Natural Gas Infrastructure Company of Cyprus (ETYFA) has issued the Notice to Proceed to the Consortium that was awarded the construction works of the liquefied natural gas (LNG) project in Cyprus, Cyprus’ Natural Gas Public Company (DEFA) Chairman Symeon Kassianides told New Europe in an interview on June 24. “The launch of the terminal project is scheduled for July 9 with a ceremony that will take place at Vasilikos with the participation of Cypriot authorities and all stakeholders of this major energy project of significant strategic and environmental importance,” he said.
According to Kassianides, ETYFA secured a grant of €101 million from the Connecting Europe Facility (CEF) Energy, received €43 million as equity finance by the Electricity of Cyprus while in addition the Board of Directors of the European Investment Bank (EIB), approved funding of €150 million and the Board of Directors of the European Bank for Reconstruction and Development (EBRD) approved additional funding of €80 million for the construction of the Cyprus LNG Import Terminal. “We are therefore, confident that the financing of the project is fully secured,” he said. It is estimated that the project will be completed in 24 months. Thus, it is expected that first LNG will come to Cyprus in the summer of 2022.
The project entails the acquisition of an FSRU, the construction of a jetty, pipelines and all related infrastructure. “Cyprus is moving in the right direction as it’s widely considered that turning to natural gas is not only our national strategy aiming at lowering the very high electricity cost for all consumers but also our European commitment to meeting the environmental and energy goals set by the European Union,” Kassianides said. Aphrodite’s consortium is moving with its Development and Production Plan, which will supply with a substantial amount Europe and the international market, he said, adding that potential synergies between own reserves and the LNG Terminal will be explored at a later stage.
The consortium comprises 2 Chinese companies and two European companies. It is an EPCOM (Engineering Procurement Construction Operations and Maintenance) contract. The facilities will be fully owned by ETYFA so there is no foreign ownership or investment. As for the process of converting an LNG tanker to an FSRU, this is a tried and tested approach, he said, adding that it was the optimum solution in terms of requirements, timing and cost available to the project, he said.
DEFA’s role is the procurement/import and distribution of natural gas for the needs of Cyprus, Kassianides explained. Natural Gas exports is not within the DEFA. Exploitation and monetization of the Cyprus natural gas reserves lies with the Cyprus Hydrocarbons Company (CHC) which is responsible for the exploration and production in the Cyprus Exclusive economic zone (EEZ). The CHC objective is to discover and develop hydrocarbons and bring to market for both potential uses within Cyprus but primarily it is expected that most of the gas will be sold internationally.
He said the exploitation of the hydrocarbon resources in the Cyprus’ EEZ are a main priority for the Cyprus government. Another important factor is the liberalisation of the electricity/power market where in this new market, producers and suppliers of electricity will now compete on an equal footing, he said.
Kassianides told New Europe there potential to export further natural gas resources to other
European countries, contributing to EU energy security. Cyprus expects that initial natural gas production from the Aphrodite field will begin between 2024 and 2025. A favoured and likely scenario is to transport the gas from the Aphrodite field via pipeline to Egypt, where it will be liquefied and exported to Europe and other countries. “With further discoveries the contribution to the EU energy security will increase and could take other forms. We need to keep in mind the work supported by the EU in the EastMed Pipeline,” he said.
Given the low energy prices following the coronavirus pandemic, US major ExxonMobil has decided to freeze exploration at Block 10 and France’s Total and Italy’s ENI postponed their drilling activities. However, Kassianides said in the medium to long term, which is a timeframe for further discoveries and for successful field development and monetization of reserves, there is the conviction that the export prospects from the Eastern Mediterranean remain promising. He added that the needs for energy and electricity will continue to grow. “That means the market for EastMed gas will grow,” Kassianides said, adding, “Indications are that the companies will resume their drilling activities in 2021”.
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