In the second part of his interview to the press, Energy, Commerce, Industry and Tourism minister, George Lakkotrypis makes it clear that, realistically, Egypt’s market is the only option for the confirmed Cypriot gas well.
The minister also mentioned the EU’s expressed interest in financing a feasibility study for the so-called East Med pipeline carrying Israeli and possibly Cypriot gas to Greece, Italy and from there to the rest of Europe.
Representatives from the four countries involved meet regularly to discuss the project, although energy analysts do not hold their breath in anticipation.
The Aphrodite delay
Cyprus has confirmed albeit modest gas findings in Aphrodite well of block 12. For some time now the government has been engaged in talks with Egypt to buy the bulk of Aphrodite’s gas.
Lakkotrypis confirmed that this “is the only viable option”.
Despite the fact that companies of Shell, US Noble Energy and Israeli Delek’s calibrer own the exploitation rights of the Aphrodite gas field, negotiations with Egypt have not borne fruitmainly on high oil prices that make such a deal prohibitive.
“Certainly what is challenging for us is the international prices of oil. Nonetheless, negotiations are continuing in an effort to find a mutually acceptable pricing profile”.
The frustration of the energy companies and the government is palpable not only because Aphrodite’s gas is not expected to bring any profits soon, but also because without a buyer the development of the field will remain remote and Cyprus won’t be able to use its own gas for domestic consumption.
“The domestic demand is so small that it doesn’t justify the development of the Aphrodite field. We need to depend on the vast majority of the gas being exported in this particular case, and we need a contract with a buyer for that”.
East Med pipeline
In mid-2015 the European Union agreed to co-finance a feasibility study to determine if the proposed East Med pipeline, transporting gas for Israel and Cyprus to Crete first and then through Italy to the European Union could be viable. Greece, Italy, Cyprus and Israel welcomed the study.
This way a project which had been labelled as a non-starter financially (initial estimates were putting the cost in the area of €5 billion) acquired political backing. Concerns that an unresolved Cyprus problem would make sales of Eastern Mediterranean gas to Turkey and from there to Europe unfeasible, led interested actors to seek alternatives.
Cyprus’ Energy minister says that the East Med pipeline is one alternative together with “a floating platform to liquefy gas (floating LNG) and an onshore LNG plant”. At the end of the day, Lakkotrypis said, it all depends on the price one sells the gas.
“Can the prices that we sell the gas to a receiver in Europe justify the cost of a pipeline? That is the big question.
“That is why the four countries involved, namely Cyprus, Greece, Italy and Israel, are seeking the assistance of the European Union to help us both in the studies of the pipeline but potentially also in the construction of it”.
The minister also hinted that discussing projects like this could help the East Med region “start thinking the infrastructure that would be required to carry the gas primarily to the European markets”.
Tourism is looking up
Lakkotrypis appears pleased with the performance of Cyprus’ tourism industry during 2016. He acknowledged though that the island needs to try much harder in order to compete with other rival destinations.
And 2016 was a very good year for the tourism industry of Cyprus. Up to 3.1 million people chose to spend their holidays on the island. For 2017 the government aims to consolidate its position on the tourism map and possibly to achieve a slight growth, especially during the winter months. The minister who also oversees the tourism portfolio points out that in 2017 major infrastructure projects will start taking effect.
“Casino, we are licensing and probably by January – February will be done. Then there will be the temporary casinos, each in every region, until we have the big project.
“We will hopefully have some progress with building marinas, whereas we will be looking to give a push to constructing viable golf courses and also invest in thematic special interest tourism, such as medical and wellness tourism.”
Lakkotrypis is quick to point out that the government recognises that the recent tourist surge could be partly attributed to geopolitical circumstances with instability rife in Mid East and Turkey.
“We are not celebrating and I have to stress that we should have had 10 years ago this market share we are getting now”.