Energy minister defends prioritising gas imports (Updated)

Energy Minister George Papanastasiou dismissed media reports on Wednesday which downplayed the government’s reorientation on energy as “wrong”, stating that energy companies and the government are on the same page.

The government had faced criticism from some quarters that the prospects of Cyprus using its own gas fields are diminishing – becoming an importer instead of an exporter.

Later in the day NewMed Energy – one of the three companies with a stake in the ‘Aphrodite’ gas field – said the field will be connected to an established processing plant in Egypt via a subsea pipeline.

There are now many moving parts: Cyprus’ own gas fields, a proposed pipeline to import natural gas from Israel, a suggested liquefication plant at Vasiliko, a potential pipeline with Egypt, among others.

In comments after Wednesday’s cabinet meeting, Papanastasiou emphasised that the two-day workshop was a complete success in which it was confirmed that the stakeholders share a similar outlook with the government.

He emphasised that the primary aim is to secure cheaper energy in Cyprus, and gas could begin arriving from Israel within 18 months – once the agreements are finalised and investment begins.

The minister was dissatisfied with reports, likely from Politis, which cited sources as expressing their disappointment at the situation in which it appears that Cyprus will become an importer of natural gas instead of exploiting its own reserves.

The sources were further quoted as saying that the companies viewed Cyprus’ gas fields as too spread out, further compounded by a lack of sufficient reserves to spark keener interest.

Politis then went on to say that the energy companies are “turning their backs on us”.

But Papanastasiou said those reports create the wrong impression of the situation. He explained the government’s plan as focusing on affordable electricity, therefore necessitating low-cost natural gas to be delivered through a pipeline – from Israel to Vasiliko.

That, he explained, is part of the state’s ultimate aim towards greener energy of which natural gas is a stepping stone.

“So the primary goal has been achieved. The second goal was, since the infrastructure incurs costs, to create an alternative, and that is liquefaction in order to reach European markets – this may not be necessary because we have achieved the first goal,” he said.

At the workshop earlier this week, President Nikos Christodoulides explained that the plan is centred on creating a pipeline from Israel to Cyprus to transport natural gas – meaning cheaper energy on the island – along with a facility which will liquefy the gas, therefore helping Israel export more of its product.

But referring to Politis’ report – that companies are unenthusiastic about Cyprus’ gas fields – Papanastasiou said the situation is a bit of a mixed bag.

Speaking prior to NewMed Energy’s Wednesday statement, Papanastasiou said that the company involved with the ‘Aphrodite’ field has prepared an updated draft report which is currently under review – with some points being favourable and others not so much.

“The first is that the development timeline is 2028 which we do not agree with because the field has been idle since 2011. There will be consultations when we are ready and try to bring it closer to our strategy,” he said.

Later on Wednesday, NewMed Energy, a partner in the Aphrodite gas prospect, said it had submitted with partners Chevron and Shell a development plan for government approval.

“The updated plan is expected to accelerate and reduce the cost of development,” NewMed said, as reported by Reuters.

Papanastasiou told the Cyprus News Agency (CNA) on Tuesday the government already has the blueprint in draft form and is studying it.

Listed on the Tel Aviv stock exchange, NewMed Energy (formerly Delek Drilling) owns a 30 per cent stake in the Aphrodite field, located in Cyprus’ offshore Block 12.

The minister went on to describe the two-day workshop The Cyprus Gateway: Natural Gas to Power and Liquefaction on Monday as a “great success”.

CNA also reported that there is “immediate interest” in the construction of a pipeline connecting Israel with Cyprus.

Citing unnamed sources, the news agency said there exist quantities of natural gas to be sent to Cyprus for immediate use for the purposes of electricity generation.

Cypriot officials are due in Israel in mid-June (likely June 14-15) where a clearer path forward will be set.