Cyprus Mail
Cyprus Energy

Government pressures energy giants to consider Limassol

A section of the VTTI fuel terminal at Vasiliko

By Elias Hazou

The ministers of energy and transport met on Monday with representatives of the three companies engaged in hydrocarbons exploration off Cyprus, in a bid to persuade them to relocate their onshore logistics operations from Larnaca to Limassol.

At the crunch meeting, it was decided to set up a technical committee to explore the best possible solutions for each of the three companies – Total, ENI and Noble Energy.

The matter arose following a recent decision by Larnaca’s municipal council against extending the permit for the logistics base currently based in that town’s harbour.

Each company’s needs were different, Energy Minister Giorgos Lakkotrypis said later.

Given that Total’s needs were more urgent, as they planned to drill an exploratory well in the autumn, the technical committee would come up with a solution within the next 10 days.

The solution sought for Total was a permanent one, said Lakkotrypis.

For ENI and Noble Energy, the panel would deliver a proposal sometime in the next few weeks.

It was decided that in any case Noble would itself handle the management of its onshore support base.

ENI and Total would subcontract the new facility to third parties.

It was not altogether clear whether the companies definitively agreed to maintain their onshore logistics operations in Cyprus, but at the very least the government has been able to buy itself some time.

Although the government can override the decision of Larnaca’s municipal council – the permit for the support base was issued by the Cyprus Ports Authority, the government agency administering the ports – the administration has opted not to insist on Larnaca.

As the permit at Larnaca port expires in August, it would have to be periodically renewed thereafter, casting a constant shadow of uncertainty over the companies’ operations.

The government has therefore decided to abandon Larnaca altogether, proposing to the companies a long-term workaround, in Limassol.

An area of some 25,000 square metres has been earmarked within the new port of Limassol.

It would be left to the companies to invite tenders for the design and construction of the facility.

Total and ENI currently make use of the same logistics base at the port of Larnaca; the facility is subcontracted to MedServ, a Cypriot-Maltese outfit providing oilfield support services to the offshore oil and gas sector.

Noble Energy operates out of Larnaca as well.

In the wake of Larnaca’s decision, reports surfaced that Total and ENI were considering relocating their onshore support base to Haifa, Israel.

Industry people have been warning the development would lead other energy businesses – which have also set up shop in Cyprus – to leave.

Earlier, walking into the meeting, Energy Minister Giorgos Lakkotrypis said the government is seeking a permanent solution to the issue.

Asked whether the relocation to Limassol – assuming it were accepted by the companies – would push back their exploration programme, Lakkotrypis said it would, but that the delays were “manageable”.

It is estimated that setting up a new support base in Limassol will delay Total’s drilling schedule by three to four months.

The French energy behemoth was planning its first exploratory well inside their offshore Block 11 licence around September. This would now be pushed back to early 2017.

In addition to Total, other offshore drills were planned for this year, Lakkotrypis said, but did not elaborate.

Limassol’s mayor has meanwhile said his town is ready and willing to host the companies.

In a statement on Monday, Urban Cyprus, a citizens group, urged the government to discard the idea of the Limassol port and instead find space near Vasilikos – the site of the existing VTTI energy terminal and Cyprus’ main power station – which they said was far from densely-populated areas.

“The mayor of Limassol is endangering citizens at the altar of money, having rushed to announce that he wants the hydrocarbons companies in his town, supposedly so that they can open offices and the municipality can levy taxes,” the statement said.

“The companies can go to Vasilikos and still leave their offices in Larnaca, since they love that town so much and wish to help it,” it added with a touch of sarcasm.

Weighing in, a citizens activist group representing residents of Larnaca, Aradippou and Krasas, warned the government against overruling their municipality’s decision.

Otherwise, a statement said, “we reserve all our legal rights and the taking of all necessary legal action, at all levels – local, national and European – to protect our interests.”

 



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