articles | 23 April 2013

Full steam ahead with Cyprus energy centre

Preliminary designs for an energy centre at Vasilikos are nearing completion while government seeks strategic investors for construction

Studies on the Vasilikos energy centre’s technical specifications should be ready by next month, according to executive director of the Cyprus National Hydrocarbons Company (CNHC) Solon Kasinis. The government is meanwhile looking for a strategic investor to undertake construction of the energy centre. Once the technical designs are done, Kasinis said, authorities will invite expressions of interest for the project and at the same time begin probing potential long-term buyers for Cypriot gas.

The jewel in the crown of the planned energy centre will be a liquefied natural gas (LNG) plant which will initially utilise natural gas from Cyprus’ fields and later perhaps from other eastern Mediterranean reserves to produce LNG for export to Europe and possibly to other international markets via LNG carriers. One option for Cyprus - once its gas reserves are proved - might be to put up any sales contracts as collateral to secure loans for financing the LNG plant. Kasinis said US firm Noble Energy as well as Italy’s ENI and French oil giants Total have been sounded out on co-financing the LNG plant. The three companies have drilling concessions on offshore prospects in Cyprus’ Exclusive Economic Zone.

The decision to construct the energy centre that will also house a fuel terminal was taken in 2004 with the basic plan completed two years later. In 2003 the government decided to close a fuel refinery located in Dhekelia, which according to the trade minister at the time, would act as a fuel import terminal until a new energy centre at Vasilikos was completed by 2008. The government’s pledge at the time was to move the terminal by 2010. Apart from the old refinery installation, the area is also home to storage tanks belonging to fuel companies. These would also have to move. A private company, VTT, is already constructing a terminal at Vasilikos, which is expected to be completed in the first half of 2014.

Energy and trade minister George Lakkotrypis said recently that Cyprus wants to sign a letter of intent with Israel’s Delek Group and Noble Energy for the construction of the multibillion-euro LNG facility. He added that connecting the Tamar gas field to Cyprus was the best way to export Israeli gas to the Far East.

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