CYPRUS: LNG the only option to diversify energy mix and avoid hefty fines

Using liquified natural gas (LNG) for electricity generation is the only way forward for Cyprus to diversify its energy mix and avoid bigger fines for greenhouse emissions, Electricity Authority chairman Andreas Marangos told CNA.

He acknowledged that unpopular fluctuations in high electricity bills depended on international oil prices, as 90% of power generation is dependent on imported liquid fuel.

“The way to have lower and more stable prices is the introduction of natural gas in energy generation. A reduction in electricity bills will depend on the natural gas purchase price but also on the introduction of solar plants and renewable source of energy to the system,” Marangos told CNA.

He said the EAC with capital expenditure amounting to millions of euros has implemented anti-pollutant technologies to reduce Sulphur emissions and to curtail particulate matter “but that is not enough.”

“The use of natural gas is a one-way street…if we fail to use natural gas, we will be forced to buy low Sulphur diesel which is very expensive.”

“With the introduction of natural gas, we could achieve two aims: cheaper fuel and lower emissions.”

 The EAC has a 30% stake in the Natural Gas Infrastructure Company, a subsidiary of DEFA, which will be responsible for the LNG import terminal in Vasiliko.

The project is estimated to cost €300 mln, while €101 million will be EU funded, EAC will cover approximately €100 million, while the European Investment Bank is expected to provide financing for the remaining amount.

State natural gas company DEFA is expected to launch a separate tender for the LNG supply contracts.

Although Cyprus made numerous efforts to import LNG for power generation, so far efforts failed due to high prices. DEFA believes that separating infrastructure from LNG supply contracts will achieve the target of lower LNG price.  

DEFA plans provide that LNG will be transferred to the Vasiliko FPSO and from there to the nearby EAC power plant.