UPDATE 1-Greece to commission feasibility study for Mediterranean gas pipeline

Mon Mar 10, 2014 10:41am EDT

(Adds Cypriot energy minister)

ATHENS, March 10 (Reuters) - Greece launched an international tender on Monday for a study on the feasibility of a proposed pipeline to carry gas from Israel and Cyprus in an effort to reduce dependence on Russian supplies.

The Eastern Mediterranean Pipeline is designed to initially carry 8 billion cubic metres a year of Israeli and Cypriot gas.

It would stretch from Israel's Leviathan natural gas field to Greece and onto European markets through the IGI-Poseidon pipeline, led by Italian utility Edison and state-controlled Greek utility DEPA.

The European Commission has said Cypriot gas could play an important role in diversifying supplies but its development is complicated by the long-standing rift between Cyprus and Turkey. The pipeline would pass through disputed waters.

Greece's Energy Minister Yannis Maniatis said there was European interest in creating a new energy corridor, adding it could also reduce energy costs in the recession-hit country.

He said the project was "one more step towards turning Greece into the main gateway to Europe for gas from the Caspian Sea, the Middle East and the southeastern Mediterranean."

For Cyprus, the pipeline is one of three so-called Projects of Common Interest (PCI) involving the island, approved by the European Commission, which has backed 250 power and gas projects designed to curb reliance on Russian gas imports and create a single market.

The other two are Cypriot plans to create a Liquefied Natural Gas terminal on its southern coast, and a subsea electricity cable linking Israel, Cyprus and Greece.

Cypriot energy minister George Lakkotrypis told Reuters the pipeline feasibility study would be led by Greece in collaboration with Cyprus.

"We agreed that Greece will lead this one while Cyprus leads the PCI regarding the electricity interconnector," he said.

The highest-profile non-Russian gas project is one to ship Azeri natural gas from the Shah Deniz field, which has become a contest between the Nabucco West project into Austria, led by OMV and the Trans Adriatic Pipeline into Italy, led by Switzerland's AXPO and Statoil. (Reporting by Karolina Tagaris, additional reporting by Michele Kambas; Editing by Louise Heavens and Mark Potter)