The Energy Ministries of Israel and Cyprus are in talks "on issues of mutual interest and possible cooperation" following reports that they are nearing an agreement for Israel to supply Cyprus with natural gas via a pipeline. This deal would mark Israel's first gas sale to Europe, according to S&P Global.

"Given the strong relationship between Cyprus and Israel, the ministry is engaged in ongoing discussions with its Cypriot counterpart on matters of mutual interest and potential collaboration," stated a spokesperson for Israel's Ministry of Energy and Infrastructure in an October 14 statement to S&P Global Commodity Insights.

The agreement, valued at $1.5 billion, is expected to span 10 years, with the natural gas to be transported via pipeline from Israel's Karish and Tanin offshore rigs to Cyprus, according to a report by ynet.com on October 9, cited by S&P Global.

Energean, which operates the Karish gas field off the coast of Israel, has applied for an export license to Cyprus and previously suggested a pipeline solution, a spokesperson noted on October 13. Questions regarding the contract were referred to Israel's Ministry of Energy.

Gas from the Karish field is processed through the Energean Power FPSO, which has a capacity of 8 billion cubic meters per year (Bcm/y), primarily supplying the domestic Israeli market. The pipeline from Karish brings gas ashore in northern Israel, closer to the Lebanese border.

Israel has become a significant gas producer, exporting to neighboring countries Egypt and Jordan. In 2023, the country's gas production reached a record 24.7 Bcm, according to data from Israel's Energy Ministry published in May.

Karish, which began production in October 2022, yielded 2.77 Bcm of natural gas during the first half of 2023, up from 1.97 Bcm in the same period the previous year.

Israel's other two major gas fields are Leviathan, which commenced operations in 2019, and Tamar, which started in 2013.