Local
articles | 27 August 2019

Cyprus hopes to import gas for power grid before end 2021

Cyprus expects to start importing natural gas for power production in late 2021 if its complex tender procedure goes according to plan.

The Cyprus Natural Gas Public Company (DEFA), announced last week that a Chinese-led consortium is the preferred bidder for the construction of a €300 million LNG import terminal and related infrastructure.

DEFA Chairman Symeon Kassianides said recently if the procedure goes according to plan, contracts with the successful bidder – consisting of two Chinese firms, two Greek and a Norwegian company - will be signed in mid-October this year.

"This will start the process so that between October and December 2021 we will have natural gas for power generation in Cyprus… we hope by the end of October 2021 but certainly before the end of 2021,” Kassianides said after meeting President Nicos Anastasiades.

A step closer to the establishment of a natural gas market in Cyprus, DEFA said the multinational consortium of JV China Petroleum Pipeline Engineering, AKTOR S.A. and METRON S.A., with Hudong-Zhonghua Shipbuilding and Wilhelmsen Ship Management were the preferred bid.

The other two consortia bidding for the multi-million contract are: Consortium Samsung C&T, Posco E&C, Mitsui O.S.K. Lines, Osaka Gas; and, European Consortium (DAMCO Energy S.A., ENAGAS Services Solution S.L.U., GasLog LNG Services, SNAM Spa, TERNA S.A.).

The LNG import terminal includes a floating storage regasification unit (FSRU), a jetty for the mooring of the FSRU, jetty-borne and onshore pipelines, as well as additional facilities.

The LNG import project is co-financed by a grant of 40%, or up to €101 million from the European Union’s ‘Connecting Europe Facility’.

Kassianides said this was not an interim solution as the same infrastructure can be used for exporting gas when or if Cyprus becomes a producer.

"It is considered a work of the highest strategic importance, so it is not an intermediate solution…the entire infrastructure can be used in the future, even if we have our own gas.”

The LNG terminal at Vassiliko is scheduled for completion in 2021.

DEFA’s tricky tender process – launched last year – closed on July 12, its fourth attempt but Cyprus also needs to secure a supplier of gas apart from building the infrastructure.

It had extended the deadline several times to allow companies interested in bidding sufficient time to put together top-quality proposals.

Kassianides said another tender is currently underway to find a supplier with “strong international interest” from major players that will ensure medium term needs and security of supply.

Despite confidence in the tender procedure, Greek firm Energean Oil & Gas is lobbying hard to be allowed access to the Cyprus market so it can sell its Israeli gas via pipelines to Vassiliko by early 2021.

Officials from Energean have visited Cyprus to make their pitch to supply gas via a pipeline from Israel which it claims will be cheaper and quicker.

Although the government has rebuffed Energean’s “unsolicited offer”, the Greek firm insist they can deliver quicker than the FSRU project and that competition should be allowed for the benefit of the end-user.

Even if the figures add up financially, Nicosia is reluctant to abandon its plan as it doesn’t want to be dependent on a single supplier and forsake the construction of an LNG terminal.

Energean has submitted to the Cyprus Energy Regulatory Authority (CERA) an updated proposal to supply the island with natural gas through an FPSO, which will commence operations in March 2021 in the EEZ of Israel.

There have even been some suggestions the Greek firm could seek legal action to force its way into the Cyprus supply chain.

Complicating matters is that the government has declared the natural gas market in Cyprus as isolated and emerging.

It effectively means that DEFA is not only the sole importer and distributor of natural gas on the island but also the solitary entity allowed to supply the fuel.

Source: Financial Mirror

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