LNG [facility]; it’s also politically better,” Zenonas Tziarras, a professor in security and diplomacy at the University of Central Lancashire Cyprus, said.

Even though Egypt needs more gas to meet domestic demands and LNG export commitments, the supply restriction is expected to reduce once production commences from the massive Zohr gas discovery.Eni has accelerated the development plan for Zohr and plans to start production by the end of 2017 while the Aphrodite may begin production in 2020, subject to numerous factors, like the recovery of the global oil prices.

Plans to export gas to Egypt have been brought forward by the Cypriot government for a while, but the delay had been caused by Cairo’s belligerent stand on price.This had made the deal unrealistic as developing the Aphrodite field was expensive.“I see [the Cyprus-Egypt deal] as a political move. On the one hand, it’s evidence of Cyprus trying to deepen its relations with other countries in the region – Israel and Egypt – with the intention of exploiting its gas reserves. On the other hand, it’s a response to what has been happening between Turkey and Israel. This has prompted Cyprus to seek an energy deal to counterbalance the Turkey-Israel deal or as a bargaining chip in the negotiations,” Tziarras said.

Importing gas from Cyprus would be politically more suitable for Egypt than importing from Israel. “Israel is eyeing the Egyptian market, although Cyprus seems to be a more preferable [supplier] for Egypt,” Tziarras explained, adding that Egypt could import gas from Cyprus or use the deal as an advantage to pressure Israel on the price.

“The export of gas from the Tamar and Leviathan fields to the idle liquefaction plants in Idku and Damietta via new submarine pipelines is challenging due to the glut in the LNG market and gas pricing considerations,” Amit Mor, a Chief executive of Eco Energy, told Interfax.

Anita Fatunji