East Med Gas: Commercial Prospects and More
“Of course we'd like to
see Cyprus become an energy hub," he said. "We've taken an important
decision, the only one so far, which is the construction of the LNG
plant, and this will be the first step in our strategy of becoming an
energy hub."
Mr. Kouyialis conceded
that Cyprus' internal market was very small for the consumption of
natural gas. “So we definitely have to look to the external markets –
the European market and others in the rest of the world.”
Another panel participant, Amit Mor, CEO ECO Energy, Israel,
weighed in on LNG in Vasilikos, where the commercial, geologic, and
political risks, he said, must be mitigated, raising questions for the
potential participants: Israel, Cyprus, Turkey, etc.
For one, would Cyprus
remain an EU country, given the deep Russian influence which had been
growing, he queried. “This is a major concern for Cypriots, for the
Israeli people,” he said.
A conference delegate noted that there had been numerous proposals, among them a proposed chemical and fertilizer factories - serious interest expressed from global players from global service companies to relocate their headquarters to Cyprus.
A conference delegate noted that there had been numerous proposals, among them a proposed chemical and fertilizer factories - serious interest expressed from global players from global service companies to relocate their headquarters to Cyprus.
Of the country's relationship with Russia,
he commented, “Of course we are a small nation and need friends, but I
think Cyprus has proven for itself and its people that we want to stay
in the eurozone and in the EU. This is why we're making all these
sacrifices since last March and I think we've developed a lot of
discipline and resolve to stay.”
“I think Russia's got
bigger problems than worrying about Cyprus, frankly,” quipped Angus
Miller, Founding Director, QuinSec Security Management Ltd. (and former
Energy Adviser, Foreign & Commonwealth Office, UK). Russia was
always wheeled out in such situations, he explained.
There were real questions
in Russia's role in all of this, he conceded, especially given the
flows of Russian cash through Cyprus. “Russia's major role is as an
'interferer' not as a promoter of anything and now it needs to replace
its depleting gas supplies, needs to manage its major market which is
Europe. In the past it said it never interfered with the supply of gas
to Europe; it demonstrated that it did and that it could and is dealing
with the outcomes of that now.”
By overestimating the
capacity for Russia to intervene in such activities, he said, resulted
in a negative impact on commercial aspects of development.
Moderator John Roberts,
Energy Security Specialist, Methinks Ltd. UK, observed that Gazprom was
grappling with whether they would face a gigantic fine for an alleged
monopoly. “If Russia in some way were seen to do anything, either that
physically prevented the Trans Caspian pipeline from being built, or
seemed to be some kind of retaliation for a decision in that regard,
that would not exactly endear Russia to the West in terms of its
reputation of being a reliable supplier,” he said.
Gazprom did not seek to cast itself the reputation of a ruthless natural gas supplier, he added.
Another delegate reminded
the others that forthcoming waves of LNG looked to further undermine
Gazprom's pricing model, which was based on expensive new gas fields
like Yamal. More forthcoming pipelines could hardly make Gazprom's gas
more competitive, he said.
“China, China, China,”
exclaimed Amit Mor, who said players like Israel and Cyprus must
recognize that country's thirst for energy as to how they will develop
East Med gas. “China's investing everywhere and is willing to invest in
LNG in Cyprus, Israel; it's a major consumer of oil from Iran.
“If it's a pipeline to
Europe, we are talking regional gas, Turkish pipeline, European market;
if it's LNG, the market is in China, India, east through the Suez Canal –
maybe some LNG will come to Europe, but it's not so important,” he
continued.
“Aiming for the stars but
landing on the moon,” was not a bad thing, according to Adam Hedayat,
Vice President, Sea NG Corporation, who suggested that East Med gas
should have contingency plans depending on the size of gas finds (for
one). “There has to be an integrated plan in order to start looking at
petrochemical developments, natural gas used for transportation, small
scale exports (via his company's CLNG technology was a possibility).
“LNG requires reserves –
in order to invest in a terminal you have to have a reserve of 20 year
plus in order for the investment community to go with LNG facilities. If
you don't find the gas early enough...Cyprus needs early cash flow:
there's an importance in looking at projects that can bring in
prosperity, early cash flow as well as a reduction in the cost of
electricity.”
Cyprus could have a
“first mover advantage” when it came to a small-scale LNG solution in
the region, potentially delivering to the region's coastal areas and to
customers with power stations in the vicinity.
Noting that commercial
realities had eclipsed much of the strategic thinking of the EU, John
Roberts questioned where the Union might go next regarding gas in the
Eastern Mediterranean.
Anthony Livanios, CEO, Energy Stream CMG GmbH, Germany responded.
He stated, “The market drove TANAP and the Trans Adriatic Pipeline,
so everything we are discussing and the concerns raised about the
area's geopolitical risks are not taking place in isolation; they happen
in relation to the Southern Gas Corridor whose key country is Turkey.
Its geography, energy and economic policies that we've seen in the last
decade, in tandem with the economic development, places Turkey as the
key country between the Southern Gas Corridor and the developments in
Israel.”
Nabucco West having lost
out in the great pipeline races, Mr. Livanios contended that Europe's
energy security policy would be increasingly focused upon Caspian and
Levant regions, meaning that in time East Med gas would enjoy an
ever-developing relationship with the Southern Gas Corridor.
Link to source: http://www.naturalgaseurope.com/east-med-gas-commercial-prospects-frankfurt-gas-forum
