By Elias Hazou
LARNACA: tourist hub or oil rig service centre catering to Cyprus’ new hydro-carbons industry? A little of both perhaps, if that’s at all possible.
Officially the aim was to turn Larnaca marina and port into the largest passenger terminal in Cyprus. But a consortium set up to develop the project was hampered by lack of funding in the wake of the financial crisis. In the meantime oil field service companies have received permits to set up shop at the port, sparking strong reaction from residents and the business community.
In 2012 the Zenon consortium signed an agreement with the government for the development of Larnaca’s existing port and marina worth a reported €700m. The project would be executed over a three-phase development spanning nine years in total.
Once completed, the new port would become the main passenger port of Cyprus able to accommodate large cruise ships and have the potential to serve commercial vessels. The project would feature parks, restaurants, recreation space, shops and other public areas. Artist’s impressions depict piers and curvy mega-buildings, bringing Dubai to mind.
Then the project hit a snag, as local banks set to bankroll the project pulled back in the wake of the credit squeeze. The Zenon consortium is now seeking financing elsewhere for the initial marina component of the project.
To complicate matters, authorities in the last few months gave at least two energy companies – Noble Energy and ENI – permits to set up base right smack in the port, situated next to the marina, and which happens to be an integral component of the grandiose tourism development plans.
Also on Friday, the government concluded a deal with US oilservices giant Halliburton to use Cyprus as a base for operations in the region. The government assures Larnaca the energy companies won’t be there forever, but locals aren’t sold: they fret about their health, their pockets and the town’s future as a tourist destination.
“I think there’s quite a bit of misunderstanding and even misinformation over the affair, but there’s a sense this is now changing,” Communications and Works Minister Marios Demetriades told the Sunday Mail. On May 23 Demetriades is holding a meeting with stakeholders, including the Larnaca mayor and reps of the Zenon consortium to discuss the whole issue.
The permits given at Larnaca port are for storage space. So far Noble Energy, which has moved its shore base from Limassol to Larnaca, has brought in some pipes to the site, but little else.
Demetriades said that if Noble Energy wants to install a mud plant on the site it must first submit an environmental impact study.
Taking no chances, Larnaca municipality meanwhile is commissioning its own environmental study for the seafront and has already put out feelers for interested contractors.
Also operating out of the port is the Maltese outfit Medserv, acting as subcontractors for Italian oil company ENI, which plans to carry out exploratory drilling in one of their offshore licences in the second half of the year.
Medserv’s permit, granted in September of last year, expires in August 2016, as does that given to Noble Energy.
The permits to the oil companies (actually, to their subcontractors) were issued by the communications ministry and the Ports Authority. Local authorities were kept out of the loop, and they aren’t happy about it.
Lately there’ve been some clues that the friction may be easing off. Speaking to the Mail, Larnaca mayor Andreas Louroutziatis said the municipality is not dead set against the installation of oil field services and logistics facilities, provided however that these are on a short-term basis and involve “mild operations”.
“Our primary concern is for the safety and health of our residents,” he said.
Louroutziatis evaded a question as to how far local authorities would still object should they get guarantees that the oil field services facilities at the port are dismantled by 2016 – around the time that the first phase of the Larnaca tourist development is forecast to start.
“Yes, I’ve heard that argument,” he commented.
The mayor confirmed that about a month ago he and municipal councillors travelled, on the municipality’s dime, to Ravenna, Italy, where they were given a tour of the facilities of oil service giant, Halliburton. They wanted a first-hand look at what it is that oil companies do and were accompanied by Larnaca district’s political party bosses, MPs and officials from the town’s chamber of commerce.
But Chrysis Prentzas, former chairman of the Ports Authority, wonders what the officials got out of the trip. For one thing, he observes, Halliburton’s operations at Ravenna are on a massive scale.
“There’s no comparison whatsoever to what’s going to happen at Larnaca,” he said. “If they wanted to get a feel for Noble’s operations in Larnaca, all they had to do is drive out to Limassol and check out Noble’s mud plant there.”
Prentzas, himself hailing from Larnaca, has previously gone on record suggesting Larnaca could support the energy companies’ activities in a nearby area, still reaping the financial benefits, without abandoning the prospect of a passenger port.
“The way I look at it, the Zenon consortium is holding Larnaca port hostage, in anticipation that economic conditions will someday improve,” he told the Mail.
“Do we really want to give Noble and the others a hard time, if it’s for no good reason? At the drop of a hat they’ll just pack up and move their shore base to Israel.”
Meanwhile the new deadline for the Zenon group to find investors is fast approaching – next week – but the group says it’s confident of getting a new extension from the government.
Dinos Lefkaritis is chairman of the Larnaca Tourism Development and Promotion Company, which has been very vocal against any industrial activity at the port.
Lefkaritis, also an executive at Petrolina – part of the Zenon consortium – said talks with potential investors from the Middle East (including Egypt) are ongoing.
“Things are progressing,” he said, but did not elaborate.
For his part Alecos Michaelides, permanent secretary at the communications ministry, said there was “a fair chance” of the government granting Zenon a further extension.
And he again dismissed the notion that oil and gas companies would operate permanently out of Larnaca port.
The facilities would “definitely not” remain in Larnaca, particularly if the marina project goes ahead.
The official pointed out that in any case the first phase of the Zenon development project does not involve the port, but rather the adjacent marina and the immediate surrounding land.
Earlier, Michaelides told the media that the government included a clause in most of the permits issued that stipulates that if the marina development commences then the energy companies will move their operation elsewhere.
But he refrained from saying where the facilities might then be relocated.
