Cyprus Moves on for LNG Option
Cyprus through DEFA received seventeen offers by international energy companies, regarding the country's "intermediate gas solution" detailing around the importation of natural gas needed before the offshore reserves, such as the Aphrodite one, are fully exploited.
Along the companies that expressed their interest for a 20 year contract for the supply of liquefied natural gas, are Shell and Vitol, both which were involved in a similar competition in 2009, that was cancelled and re-enacted this year. Although DEFA stated that due to "Confidentiality agreements no names of interested parties will be provided", the local media have already made known that Shell and Vitol, are amongst them and count as favorites, especially the latter one, who has already invested in constructing a substantial oil terminal in the Island along with port facilities.
Moreover, it was made know that almost all seventeen companies propose the construction of an LNG terminal in the south of the Island and in a close distance from the newly discovered gas reserves. Further it has been made known that there is no proposal regarding the creation of a natural gas pipeline option for transferring gas from the Israeli offshore "Tamar" field to Cyprus. According to plans of DEFA, until the 19th of November the propositions would be examined and a short-list will be made thereafter. Negotiations with the selected companies will commence on the 20th of December with a final selection due around 15th of January 2013.
The developments in Cyprus have caused anxiety amongst the natural gas stakeholders in Israel, because it may interrupt the future plans for the exportation of Israeli gas to Europe. The Ratio Oil exploration company has made known in the local media that the total investment planning for the Leviathan field needs around 15 billion Dollars and without a regulatory certainty the plan will not move forward. In parallel energy experts comment on the delay of the government to decide if it’s going to proceed with a domestic LNG terminal or not and in light with the developments in Cyprus.
Also Gideon Tadmor, Avner Oil's CEO believes that "Cyprus discovered gas just last year and it has already a potential terrain for its own LNG station and it has a vision for it. The question is how Israel will make sure it is not left behind although it was the first to discover gas in the region".
In overall it seems that despite previous collaboration between Cypriot and Israeli natural gas stakeholders, and the latest interest by Greece's DEPA to be involved, there is no clear point if each country will proceed to export commercial viable amounts of gas in the future by its own or will they cooperate between them. Various reports in Greek media relay around the strong interest of Gazprom to cooperate separately with the Israeli companies, and this could explain the hesitation of that side to choose a definite course of action in the present period.
Related Reading: Risky Business: The Tensions and Triumphs of Cyprus' Gas