Shell has “best offer” for Cyprus LNG supply, may handle exports too

Royal Dutch Shellhad made Cyprus the best competitive offer for a 20-year supply line of liquid natural gas, according to its energy and trade minister Antonis Paschalides.
This was the first public admission by a government official that Cyprus was close to concluding a deal with Shell, after the state-run natural gas company (Defa), wrapped up consultations with a short list of potential suppliers last week.
It also added to the speculation of who will have first-option to market any prospective LNG exports from sources south of the island, which are close to rich wells found within neighbouring Israel’s offshore exploration parcels.
"The amount in the best offer, according to Defa, is that by Shell and it is worth 4.5 bln euros," Paschalides told reporters.
It had already been widely reported that Defa had opted for Shell, though the amounts cited for the contract, which Paschalides said were inaccurate, were in the region of 6 to 7 bln euros.
Earlier in the week, a government spokesman said the cabinet would take a decision soon on the supply contract. Defa had made its recommendations to the government last week, and authorities on Wednesday wrapped up consultations on the matter with the island's political parties.
"A political decision has not yet been taken," Paschalides said.
Most parties had expressed misgivings at the way negotiations were handled and about its potential cost. The selection process itself is meant to define a preferred supplier, with further more detailed talks to follow.
Defa, which invited expressions of interest for a supplier in November 2009, is seeking a supply line for 20 years starting from 2014. According to its projections, Cyprus will need 0.77 mln tonnes of LNG initially, rising to 1.37 mln tonnes per year by 2035.
The energy network of Cyprus is now powered by heavy fuel oil, which costs between 500 mln and 600 mln euros annually, Paschalides said.