articles | 26 April 2014

Deutsche Bank eyes Cyprus LNG terminal funding

Deutsche Bank officials have told Cyprus they would be interested to lead a financing consortium if the LNG terminal proves to be viable.

The bankers met with Cyprus Energy Minister Yiorgos Lakkotrypis to discuss the funding options over the construction of a natural gas liquefaction terminal to be built at the Vassiliko energy hub once upstream flow starts from the offshore Cyprus gas fields.

Already, block 12 operator Noble Energy and its Israeli junior partners Delek and Avner, have signed a memorandum of understanding with the Cyprus government to plan, build and operate the terminal, estimated to cost in the region of €20 bln.

However, the initial finds of gas reserves have left Noble in a dilemma whether to proceed with the terminal or not. Experts believe that in order for the project to be viable, other exploration companies with licenses within the Cyprus exclusive economic zone (EEZ), French Total and the Italian-Korean joint venture ENI-Kogas, would also have to build a liquefaction train at the terminal.

“Ι await to hear their views on how the project will move forward and on the funding possibilities,” Lakkotrypis had told reporters prior to his meeting with the Deutsche Bank delegation.

The minister had denied press reports that the German bank is interested in the management of the terminal. “There is no such thing, the discussions are at a preliminary stage,” he said.

However, the daily Cyprus Mail reported that “the government has been mulling its options with regard to the LNG facility, after consultants recommended that it stay out of investing directly in the infrastructure project.”  The newspaper added that Noble Energy officials were also present at the minister’s meeting with the German bankers, as Deutsche Bank is already involved in a management role in Israel’s Leviathan offshore gas field, where Noble is a partner with Delek and other investors.

The bank will likely take up a role as arranging bank for future financing of the LNG project, a matter that is expected to be discussed during President Nicos Anastasiades’ state visit to Germany on May 6-8.

An appraisal well carried out by US-based Noble Energy in block 12 revealed a natural gas reserve between 3.6 trillion cubic feet (tcf) and 6tcf with a gross mean resource of 5tcf. Experts say that a single-train LNG terminal needs at least 8tcf of natural gas to be viable.

“This project needs more natural gas to be viable,” Lakkotrypis said, adding, “from there on we are trying through parallel moves to prepare in terms of funding when the project becomes viable.”

Source: Financial Mirror

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