Cyprus Mail

DEFA reviewing final bids for natural gas supply

By Elias Hazou

THE Natural Gas Public Company (DEFA) has begun its final phase of assessing the technical tenders for the supply of natural gas, for a potential contract spanning at least seven years and worth upwards of €3bn.

DEFA, for the first time yesterday, looked at a report prepared by consultants assessing the technical tenders on the basis of pass-fail criteria, such as the bidders’ financial standing, creditworthiness, experience and compliance with the technical specifications of the tender.

Based on its initial invitation for proposals, DEFA is seeking a supply line for seven to ten years, commencing in January 2016 and no later than June 2017.

It is looking for a comprehensive solution involving all commercial and infrastructure requirements including sourcing, transportation and processing.

DEFA will sell the gas to the semi-government electricity utility EAC.

The state enterprise did not disclose details on the bidders, with whom it has signed confidentiality agreements.

Once the technical proposals are assessed, one or more (or none) of the bidders may be eliminated. DEFA will then proceed to the next stage, opening the sealed dossiers containing the crucial component of the bids – the financial proposals.

DEFA chairperson Eleni Vasiliadou declined to give a deadline for the assessment procedure and for a final selection decision, but said their aim was to finish “as soon as possible.”

It has been confirmed that DEFA has received four proposals to supply natural gas to the island, an interim solution for power generation before the island’s own reserves come on line.

The only bidder which has made its bid public is the Israeli consortium of Delek and Ratio. The consortium has offered to sell gas via pipeline from Israel’s Leviathan gas field.

The other bidders are reportedly Vitol, the Greek consortium M&M, and a consortium led by Socar, Azerbaijan’s state oil company.

Daily Politis reported that Vitol and M&M have proposed building a floating storage and regasification unit (FSRU), while Socar is said to have proposed an onshore regasification plant.

Dependent on heavy fuel imports for its electricity needs, Cyprus is looking to switch to the cheaper natural gas that will also help lower its CO2 emissions.

DEFA terminated a previous tender last year after it failed to clinch an agreement with the preferred bidder at the time, Russia’s Itera.

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