Charles Ellinas

The global climate summit COP30 that took place in Brazil in November fell short of expectations. It is not that the world is not concerned about climate change or that energy transition is not progressing, but more the outcome of the emerging global energy reset.

Undoubtedly the war in Iran has upended the way we view energy security and its impact is global, including on southeast Europe and the East Med. That was the subject of a roundtable conference organised by the Institute of Energy for Southeast Europe (IENE) at the European Parliament in Brussels this week.

The closure of the Strait of Hormuz has stopped about 20 per cent of global LNG supply from reaching markets and has sent gas prices about 50 per cent up from pre-war levels. But it has also presented the East Med with an unexpected opportunity: to create an LNG hub…

On 19 May Cyprus approved the ‘Development and Production Plan' of the Cronos gasfield in block 6 by the ENI-TotalEnergies consortium. This focuses on a fast-track, subsea tie-back to the existing Zohr and Egyptian gas infrastructure, to be liquefied at the Damietta LNG plant for export. The estimated 3 trillion cubic feet (tcf) Cronos is planned to supply natural gas to Damietta by 2028

The announcement of an interim agreement between the US and Iran has triggered an immediate and dramatic reaction in world energy markets. Oil prices fell sharply, with Brent crude dropping below $80/b, as traders rushed to remove much of the geopolitical risk premium that had built up during more than three months of conflict and the effective closure of the Strait of Hormuz. The market response is understandable. The agreement envisages the reopening of Hormuz, the lifting of restrictions on Iranian oil exports, and the start of a 60-day process aimed at reaching a broader settlement covering Iran’s nuclear programme

The first round of high-level US-Iran talks in Lucerne produced cautious but meaningful progress towards restoring stability in one of the world's most important energy regions.

When Cyprus approved the Vasilikos LNG import project in 2019, the rationale appeared compelling. Importing natural gas promised to reduce electricity prices, lower carbon emissions, improve security of energy supply, diversify the country's fuel mix and enable compliance with increasingly stringent European environmental legislation. It was also expected to facilitate the liberalisation of the electricity market by providing a cleaner and more competitive fuel for power generation.

For years, public debate in Cyprus has focused almost entirely on the international price of LNG. Every discussion about importing natural gas eventually arrives at the same question: what will LNG cost?

For many years, the public debate has assumed that replacing oil with natural gas would automatically produce substantially lower electricity prices. That assumption was reasonable when the Vasilikos LNG import project was expected to cost around €300 million.

The first two articles in this series concluded that the key question facing Cyprus is no longer whether natural gas is needed, but whether the current Vasiliko LNG import project remains the most economic way of supplying it.