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Cyprus must resolve energy company port problems asap, energy expert warns

Charles Ellinas

By Thalia Neophytou

Energy expert Charles Ellinas expressed great concern over the problems regarding the use of the island’s ports by gas companies engaged in offshore drilling, stressing that a solution must be found so that they could carry on with their programme unhindered.

In an interview with the Cyprus News Agency, the former chairman of Cyprus hydrocarbon company and CEO of E-C Natural Hydrocarbons Company, Ellinas added that available space at Limassol port was limited therefore there was a possibility it would not be able to host all the companies operating on the island.

Expressing the hope that the problem with the use of the Limassol port by TOTAL would be resolved soon, he said that only then the French company could proceed with exploratory drilling in block 11 inside the island’s exclusive economic zone, a project scheduled for April 2017.

TOTAL cannot sign contracts for drilling before all the problems were solved, Ellinas said, because the drill was costing a million dollars a day and any delay would cost a lot.

TOTAL, he added, would like everything to be clear about its activity in the port of Limassol, after a problem emerged with the port`s managing company DP WORLD.

However, there is another problem relating to the limited space in the port, as reported by gas companies ENI, Noble and TOTAL.

This, Ellinas said, would prohibit ENI and TOTAL to drill in Cyprus’ EEZ at the same time, as ENI plans to begin drilling by the end of 2017.

This may also be a problem for companies taking part in the third licensing round.

Hydrocarbon companies based at Larnaca port have to relocate following a decision by the municipal council.

“We must find a permanent solution to the problem, not only a temporary solution as the one we found now,” he said.

“We want a solution, we want these projects to proceed, we want a port that can serve these companies. These companies came here to make the drilling that we want, we want natural gas. It is our duty to find the solution, ” Ellinas said.

Asked what would be the most economically viable solution for Cyprus, as regards its own natural gas, Ellinas said there were many arguments in favour of a floating liquid natural gas unit.

He mentioned projects already implemented by PETROLAS in Sarawak (Malaysia) and by ENI in Mozambique, something that proves that this technology is no longer a new technology but it is economically advantageous with the current natural gas prices.

He added that it would be likely economically viable if Cyprus could also proceed with FLNG.

“I believe that the company that could look at this issue seriously is TOTAL,”, he said, adding that if TOTAL proceeds with the drill next April, and since there are good chances of success for a small deposit in block 11, then one option for extraction would be FLNG.

“TOTAL has the technology, is already prepared, and has the financial ability to proceed with the project, it does not need help from anyone,” he said.

This way, exploitation would be direct, without having to go through other countries.

“It will be a floating unit over the reserve that will do the production and the liquefaction. The ships will get the gas and go wherever they want to go, without anyone’s permission. It will be under the control of TOTAL and Cyprus,”he said.

Ellinas said intensification of efforts to resolve the Cyprus problem was not connected with developments in the natural gas field, especially with the efforts to build a pipeline transporting natural gas from Israel to Turkey.

“If Israel really wants to go ahead with a pipeline to Turkey and Turkey wants to buy gas, because there are several doubts there, then Cyprus cannot stop the project,” he said. “With a solution or without a solution the pipeline will go ahead,” he said.

He added that there are international agreements such as UNCLOS saying that the country from which a pipeline passes cannot stop it, but could only object on environmental grounds, or other minor issues to a limited extent.

He also noted that the Israeli-Turkey pipeline would not be built by countries but by Turkish companies and will be owned by Turkish companies, not by Israel or Noble.

“This is good for us because we want strong companies, large companies, so if they make discoveries of natural gas to be able to proceed with the projects”, he said.

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