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Cyprus Internet Directory [ EAC: imported gas would have saved millions ]

EAC: imported gas would have saved millions

Author: 
Stefanos Evripidou

THE DECISION not to import natural gas for power production after it became clear Cyprus had its own deposits is costing the country around €50 million a year in potential savings, said a senior electricity official yesterday. 

Electricity Authority of Cyprus (EAC) official Yiannis Tsouloftas questioned the wisdom of scrapping plans to import liquefied natural gas (LNG) which would have lessened Cyprus’ dependence on costly oil for electricity production. He noted the “great uncertainty” now surrounding the issue of when gas will be brought to Cyprus from its own offshore field in Block 12. 

Speaking at the Cyprus Natural Gas Conference sponsored by Ernst & Young Cyprus, Tsouloftas blamed the EAC’s soaring prices on the island’s dependence on oil, and its small and isolated market, rejecting the notion that profits were high. 

Ninety-five per cent of Cyprus’ energy needs are met through oil-generated electricity production, with the remainder covered from renewable energy sources. The EAC wants to see that oil dependence chopped down to 15 per cent, the share of renewable energy doubled and natural gas used to meet the remaining 75 per cent of energy needs. 

Based on a 2009 study, Tsouloftas argued the authority could have built a regasification terminal at a cost of €400 million which would have allowed the EAC to import LNG and dramatically reduce the use of oil in power production.  

“We could have designed the terminal in such a way so as to convert it from an importing terminal to an exporting terminal” allowing Cyprus to liquefy its own hydrocarbon reserves for export when its own gas comes onshore instead of building a €10 billion liquefaction plant, he said.

“Bearing all costs in mind, there would be a net benefit to the economy of about €700m over 20 years,” had the EAC closed a long-term deal with Shell to import LNG as it came close to doing, translating into savings of about €35m a year.   

“Now though, the prices of oil have gone sky high and the differences between gas prices we locked back in 2009 and today’s oil prices that we’re now paying take this €35m to around €50m,” he added. 

Tsouloftas argued that the EAC could have had the project up and running by 2014. Instead, the government decided to put the brakes on the deal, waiting to see whether Cyprus could use its own potential reserves in the future. 

Speaking to the Cyprus Mail, he rubbished the idea of getting Cypriot gas onshore before 2020, saying it could even take as long as 2025. “It’s very, very difficult,” he said, adding, “Even if all the necessary decisions were taken today, it would take us to 2019 to bring the gas.”

Tsouloftas questioned how much the Cypriot economy will lose in potential savings by waiting to use its own gas reserves. 

Last December, Noble Energy, which has an offshore concession in Cyprus’ Exclusive Economic Zone, announced a sizable gas discovery in Block 12, with a gross mean of seven trillion cubic feet.     

Commerce Minister Neoclis Sylikiotis yesterday confirmed that a government-appointed team will soon begin negotiations with Noble to decide when this gas can reach Cyprus, focusing in parallel on the construction of an onshore liquefaction terminal and the laying down of pipelines from the gas field to Vassilikos power plant.  

Also speaking at the conference, Energy Service director Solon Kassinis said current indications were that Cypriot gas might be brought onshore somewhere between 2016 and 2018, depending on developments. 

He rebuked Tsouloftas for making “dangerous” public statements, and argued against adopting an interim solution for gas at any cost.  

Kassinis argued the government had to give Noble room to work, be profitable and find ways to bring gas to Cyprus as soon as possible instead of rushing to import gas at extremely high costs, like Israel has had to do after Egypt cut off its supplies. 

At the same time, the government is looking into alternative ways of bringing gas to Cyprus as an interim option, he added. 

Sylikiotis is due in Israeli tonight, where he is expected to raise the possibility of a pipeline from an Israeli gas field to Vassilikos with Israeli Energy Minister Uzi Landau on Monday.   

Kassinis threw a one-two jab at Tsouloftas with a few words on electricity prices: “I assure you that these high prices, they are not the highest in Europe, (but) possibly the highest in the world.”

He warned that when natural gas finally comes to Cyprus, providing cheaper options to private energy producers in the open market, “it is going to bring such competition to the EAC, that if they don’t do their homework properly they are going to face serious consequences”. 

 



(Source: Cyprus Mail)
Copyright © Cyprus Mail 2008 Please contact Cyprus Mail for the copyright terms of this article.



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