Cyprus Mail
Cyprus

Another top official concerned over direction of energy company

Charles Ellinas

By Stefanos Evripidou

HEAD OF the national oil and gas corporation Charles Ellinas on Wednesday met with Energy and Trade Minister Giorgos Lakkotrypis to discuss the government’s energy plans and how they will impact on his own future at the helm of the new company.

In a written statement, the executive director of the Cyprus National Hydrocarbons Company (CNHC) said he discussed the government’s plans regarding the company “and the possible consequences for him” with Lakkotrypis.

Ellinas said in the statement that he left a successful international career to take up the position at CNHC because he believed he had a lot of experience to offer the country. He noted that before accepting the position, he met with President Nicos Anastasiades, then leader of the opposition DISY, who told him to go ahead and take the job.

“I believe Cyprus is at a critical juncture and needs the contribution of us all. How we proceed in future, however, is in the hands of the government. I hope to be a part of that future,” he said.

It is no secret that all is not well at the CNHC, after two of the three executives on the CNHC board offered their resignations, citing delays and uncertainty over the future role of the company in the hydrocarbons sector.

One of the two is top energy official Solon Kassinis who told Anastasiades last week that he wants to quit as executive vice-chairman at the corporation.

According to sources, the main reason for the discontent is the government’s apparent desire to appoint a “fully political board” of non-executives to the corporation, giving it total control over the entity, while sidelining its three executive board members, Ellinas, Kassinis and Stavros Stavrou.

The coming shake-up at the company will reportedly see the position of executive director, currently held by Ellinas, abolished while the three serving executives will effectively be demoted to department heads.

Sources also pointed to the fact that the CNHC has already been demoted to observer status, with no clearly determined role in negotiations with Noble Energy and other companies for the earliest possible supply of natural gas from offshore block 12 and the construction of a Liquefied Natural Gas (LNG) plant.

The board executives had assumed that their place on the negotiating team to conclude commercial agreements was a given, since the company is meant to be acting as the state’s representative and commercial arm.

However, the government’s plans to restructure the company apparently include giving it a more political slant, by removing experienced members from the board and replacing them with non-executive directors.

Already, the government-appointed negotiating team met with Noble reps in Nicosia this week – one of the first meetings in a series of discussions aimed at hammering out a deal for a final project agreement, considered a milestone for the whole LNG endeavour.

In turn, the deal will pave the way for setting up a joint venture between Cyprus and foreign companies that will seek gas contracts and investors for the multi-billion euro gas plant, eventually leading to the final investment decision by Noble and its block 12 Israeli partners Delek and Avner.

The latter is what will lock in the decision to build an LNG plant, but reports yesterday suggested Delek is already considering exporting natural gas from its offshore Israeli interests to Turkey, Egypt, Jordan and the Palestinian Authority via one or more pipelines.

Should any one project take off, particularly a pipeline to Turkey, this would seriously decrease the chances of Israel making use of Cyprus’ planned LNG terminal to export gas either to Europe or Asia, thereby diminishing hopes of establishing the country as a regional energy hub.

Commenting on the reports, government spokesman Christos Stylianides said it was all the more reason for Cyprus to work fast and methodically to stay ahead of the game.

A road map certainly does exist for turning Cyprus into an energy hub, using its own natural gas while also attracting gas from the region to be processed at its planned LNG plant at Vassilikos.

But as the near collapse of Cyprus’ banking system highlighted the inherent nature of political meddling in the economy, evidence of similar activity in the energy sector would not bode well for the burgeoning industry, considered the great transparent hope of the island’s future economic recovery.

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