Cyprus to set up Energy Centre

Cyprus, as an EU member state and having harmonised its legal framework with the European directives, provides a stable business environment for potential investors, President Tassos Papadopoulos said, adding that the Government proposes the establishment of an Energy Centre, which together with the continuing promotion of the use of Renewable Energy Sources, as well as any prospective hydrocarbon resources in the offshore sector of the island, constitute the island’s main long-term energy potential.
In his address at the event organized by the Nicosia Chamber of Commerce and Industry on the occasion of the visit of the General Secretary of the Organization of the Petroleum Exporting Countries (OPEC) Abdalla Salem El-Badri, Papadopoulos noted that the island due to its geographical position could become an energy hub for the safe storage and transit of fuels at its Energy Centre.
The energy sector of Cyprus constitutes a basic element of the country’s development, and the Government’s priority is to ensure an adequate, secure, competitive and sustainable energy supply. He added that this is achieved by the diversification of energy sources, by promoting the energy conservation in the context of Renewable Energy Sources development, and sustainable energy production and use.
Noting that these priorities are in line with European Union directives and provide stability for this important sector he added: “The Government plans the establishment of an integrated Energy Centre, which will include facilities for the importation, storage and vaporisation of liquefied natural gas (LNG), as well as various petroleum fuels (oil terminal). The natural gas, being a more efficient and environmentally friendlier energy source, will be used mainly in the generation of electricity and will have a positive effect on the national economy. In addition, the oil terminal will improve the competitiveness and efficiency of the Cypriot oil industry through its modernization”, Papadopoulos said.
Referring to the energy system of Cyprus, he noted it is an isolated system without any indigenous sources, excluding the renewable potential, and therefore entirely dependent on petroleum imports. In 2006, the energy imports cost approximated to one billion Euros, representing 18% of the country’s total import costs.
As regards the recent geophysical surveys in the Eastern Mediterranean / North African region which have proven to be successful, the President said that in conjunction with the current high oil price, makes this region a significant exploration target. “Thus, the Government of the Republic of Cyprus considers that the time has come for Cyprus to embark on hydrocarbon exploration within its Exclusive Economic Zone, an activity in which neighbouring countries are engaged for some decades”, the President said.
He also said that the Republic of Cyprus, exercising its sovereign rights to explore and exploit its natural resources, which may occur in its Exclusive Economic Zone, has concluded agreements with the Arab Republic of Egypt and the Republic of Lebanon on the Delimitation of its Exclusive Economic Zone. “This is indeed in full conformity with international law and in compliance with its obligations under the United Nations Convention on the Law of the Sea (UNCLOS ’82). The Republic of Cyprus and the Arab Republic of Egypt have also signed a Framework Agreement concerning the development of cross-median line hydrocarbon resources”, he added.
Referring to the Government’s moves towards the exploitation of its reserves, Papadopoulos said that Cyprus has updated the national Hydrocarbons (Prospecting, Exploration and Exploitation) Law and Regulations in order to be in full compliance with the relevant Directive of the European Parliament and Council. Furthermore, he said, a Model Production Sharing Contract has been prepared, which outlines upfront the legal and financial framework for foreign investors who will be investing in this field.
“Cyprus has entered into a non-exclusive, multi-client agreement with PGS, a Norwegian geophysical service company, which acquired seismic data within the Exclusive Economic Zone of the Republic, for a gross evaluation of its hydrocarbon potential. The Government has launched the 1st Licensing Round Offshore Cyprus for 11 exploration Blocks within the Exclusive Economic Zone early in 2007, with the submission of three applications on the 16th August 2007, for three different Exploration Blocks. The applications are currently being evaluated, while the 2nd Licensing Round is envisaged to take place this year”, the Cypriot President added.
Welcoming the SG of OPEC, the Cypriot President noted that the Organisation, since its founding 48 years ago, has been successful in coordinating and harmonising the petroleum policies of its Member Countries, which hold 77% of the world’s proven oil reserves, through the stabilisation of the international oil market.