Research Center
Cyprus Economy

DEH/Quantum to build EUR 1.5 bln East-West mega-cable

26 January, 2012

* Israel to export 2,000 MW to Europe
* Cyprus a hub for EU-Asia electricity
* Minister in Israel for talks

A subsea cable some 540 nautical miles long (1000 km) will soon connect Israel and Cyprus to south-east and western Europe to satisfy the continent’s need for cheap and sufficient electricity.
The EuroAsia Interconnector, initiated by the DEH/PPC Quantum Energy SA joint venture, will cost about 1.5 bln euros to build and will have the capacity to transmit 2,000 megawatts of energy along its east-west cable, selling Israel Energy Corporation’s excess electricity production to Cyprus or any other buyer further west.
The funding for the project is secured by DEH/Quantum Energy.
Nassos Ktorides, chairman of DEH/Quantum Energy, told an investors’ briefing on Monday www.financialmirror.com/web.php that the project cost will be recouped in about four years, while it is expected to earn about 17.5 bln throughout the life of the cable.
Ktorides said that beyond the benefits from the investment and new job opportunities, the Cyprus national power grid will also have a secure supplier of external energy, if it ever needs it. He doesn’t see the project as a competitor to the EAC’s plans.
“Quite the contrary,” he told the Financial Mirror. “We may be able to supply the EAC if it ever has a shortfall, as happened after the explosion that destroyed the Vassiliko plant. Furthermore, if Cyprus ever has any excess, it, too, could export some of that electricity.”
Work on the EuroAsia Interconnector is expected to commence within 2012 if the governments of Israel, Cyprus and Greece approve it and should be completed within 36 months.
The cable will sink to as deep as 2,000 metres below surface and will connect Israel with Cyprus, Cyprus and Crete, and Crete with the Peloponese from where electricity supply can be distributed to Greece or further west.
Trade and Energy Minsiter Praxoulla Antoniadou visited Israel on Monday and attended a business forum where she spoke on the potential of cooperation between the two countries in the areas of tourism and energy.
DEH/Quantum Energy was established in December 2011 and plans to build four hydroelectric power stations in Srpska with a design output capacity of 238MW. The greenfield project will cost some 500 mln euros and will need about three years to complete once the contractors have been chosen, a process that may last throughout 2012. Bank of Cyprus is a minority shareholder in the venture. Cyprus-based Quantum Corp. already operates five hydro and power stations in Srpska since 2000 with an installed capacity of 1422 MW and an annual growth rate of 4%. The company has a total book value of 1.2 bln euros.

AMBITIOUS
The EuroAsia Interconnector will link Israel, Cyprus and Greece with the pan-European electricity grid. It is the first project to link energy between two continents. It will be the most ambitious
project in the world to date, both in terms of cable length and depth.
Business leaders and politicians were quick to praise the project and its initiator, with the opposition Democratic Rally (Disy) saying that the project “of national importance, secures energy supply for all three countries and opens new prospects for export of energy. We support this important initiative and the government’s involvement.”
In her speech in Tel Aviv on “The prospects created in the Eastern Mediterranean by the discovery and exploitation of natural gas”, Praxoula Antoniadou said that despite a national action plan for the gradual increase of the contribution of renewables to the energy balance, aiming at reaching 13% by 2020, renewables given their high cost cannot comprise the full answer in the short term.
“A bridging solution with reference to a low carbon economy is required for the medium term, until long term targets about the contribution of renewables to the energy mix can be attained. And natural gas seems to that answer for the medium term.”
She referred to the recent discovery of natural gas within the exclusive economic zone of Cyprus and the government’s decision to proceed with the second round of licensing for exploration and production in all the other blocks.
“Discoveries of hydrocarbons in the area of the Eastern Mediterranean come at a time of increased demand for fossil fuels by the EU, as a follow up to the nuclear accident in Japan and to consequent changes in the energy mix in Europe.
“Opportunities for investment are already arising both in activities that are directly related to the exploitation of hydrocarbons but also with reference to sectors and activities that are supportive or complementary,” she concluded.