Cyprus Mail

Priority remains LNG plant says minister

By Elias Hazou
CYPRUS is looking at several options for developing its hydrocarbon reserves but its priority remains the construction of an onshore liquefied natural gas (LNG) plant, energy minister Giorgos Lakkotrypis said on Tuesday.
Floating, or water-based LNG operations, are one alternative, he said, as is a possible pipeline linking Cypriot gas wells to gas-processing plants in Egypt.
Briefing the House commerce committee, Lakkotrypis conceded that the island’s proven gas reserves so far are insufficient to justify an onshore LNG terminal.
But, he stressed, the government is not discarding plans for a land-based facility. The project could still materialise if Israeli gas reserves were to be pooled with Cyprus’ and diverted to a mooted LNG terminal in Vasilikos.
He revealed also that foreign minister Ioannis Kasoulides will be travelling to Jerusalem some time this month for talks with the Israeli leadership.
The purpose of Kasoulides’ visit would be to elucidate Israel’s intentions vis a vis that country’s export policy.
Israel itself is still mulling its export options after a series of major gas discoveries in recent years.
In the interim, gas prospecting in Cypriot waters would continue. The Italian-South Korean consortium ENI-Kogas, which has a concession on three offshore blocks, is planning four exploratory well drillings this year, and in October US-based Noble Energy is expected to drill again in its Block 12 concession.
Should additional discoveries be made, these could raise the estimated amount of reserves and render viable an onshore LNG plant.
Being an island, Cyprus is cut off from continental electricity grids and pipelines and has to import expensive heavy fuel oil to drive its power plants.
It has just invited tenders for the purchase of natural gas for a period of seven to ten years. The invitations for expressions of interest (EOI) were published in the official journal of the EU on January 25. The EOI expires on March 24. The aim of the tender is to lower power generation costs through cheaper natural gas.
Without naming names, Lakkotrypis said a number of companies, including high-calibre outfits, have so far purchased the tender documents.
As far as technology goes, the tender is open-ended, although the terms and specifications are slanted toward suppliers of LNG.
A gas sales agreement would span at least seven years (2016 to 2023) with an option for renewing for another three years.
The top criterion would be the lowest financial proposal, the minister said.
“The dilemma is this: do I take a price today to make the economy more competitive, or do I wait?” Lakkotrypis explained.
Meanwhile Israeli news website Globes reports that the partners in the Tamar gas field – Noble and the Delek Group – are planning €15b in natural gas sales to Turkey, Cyprus and Greece without the need to build a pipeline.
Edeltech Ltd, an Israeli group of companies, is said to be in talks with the Tamar partners to buy up to 80 billion cubic meters and sell it using the Compressed Natural Gas (CNG) technology.
According to Globes, Edeltech plans to bid in the Cypriot tender and wants to buy gas from Tamar at $7 per million British Thermal Units. The cost of transporting gas from Israel to Cyprus is estimated at $2.50 per million British Thermal Units, giving a final price of around $10 per million British Thermal Units, compared with the current price of $18 per million British Thermal Units for LNG.


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