Greek-owned energy company Energean PLC on Monday confirmed it has signed a letter of intent with a Cypriot company for the potential supply of natural gas to Cyprus via pipeline.

Energean said it signed a letter of intent with Cyfield for the potential supply of natural gas to the latter’s planned power station in the Mari area.

The gas would come from gas fields off Israel where Energean operates.

“Under the proposal, Energean would design, construct, own, and operate a new subsea pipeline connecting the FPSO Energean Power, currently producing in Israeli waters, directly to Cyprus,” Energean said.

An FPSO is a floating, production, storage and offloading unit.

“The agreement and project are subject to the approval of the governments of Cyprus and Israel. Should all necessary approvals be obtained, the project would mark a significant step forward for regional energy integration and security of supply.”

Energean – listed on the London and Tel Aviv stock exchanges – said the proposed project is “designed to benefit both markets, promote regional energy collaboration, and contribute to the development of a competitive and interconnected East Mediterranean gas market”.

The outfit said such a development would diversify gas supply sources for Cyprus and enhance energy security; promote cleaner power generation by replacing oil-based fuels with natural gas; and support economic growth by stabilising energy costs and improving efficiency.

“Energean consistently strives for the operation of a free market and fair competition, the security of supply, and the delivery of natural gas in Cyprus for the benefit of the economy and consumers,” Energean CEO Mathios Rigas said.

“Our proposal offers a practical and cost-efficient solution to Cyprus’ energy isolation by providing direct access to natural gas from a neighbouring source – strengthening regional energy cooperation and supporting the transition to cleaner, more sustainable energy.”

“This collaboration with Energean has the potential to transform Cyprus’ energy future,” CEO of Cyfield George Chrysochos said.

“Access to natural gas will enable cleaner and more efficient power generation, reduce costs for consumers, and help achieve national climate targets. We look forward to working closely with the Cypriot and Israeli authorities to bring this important initiative to life, subject to all required approvals.”

Energean reported revenue of $1.31 billion and total assets of $5.92 billion for 2024.

The under-construction power station in the Mari area is owned by Power Energy Cyprus (PEC), a subsidiary of the Cyfield Group.

The company says it has invested some €200 million in the 260 megawatt power plant.

The Cyprus Mail on Monday attempted but could not reach Energy Minister George Papanastasiou for a comment.

Daily Phileleftheros broke the story about the letter of intent last week. Cyfield boss Chrysochos told the paper that construction of the pipeline would take about 14 months. He also opined that the price of the gas for power generation would be 30 to 40 per cent lower than that paid for the re-gasified LNG, which would be brought by ship to Vasiliko.

By law, only the state-run natural gas public company (Defa) may import natural gas.

Asked about this hurdle, Chrysochos told the Cyprus Mail that one workaround might be for parliament to amend the law, allowing private companies to import gas. Another possibility might be to let Cyfield import the gas under the auspices of Defa.

On paper, Defa would be the importer and distributor.

However, the Cyfield CEO said they’d prefer the first option of changing the law – “A clean-cut solution, without any asterisks,” as he put it.

He also confirmed the joint proposal with Energean involves importing gas from Israel’s Karish field. The pipeline from Karish to Cyprus would be approximately 200km long.

On the PEC power plant in Mari, Chrysochos said it would likely come online around March 2026. The turbines are dual-fuel – meaning they can operate with either diesel or natural gas.

It’s understood that Energean first made their pitch to sell Israeli gas to Cyprus back in 2019. But the idea got little traction at the time, as all eyes were on the Vasiliko LNG import project.