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Israel approves pipeline deal to sell gas to Europe

Israeli Energy Minister Yuval Steinitz speaks at the third East Mediterranean Gas Forum (EMGF) meeting which is hosted by Egypt and brings together Cyprus, Greece, Israel, Italy, Jordan and the Palestinians in Cairo

JERUSALEM (Reuters) - The Israeli government on Sunday approved an agreement with European countries for the construction of a subsea pipeline that would supply Europe with natural gas from the eastern Mediterranean.

The Eastmed pipeline, which has been in planning for several years, is meant to transport gas from offshore Israel and Cyprus to Greece and on to Italy. A deal to build the project that was signed in January between Greek, Cypriot and Israeli ministers had still required final approval in Israel.

The countries aim to reach a final investment decision by 2022 and have the 6 billion euro ($6.86 billion) pipeline completed by 2025 to help Europe diversify its energy resources.

A land and sea survey is currently underway to determine the route of the 1,900-km (1,200-mile) pipeline. The European Union and the pipeline's owner IGI Poseidon, a joint venture between Greek gas firm DEPA and Italian energy group Edison <EDNn.MI>, have each invested 35 million euros in the planning.

"The government approval of the framework agreement for laying the Israel-Europe natural gas pipeline is another historic milestone for making Israel an energy exporter," said Energy Minister Yuval Steinitz.

The pipeline is planned to initially carry 10 billion cubic meters of gas a year with the possibility of eventually doubling the capacity.

(Reporting by Ari Rabinovitch; Editing by Frances Kerry)