ENERGY: Energean ups the ante in bid to supply natural gas to Cyprus

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Greek oil and gas producer Energean has submitted bids to Cypriot authorities to import and supply natural gas to Cyprus from 2021, despite Nicosia already being in the middle of a tender procedure.

The move comes as Cyprus has already launched a tender process for the import of gas while a Chinese-led consortium is a preferred bidder for the construction of a €300 mln LNG import terminal and related infrastructure.

Despite this tender procedure, Energean is pushing hard to be allowed access to the Cyprus market so it can sell its Israeli gas via pipelines to Vassiliko by early 2021.

Submission of the applications – through its subsidiary Energean International – follows the ‘Karish to Cyprus Preliminary Pipeline Development Plan’ that has already been presented to the Cyprus Energy Regulatory Authority, Said Energean.

It plans to transport natural gas via pipeline from its Israeli offshore block to Vassiliko, Cyprus, where it will landfall.

“The pipeline from the Energean Power FPSO to Vassiliko will have a total length of 215 kilometres and transport natural gas from the Karish North field, offshore Israel, which contains 25 BCM of discovered recoverable resources,” said Energean.

Total investment is estimated at around $350 million and will be funded by Energean.

“The Republic of Cyprus will bear no upfront cost. Provided that there will be no delays in permitting procedures, the project will allow the Republic of Cyprus to receive competitively priced natural gas from 2021.”

 The Greek energy firm also believes their project will “further strengthen” Cyprus’ geostrategic role in the region and cooperation with Israel and Greece in the East Med Pipeline venture that is planned to transport natural gas to Europe.

Mathios Rigas, CEO of Energean, said: “Energean’s proposal offers the Republic of Cyprus the option to switch to natural gas as soon as possible, and under the most competitive terms.”

“Execution of the proposal will bring competition to the Cypriot natural gas market, decrease energy costs across the economy and result in enhanced diversity and security of supply. “

Rigas argued the proposal “enhances the planning of the Republic of Cyprus and the security of supply, as it is supplementary to the LNG import procedures launched by the Cypriot Government”.

“We expect that the Republic of Cyprus will take advantage of the options that the market offers for the benefit of the Cypriot economy and the consumers”.

Energean said it has already signed Letters of Intent (LOIs) with all three IPPs that have been granted a licence to construct combined cycle power plants in Cyprus.

The first phase of Cyprus Gas Company’s (DEFA) tender process for the supply of liquefied natural gas (LNG) has triggered interest from major international players such as Shell, BP, Eni and Total.

According to DEFA, 25 suppliers, among the most dominant in the global LNG market, are seeking to supply gas to Cyprus and have submitted the prerequisites to qualify for the next stages of bidding and negotiation.

Through this process, DEFA shall pre-qualify and proceed to contract with the LNG suppliers for the procurement of both “spot” cargos and basic quantities of gas.

DEFA is expected to proceed to the next stage of the process at the beginning of 2020.

The LNG import project is co-financed by a grant of 40%, or up to €101 mln from the European Union’s “Connecting Europe Facility”. The LNG terminal at Vassiliko is scheduled for completion in 2021.

The LNG import terminal includes a floating storage regasification unit (FSRU), a jetty for the mooring of the FSRU, jetty-borne and onshore pipelines, as well as additional facilities.

Although Nicosia has previously rebuffed Energean’s “unsolicited offer”, the Greek firm insists it can deliver quicker than the FSRU project while competition should be allowed for the benefit of the end-user.

Even if the figures add up financially, the government is reluctant to abandon its plan as it doesn’t want to be dependent on a single supplier and forsake the construction of an LNG terminal