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Our View: Stability is essential for big investments

EVERYONE remembers how in the presidential election campaign one of the unsuccessful candidates insisted that we could have avoided a financial assistance programme by pre-selling big quantities of the natural gas we would extract from our EEZ. It was a very foolish idea, even though the demagogue, who came up with it, insisted it was a viable option that would spare us of the dire consequences of a memorandum.

His idea sounds even more outlandish now that the estimates of the gas quantities at Block 12 are being revised downwards – the estimated gross mean was 7 tcf went down to 5tcf and is now at 4tcf. This is an industry characterised by uncertainty and the idea there would be business willing to pay us billions of dollars in advance for quantities of a resource we do not even know we have is just too absurd for words.

The uncertainty has also forced the government to review its plans. Until a couple of months ago, President Anastasiades and his energy minister were declaring that the decision for the construction of a LNG terminal had been taken and there would be no turning back. However Noble Energy’s appraisal drilling indicated that there were inadequate deposits to justify an investment of some 10 billion dollars in a liquefaction terminal. A senior executive of the company said that additional gas discoveries would probably be needed, but placed new drilling at the end of 2014.

There has been talk about turning Cyprus into a regional energy hub, neighbouring countries like Israel using its terminal to export LNG but, understandably, nobody has been willing to make such a commitment. Israeli gas reserves would make the terminal viable. Despite continual consultations with Israel, which has bigger quantities of natural gas, we are not even close to a co-operation agreement, because Tel Aviv wants to keep open all its options, one of which could be the pipeline to Turkey.

Against this background it is very difficult, if not impossible, to make any long term plans about the exploitation of natural gas. Our government is fast realising that no decisions can be taken about projects worth billions when nothing is certain. Turkey’s frequent threats only add to the uncertainty, even though Greek Cypriot politicians try to ignore them. It would be no exaggeration to say that unless there is a Cyprus settlement we will keep on changing our energy plans without any prospect of monetising the gas finds.

Stability is essential for big investments and only a settlement would ensure it. Only then would the government be able to finalise its energy plans and sign co-operation agreements with other countries.

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