Cyprus could supply liquefied natural gas to Europe by 2022 | ITAR-TASS News Agency

Cyprus could supply liquefied natural gas to Europe by 2022

Economy

 September 23, 10:09 UTC+4
The idea that Cyprus could offer Europe an alternative source of gas supplies reducing the region’s dependence on Russia is backed by Washington and Brussels amid the deteriorating crisis in Ukraine

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NICOSIA, July 23. /Alexey Berezhkov, ITAR-TASS/. Cyprus hopes to begin exporting its liquefied natural gas /LNG/ by 2022, President of the Board of Directors of the Cyprus Hydrocarbons Company Professor Toula Onoufriou said in an interview with ITAR-TASS.

The company was set up in March 2014 as a state commercial arm that is responsible for the development of hydrocarbon resources in the exclusive economic zone (EEZ) and the sale of the share of resources which belong to Cyprus. It also participates in the management committees established for the reference of the contracts signed by the government with international companies operating in the republic.

The beginning of selling LNG overseas, primarily in Europe, would mean the realization of plans of the European Union and the United States which have been promoted the idea of establishing a regional energy hub in Cyprus able to offer an alternative corridor for energy supplies from the Eastern Mediterranean to the continent. These plans have been nurtured by the authorities of the republic for about two years and in recent months received strong support from Washington and Brussels due to the worsening of the crisis in Ukraine and a threat to gas supplies to Europe from Russia.

"We are pleased that the geopolitical situation in the region and some of the changes on the international scene, particularly in Europe, have led to increased interest in Cyprus," said Onoufriou. "We hope that it will help us to grow in the right direction. Hydrocarbon resources in the Eastern Mediterranean region are essential from the point of view of ensuring the energy security of Europe, which is increasingly concerned with the need to create alternative routes of supply and diversifying the energy sources. Given that Cyprus is a country of the EU and has its own natural gas reserves, the republic can contribute to energy security, becoming an energy hub in the region with the necessary infrastructure."

For these ambitious plans to be fulfilled, the government needs to build an LNG plant the cost of which can amount roughly to half of the GDP of the republic. The main priority and strategic objective of the Republic of Cyprus is the development of an onshore LNG plant, said the president of CHC as this provides added value and flexibility to the country. "This will help to achieve a number of important objectives. First, it will give us the opportunity to export gas to world markets without any obstacles. Secondly, it will create a large number of new jobs, which is very important for the country and its economy at present. Another key point is that this opens up opportunities for cooperation with neighbouring countries-Israel, Lebanon, Egypt - that brings us closer to the goal of transforming Cyprus into an energy hub in the region," Onoufriou said.

INFOGRAPHICSRussian gas in Europe

One-third of gas consumed in EU comes from Russia. Infographics ITAR-TASS

Onoufriou acknowledged that the decision to construct an onshore LNG plant can only be accepted if it is commercially justified. At this point it is not yet possible, as proven reserves of gas in Cyprus EEZ are limited to only the discovery by the American company Noble Energy deposits at Aphrodite site on block 12. Its volume is about 140 billion cubic meters of gas. Cyprus hopes to get concrete data on energy inventories in six of the thirteen blocks in its EEZ in the coming 6-12 months. Licenses to search and develop hydrocarbons from the Government besides Noble Energy have also a consortium of Italy's ENI and South Korean Kogason 2, 3 and 9 blocks and the French TOTAL at 10 and 11 blocks. According to Onofriou, ENI plans to start drilling of four wells in September of this year. TOTAL is in the process of processing seismic data since the company operates in an area that has a different geological structure from other blocks. It plans to start drilling in the year 2015, but the timing is not specified. Noble Energy is also exploring the possibility of drilling new wells. Now the company analyzes the data with the neighbouring Israeli fields, which became available due to the recent agreement concluded between Cyprus and Israel on the exchange of information. The results of this analysis would make possible for Noble Energy to incorporate the new data into their models that will enhance the reliability of their predicitons.Based on these studies, the company will decide on a further test drilling to "Aphrodite" or the beginning of a new field on the 12 block.

"Within 6-12 months period we will be able to make strategic decisions on further steps," Onoufriou said. "If we get confirmation on the availability of sufficient quantities of the gas, we will continue to develop plans for the construction of an onshore plant, if not - we will have to consider other alternatives which are currently being examined.. Among the alternatives, she said, there is the possibility of constructinga floating LNG plant, which has limitations as to production volume and flexibility in increasing their capacity, compared to an onshore plant. Other options include pipelines to the regional market which are currently being examined."

"Cyprus, of course, wants to develop this opportunity for the benefit of the country and we want to develop it as soon as possible. It is important not to rush things, we need to examine the various alternatives and work towards developing the right environment and preconditions for success in this area for the benefit of our country," Onoufriou said.

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