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Cyprus looks to move fast with gas search

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Photo - Energy Minister Yiorgos Lakkotrypis speaks during an interview for the Associated Press at his office in the Cypriot capital Nicosia, Thursday, May 8, 2014. Cyprus' energy minister says a land-based facility to process new offshore gas finds remains a top priority, but the search for additional sources of the fuel must move quickly to keep up with a rapidly shifting market. (AP Photo/Petros Karadjias)
Energy Minister Yiorgos Lakkotrypis speaks during an interview for the Associated Press at his office in the Cypriot capital Nicosia, Thursday, May 8, 2014. Cyprus' energy minister says a land-based facility to process new offshore gas finds remains a top priority, but the search for additional sources of the fuel must move quickly to keep up with a rapidly shifting market. (AP Photo/Petros Karadjias)
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NICOSIA, Cyprus (AP) — A land-based facility to process Cyprus' new offshore gas remains a top priority, but the search for additional sources of the fuel must move quickly to keep up with a rapidly shifting market, the country's energy minister said Thursday.

The amount of gas inside Cyprus' single proven field off its south coast isn't enough to secure the billions of euros needed from investors to finance construction of the facility that authorities hope will turn the country into an alternative supplier of energy to Europe and beyond.

Energy Minister Yiorgos Lakkotrypis told The Associated Press that signs of additional gas discoveries in Cypriot waters are "very promising." But he said it's essential to expedite exploration so Cyprus can keep up with other potential exporters.

New sources of fuel — like shale gas from the U.S. — could soon reach the market, lowering prices and complicating Cyprus' efforts to woo investors willing to back construction of the expensive facility that would liquefy the gas for easier export.

"We need to have these conditions met, which is basically to have enough gas to proceed (with an onshore facility) because we feel that's the best strategy for Cyprus in the longer term," Lakkotrypis said. "But at the same time we're keeping an eye on what's going on in the international markets."

Lakkotrypis said the key advantage to a Liquefied Natural Gas — or LNG — plant over a fixed pipeline is that it would give Cyprus the flexibility to meet demand for the fuel anywhere in the world. The benefits for Cyprus, which international lenders saved from bankruptcy with a painful, multibillion-euro rescue last year could be huge.

The U.S. firm Noble Energy and its Israeli partners Delek and Avner are looking to develop Cyprus' proven field, which holds between 3.6 trillion to 6 trillion cubic feet of gas, while industry giants Eni of Italy, South Korean Kogas and France's Total are moving ahead with exploration plans of their own.

Lakkotrypis said around 6 to 7 trillion cubic feet of gas are needed to make construction of a 6 billion euro ($8.37 billion) LNG plant viable and the government was working to speed up exploration work.

The minister said if sufficient quantities of gas were available now, an LNG plant would be up and running by 2020. However, that target date will be pushed back according to how long it takes to confirm new discoveries.

He said there has been interest from several investors, including Germany's biggest lender Deutsche Bank and the European Investment Bank to bankroll the plant.

Cyprus had sought to get Israel to pool its substantial offshore gas finds — including one field several times the size of the Cypriot one — with its own in order to get plans for the LNG plant into gear.

But Lakkotrypis said the consortium that's developing the Israeli field has its own commercial choices on how to get the gas to market that don't necessarily coincide with those of the one that's handling the Cypriot find.

He said Israeli companies have never committed to processing their gas in any potential Cypriot LNG plant.

The minister reiterated that any potential pipeline link with Turkey to supply gas to the island's energy-hungry neighbor as well as to other European countries remains a non-starter as long as there's no peace accord reunifying the ethnically split country.

Cyprus was divided into an internationally recognized Greek Cypriot south and a breakaway Turkish Cypriot north in 1974 when Turkey invaded after a coup by supporters of union with Greece. Turkey doesn't recognize Cyprus as a sovereign country and opposes any the Greek Cypriot gas search that it says infringes on Turkish Cypriot rights to the mineral riches.

Lakkotrypis said the international community fully supports Cyprus' right to develop its natural resources.

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