* Revenue share starting at 900 mln euros in 2020, then rising *
Earnings from the sale of natural gas export contracts could reach as high as 4 bln euros a year, once upstream production has started from offshore gasfields that are currently being explored, according to a senior government official has said.
“Cyprus has estimated reserves of about 40 trln cubic feet (tcf), that corresponds to a value of approximately 400 bln euros over a period of 20-25 years,” said Charles Ellinas, executive chairman of the state oil and gas company KRETYK.
“If the state can only collect about 25% of these profits, based on revenue sharing agreements, then state earnings would be about 4 bln a year,” Ellinas told CyBC radio.
However, former Trade and Energy minister Neoclis Sylikiotis said that earnings would start at about 900 mln euros in the first year, from about 2020, with the revenue rising gradually to the 4 bln target.
No matter how fast Noble Energy or other license operators start drilling, gas flow from Cyprus offshore fields is not expected any time sooner than 2018, Ellinas said, adding that “we cannot sign a memorandum of understanding (MoU) with Noble in July, as initially planned, as there have been too many and unnecessary delays,” to conclude the revenue sharing agreements.
Saying that KRETYK is currently undermanned, Ellinas had a glimmer of hope for the economy, adding that the Vassiliko area, where the gas liquefaction plant will be established, “will become an energy hub for Europe by 2020-2025”.
He added that state gas importer and distributor DEFA needs 500 mln euros to build an islandwide natural gas network to reach all households and that this venture alone will create “hundreds of jobs” for skilled and semi-skilled workers who “will have enough work over the next decade” to connect homes to the national gas supply grid. Ellinas added that this need calls for the introduction of more vocational courses for mechanical engineers in local colleges to satisfy the drastic need that will follow.