Greece’s Energean makes pitch to sell Cyprus Israeli gas

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Greek oil and gas producer Energean on Thursday made another pitch to sell its Israeli natural gas to Cyprus via pipeline at a competitive price while Nicosia is opting for LNG.

“Open up the gas market, take advantage of the opportunity before you have to increase the security of supply, end the isolation and secure the best possible price from a Greek company that wants to bring gas from Israel to Cyprus,” Energean’s Constantinos Nicolaou told Nicosia’s energy symposium

Nicolaou presented in detail Energean’s proposal for the import and supplying of natural gas to Cyprus by 2021 at “highly competitive prices”.

The company registered with the London and Tel Aviv stock markets recently filed applications with the Cyprus Energy Regulatory Authority.

The plan includes the development of a gas pipeline from the Energean Power FPSO, which will operate within Israel’s EEZ, to Vassiliko in Cyprus.

Energean’s Power FPSO has a capacity of 8 billion cubic metres of gas per year and Energean has already signed contracts to supply 5 billion cubic metres a year to large industrial consumers in Israel starting in 2021.

The Cyprus market is expected to initially require 0.5 to 0.6 bln cubic metres per year. The pipeline will be about 200km long and carry gas from Karish North, which recently confirmed the existence of a natural gas field with an extractable 25 bcm of natural gas.

The investment undertaken by Energean and its partners will cost some $350 mln.

In fact, Energean has signed Letters of Intent with all three private companies licensed in Cyprus for combined electricity generation, namely PEK, Lysarea Energia and Paramount Energy Corporation.

“We have the gas, we have the infrastructure, we have the customers and we don’t need any subsidies. We are able to create a project that will establish a competitive natural gas market for the benefit of consumers,” said Nicolaou.

“This will not only complement the Republic of Cyprus gas plans but will further enhance the geopolitical position of the country at a critical time for Cyprus and the Eastern Mediterranean in general,” he added.

Although the government has selected a Chinese-led consortium to build LNG infrastructure while also looking for suppliers, Energean argues Cyprus can have both.

“Our plan does not contradict the plans of the Republic of Cyprus. When you want to create a market, you don’t close the doors to competition. You use it to become better, cheaper and more efficient,” said Nicolaou.

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.