* EU expected to announce list of strategic projects
* European Commission declines to comment
* Cyprus still has to assess feasibility of the link
By Francesco Guarascio
NICOSIA, June 21 (Reuters) - A proposed gas pipeline to link Cyprus to Crete and then Greece or Italy will be in an EU list of strategic projects eligible for financial support, Cypriot officials said on Friday.
Cyprus has high hopes its natural gas reserves can be developed quickly to help revive its broken economy.
Its priority is to build a liquefied natural gas (LNG) terminal, but a pipeline could have advantages for Europe. LNG, which can be shipped anywhere in the world, is typically sold to the most lucrative market. A pipeline would guarantee that some gas supplies reached EU consumers.
“The European Union will include the East Med Pipeline in the revised list of projects of common interest within the Southern Corridor for gas,” George Shammas, chairman of the Cyprus Energy Regulatory Authority, said.
Cyprus Energy Minister George Lakkotrypis also said he had information the European Union would include the pipeline, although adding that Cyprus had to study the feasibility of the link.
The Southern Corridor is the EU name for routes to ship gas from central Asia, the Middle East and the Eastern Mediterranean basin to diversify supplies and reduce dependence on Russian gas.
The most high-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 Swiss AXPO and Statoil.
An official announcement on the outcome is expected next week, but European Commission President Jose Manuel Barroso said on Friday, following talks with the Azeri president in Brussels, he was confident both routes could ultimately be realised.
Gas from Azerbaijan’s Shah Deniz II field is expected to become available for export from 2017, while Cyprus has said it could be exporting gas from 2020.
The European Commission has said Cypriot gas could play an important role in diversifying supplies and in improving room for negotiation with Russia, but its development is complicated by the long-standing rift between Cyprus and Turkey. The pipeline would have to pass through disputed waters.
Finance is also a problem given Cyprus’ huge debts, and the pipeline would run through very deep waters (almost 3 kilometres in places), making it technically challenging.
A Commission spokeswoman said she could not comment.
EU officials have said they expect agreement on a list of EU strategic energy infrastructure projects after the August summer break in Brussels.
These projects, judged to benefit more than one EU country, would be eligible for some of a 5.1 billion euro ($6.72 billion)pot of EU funding under the bloc’s multi-year budget.
$1 = 0.7590 euros Writing by Barbara Lewis; editing by Jane Baird