The government is aiming to concentrate oil product storage at Vasilikos, near Limassol, to create an energy hub and minimise energy infrastructure in tourist areas. The new private oil terminal VTT Vasiliko Limited (VTTV) took its first deliveries at the end of November 2014 and the government has said all fuel storage facilities must move to Vasilikos by 2017.
“I don’t think it will all be completed by 2017 because we need at least two years to build all the installations in the area, but it will definitely happen in the next three to four years,” Dinos Lefkaritis, Petrolina (Holdings) Public Ltd’s executive finance director told the Cyprus Weekly in an interview.
The Ministry of Energy, Commerce, Industry and Tourism’s October 2013 update to its Master Plan of the Vasilikos Area says the facility there will take the form of an oil products storage terminal for Cyprus’ operational stocks and strategic stock requirements that will also allow for transit trading.
“The establishment of an area for the storage of oil products will enable the existing storage facilities in Larnaca to be closed and transferred to Vasilikos. A key requirement is the urgent transfer of liquefied petroleum gas storage facilities to the Vasilikos area,” the report said.
Lefkaritis, who is also chairman of the Larnaca Tourism Board, said he supported the government’s decision and would assist as far as possible without damaging Petrolina’s interests.
“This was something that was decided back in 2000 so it’s not a surprise. It’s a step forward for Larnaca and for its tourist area,” he said.
Petrolina has already spent €30 million on a storage facility in Vasilikos beside the VTTV terminal. It bought the land for €10 million from Vasiliko Cement Works Public Company Ltd in August 2013 and spent another €20 million on construction of the depot.
“We hope that in the next couple of months we will acquire all the licensing and we are carrying out commissioning at the moment in order to be able to put products into the depot,” Lefkaritis said.
The group has already been storing jet fuel at Vasilikos since 2003, and it will need to build another depot in the area to allow it to move all of its storage facilities.
Capacity in the new depot is for 55,000 tonnes, existing jet fuel capacity is 25,000 tonnes and a further 30,000 tonnes will have to be moved from Larnaca. Petrolina buys its products from Israel and Greece because they are the closest suppliers.
Storage is becoming increasingly important for Petrolina’s business as the effects of the 2013 financial crisis are still curbing spending in Cyprus.
The group posted a net profit of €5,196,216 million in 2014, a drop of almost 40% from €8,511,156 in 2013 that Lefkaritis blamed on falling consumption on the island.
“As a company we used to sell about 10,000-12,000 tonnes of heating fuel a month during winter, now we sell 2,000-3,000 tonnes,” he said.
Lefkaritis declined to give a profit forecast for 2015, saying only that the group’s target is to maintain at least the same profitability.
Petrolina already supplies and stores fuel products for Russia’s Lukoil petrol stations in Cyprus.
Another growth area once the Vasilikos move is completed could be ship-to-ship business – vessels hooking up to directly transfer oil products between each other. A lot of this business takes place in international waters because it is free. But bad weather conditions can also make it risky and Petrolina hopes to be able to charge for the service at its eventual terminal.
Crude oil prices started to fall last autumn, and many analysts believethey could stay low for as long as a year or more because of a global glut.
But Lefkaritis said this will be unlikely to translate into lower petrol prices because the relationship between crude oil prices and those at the pump is complicated.
“Crude is priced per barrel in dollars, we buy tonnes and sell litres in euros – there are lots of transactions involved so it’s not the case that a 20% drop in crude means a 20% drop in thepetrol price,” he said.
Source: InCyprus
