Cyprus gas firm Defa ends LNG talks, Shell rumoured as supplier

Cyprus's state gas company has concluded talks to find a preferred liquid natural gas (LNG) supplier for 20 years, its energy minister said, refusing to confirm media reports it had picked Royal Dutch Shell.
State-controlled Defa has been in negotiations over a contract to purchase LNG for the eastern Mediterranean island from 2014 to 2035.
"We were briefed on the conclusions of Defa as regards the supply of natural gas. We asked for clarification on certain issues … and I will brief the government and political parties on the matter," Commerce, Industry and Tourism Minister Antonis Paschalides told reporters on Thursday.
He refused to say what Defa had recommended.
Two newspapers and the state-run Cyprus Broadcasting Corporation, however, carried unsourced reports that Defa had chosen Shell, while earlier reports had suggested that Qatar, a potential investor in leisure projects in Cyprus, might also be interested.
Politis reported that the supply deal was in the region of 7 bln euros ($9.25 bln). Haravgi, the mouthpiece of the governing Communist AKEL party, said the final approval rested with the president and that Shell's offer was 10 to 15% lower than those from BP and BG.
According to Defa projections, Cyprus will require 0.77 mln metric tonnes of LNG per year from 2014 to generate electricity. The amount will gradually rise to 1.37 mln metric tonnes per annum in 2035.
Officials at Shell could not immediately be reached for comment.
Defa, which is responsible for purchasing, importing and distribution of LNG, previously said the needs of local industry could potentially increase demand.
State electricity company EAC will be responsible for operating a re-gasification terminal and is involved in a separate selection process to find a strategic partner. The terminal project is valued at 600 mln euros.
EAC has been waiting for Defa to conclude its own selection procedure, which involves some of the same bidders.
Vitol subsidiary VTTI is about to start work on its own 100 mln euro energy terminal in the Vassiliko area, but the purpose of that venture would be primarily to store and re-export gas and petroleum to other markets.