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Our View:  Anastasiades needs to factor the talks into gas plans

PRESIDENT Nicos Anastasiades gave another illustration of his government’s constantly changing energy plans on Wednesday. Addressing the 8th Mediterranean Oil and Gas Forum in Nicosia the president, said that the most viable option was a regional pipeline to Egyptian liquefaction facilities, either at Damietta or Idco, although he did not rule out the establishment of a liquefaction facility in Cyprus.

“Of course, it must be noted that, on the basis of expected future discoveries, the government of Cyprus is also examining the various other scenarios of commercial development including a liquefaction terminal at Vassilikos,” he said. The liquefaction terminal had been at the centre of the government’s original plans but was dropped when the quantities discovered in the Aphrodite field proved inadequate to justify such an investment.

Every once in a while, however, the president or his energy minister would bring up the idea of the terminal, for reasons that are unclear. It has always been difficult to take the government’s energy rhetoric very seriously considering that many months after Egypt made the biggest ever gas find in the Mediterranean we were being told that Cyprus gas would be sold to Egypt. And on Wednesday Anastasiades announced that monetising the Aphrodite gas field was the government’s top priority. But is it the priority of the consortium that has exploitation rights, given the very low international price of gas?

One thing the president did not factor into his speech is how the stalled Cyprus talks would affect the government’s strategy for the development of the hydrocarbons sector, which he claimed gained fresh momentum in the last two years. He cited the promising results of the third licensing round as proof and said that both Total and ENI/Kogas planned exploratory drilling in their respective blocks this year. Would the drilling go ahead if the settlement talks collapsed? And to what extent was the fresh momentum, he spoke about, owed to the progress made at the talks which gave rise to hopes of a deal?

If the current peace drive failed, there is little likelihood Turkey would allow exploratory drilling to take place. Foreign Minister Mevlut Cavusoglu issued a veiled threat about hydrocarbons during last week’s visit to the north, but it was ignored by the government. The harsh reality, whether we like it or not, is that no oil company would risk investing hundreds of millions of dollars for exploiting gas reserves in Cyprus’ EEZ with Turkey’s threats hanging in the air.

Anastasiades should consider this factor before the government finalises its plans for pipelines to Egypt or for the liquefaction terminal.

 

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