Cyprus Mail

Intense work to complete second tender for gas imports

THE Natural Gas Public Company (DEFA) is working round the clock to complete the dossier for a second tender for natural gas imports, its chairperson said yesterday.

“We are working intensively on two core documents and we didn’t stop even during the holidays,” DEFA head Eleni Vasiliadou told reporters.

She did not give a timeline for when the tender documents would be ready.

It’s understood that the new tender provides for a contract with a duration of seven years (2016 to 2022), with an option for up to three one-year extensions – potentially 10 years in total.

The import of ‘interim’ gas will be used for domestic electricity generation. The island is currently exclusively reliant on expensive heavy fuel oil for power production.

The first tender was terminated in October last year after DEFA failed to agree with any of the bidders.

DEFA is by law the sole importer and distributor of natural gas in Cyprus. Once it concludes a deal for liquefied natural gas with a supplier, DEFA would then sell the fuel to the Electricity Authority of Cyprus. Any contract therefore requires back-to-back agreements – one between DEFA and the supplier, the other between DEFA and the EAC – that are in sync with each other.

This latter deal between DEFA and the EAC is integral to the whole venture, and is included in the annexes of the tender documents.

Vasiliadou said DEFA and the EAC have been thrashing out this agreement over the past few weeks.

“Essentially, this will be a gentlemen’s agreement, a concrete commitment to the basic principles on which DEFA will launch the tender,” she said.

The EAC is seeking assurances that the new tenders contain no loose ends. A key concern for them is that any contract must contain a price renegotiation clause after a period of three years.

To speed up the process, Vasiliadou said the new bidding competition will merge the invitation for expressions of interest with the submission of bids.

Once the tender documents are ready, they will be published in the Official Journal of the European Union as well as in the local press.

Cyprus is turning to a new international tender after overtures to Israel to export natural gas from the Tamar field apparently came to nothing.

Meanwhile the Ensco 5006 drilling rig has been moored off the coast of Limassol over the past few days.

The platform, under lease by Noble Energy, is on a stopover here after completing operations in Israeli gas fields. It will then make the long trip round the Cape of Good Hope, headed to Singapore where it will undergo refitting and repairs. Its next destination is Australia.

The drilling rig was deployed last summer in carrying out appraisal drilling at the Aphrodite well in Noble’s Block 12 concession in Cypriot waters.

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