Jerusalem (Platts)--10Jun2013/920 am EDT/1320 GMT

The European Union, which is trying to reduce its dependence on Russia for gas and diversify its supply sources, is eyeing Israel as a likely alternative and has proposed linking it to the Trans-Adriatic Pipeline, Israeli industry sources said Monday.

Valeria Termini, vice president of the Council of European Energy Regulators, has held talks with senior Israeli Energy and Water Ministry officials on the proposal, the sources added.

The proposal would enable Israel to join the European pipeline network, eliminating the need to build a costly LNG facility. An LNG terminal is estimated to cost between $7 billion to $10 billion while a pipeline to the European network can be built for $2 billion-$3 billion.

Israel's decision depends on whether the government approves gas exports. A decision is due to be taken in the coming weeks as the government continues to grapple with divergent views on the issue.

Minister for Energy and Water Silvan Shalom has recommended that Israel set aside 530 billion cubic meters to 540 Bcm of gas for the domestic market through 2040. That will reduce the amount available for export to around 360-400 Bcm. In August last year, a government-appointed committee recommended that 500 Bcm be approved for export market through 2040.

--Neal Sandler, newsdesk@platts.com

--Edited by E Shailaja Nair, shailaja.nair@platts.com

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