“If on the other hand the marina doesn’t happen, then we shall see,” he added.
Michaelides reiterated that hosting Noble and ENI at Larnaca port is a temporary arrangement.
“Even if an investor for the marina development comes forth tomorrow, the infrastructure to accommodate large cruise ships won’t be needed until after 2016.”
Asked hypothetically whether full-blown industrial activity and the Zenon project can somehow coexist at Larnaca port, Michaelides delivered an emphatic “No.”
“Operational aspects aside, spatially there’s an overlap,” he said.
There are a variety of technical reasons why oil companies chose Larnaca, said Constantinos Hadjistassou, an energy researcher with the Kios centre, University of Cyprus.
The water depth – around 12 metres – is more than sufficient for support vessels to wade into the harbour. Also, the port at Larnaca is nowhere near as congested as Limassol’s.
Hadjistassou explained that because drilling platforms are weight-sensitive, most of the gear – risers, pipelines, fuel, inspection equipment – has to be stored on land.
Whereas space in Limassol is sparse, Larnaca has a great deal of real estate should the oil companies expand their activities.
Hadjistassou says oil companies are obligated to enforce strict safeguards, including safely disposing ashore cuttings collected during drilling.
The locals are up in arms because they were presented with a fait accompli. And they’re wary of politicians, who have for years pledged to take existing oil storage tanks away from Larnaca.
“I think they’ve developed a fixation at being treated as the poor relation, so any mention of industrial activity triggers a kneejerk reaction,” said Hadjistassou.
He comprehends the residents’ concerns – though he says these are exaggerated and perhaps misguided. For instance, there’s a misconception that the activity at the port – even once Noble sets up its mud plant used in the extraction of oil and gas – is tantamount to heavy industry.
But he acknowledges it’s a tough subject:
“Sure, people are worried about their health…they suspect the oil companies will come in, destroy the seafront and then pack up and leave. Then again, you can’t keep the port idle forever on the mere promise of a grand tourist development that may or may not materialise.”
Gas expert Charles Ellinas believes that small-scale hydrocarbon operations at the harbour are not incompatible with passenger activities.
“Noble and ENI will for the most part conduct logistical operations out of there…it won’t make a huge difference for the town I don’t think.”
Ellinas, formerly executive chairman of the Cyprus National Hydrocarbons Company, noted that the existing infrastructure at Larnaca port cannot support heavy industry for the oil companies, which in the long run would need to be moved to the Vassilikos area most likely.
He, too, acknowledged the need for public consultation with residents.
Citing another reason why Noble Energy shifted its shore base to Larnaca, Ellinas explained there is no quay at Limassol port from which to load the drilling mud onto a ship. The ship then transports the mud to the drilling rig out to sea. Instead, in Limassol the US company had to use a floating platform to transfer the mud onto vessels, which was risky. By contrast Larnaca does have such a jetty.
Former Environment Commissioner Charalambos Theopemptou, now a lecturer at TEPAK, highlighted the total lack of public consultation.
“Two things are happening at the same time. First, not everyone has all the facts. Second, there’s a lot of anger among the people in Larnaca – and who can blame them – precisely because no one bothered asking them if they wanted the energy companies in their backyard.
“The whole thing got off to a bad start, and now everyone suspects everyone else,” he said.
He was alluding to the recently created Facebook group “Larnaca in Danger” where activists are campaigning to have the permits issued to oil companies rescinded.
A reading of the online posts quickly conveys the sense that some people are deeply distrustful of their local leaders. The feelings appear to be mutual – municipality politicians feel the criticism leveled against them is partisan-driven.
Theopemptou is big on gathering accurate information and following consultation procedures.
“Right now there’s a lot of confusion. What we need is a structured, honest dialogue between the public and all the stakeholders. People need to see for example official documentation, a piece of paper, confirming that these oil facilities are indeed temporary. Otherwise we can talk until the cows come home.
“Do we know whether there’s going to be one mud plant, two? These are all questions that call for swift answers.”
Theopemptou was non-committal when asked whether the gas activities can coexist with the planned tourism developments.
“Maybe…I don’t know,” he said. “But consider this: say the industrial activity is limited. Even still, picture the smoke and noise pollution at the end of Stratigou Timagiou Avenue on the seafront, right next to the hotels. It won’t be pretty.”
Health and environmental risks
Research done at Limassol port, partly overlapping with the time Noble Energy’s mud plant was operational there, has yielded some interesting finds, though on their own these aren’t conclusive on the question at hand.
Two years ago the Cyprus University of Technology (TEPAK) and the University of Cyprus’ Oceanography Centre launched an EU-funded programme monitoring marine pollution at all the island’s ports.
Dubbed PREMARPOL, the programme involved deploying sensors in the sea and tracking pollutants over a period of two years. The mud plant at Limassol port was not specifically the target of the investigations.
Costas Costa, the programme supervisor, told the Mail there did not appear to be any significant marine pollution from the mud plant.
The measurements did discover slightly increased levels of hydrocarbons in the water – “nothing worrying” he says – which could be attributed to the increased ship traffic in the area.
Nevertheless Costa, associate professor at the department of environmental management of the school of geotechnical sciences and environmental management at TEPAK, is quick to stress the importance of air pollution measurements as well.
“Particulate emissions as well as dust from mixing and transporting the mud are certainly a potential health concern. Other research has found that relatively limited exposure to these particles can lead to respiratory problems, or asthma after long-term exposure. Prolonged exposure to high concentrations can cause pulmonary oedema (fluid in the lungs) in extreme cases.”
Despite this, Costa points out that all potential safety hazards can be managed when a mud plant is designed with the right specifications.