LNG talks to begin next month

By Elias Hazou Published on February 9, 2010

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NEGOTIATIONS with companies interested in supplying Cyprus with liquefied natural gas (LNG) are to commence in March, an official said yesterday.

“After an initial assessment we’ve come up with a short list…and now we’re almost ready for the next stage, which are the talks with the interested companies,” said Costas Ioannou, chairman of the Natural Gas Public Corporation (DEFA).

DEFA is the administrator of the government’s natural gas energy policy, and among other things is tasked with inviting and evaluating tenders for the supply of natural gas.

Last December it received expressions of interest for the supply of LNG from 13 companies, including, according to Commerce Minister Antonis Paschalides, “giants” of the industry.

The identity of the candidates is not being revealed, due to a confidentiality agreement between DEFA and the interested companies. Following the screening process, DEFA hopes to have ended up with one or two preferred candidates.

The overall process, as outlined last December, is already running slightly behind schedule.

According to officials, the selected candidate should be ready to supply the island with LNG by 2014. That’s also the quasi-official ETA for the completion of a land-based terminal that will process the fuel.

In a separate but parallel process, the Electricity Authority of Cyprus (EAC) is seeking strategic partners for the development, financing, operation and management of the re-gasification terminal. Eight companies have pre-qualified as potential partners. The process is open to firms and “voluntarily formed consortia,” and should be wrapped up by summer.

The deadline for submission of offers is February 26, following which the EAC will also enter negotiations with the interested companies. The successful candidate will ultimately form a joint-venture company with a subsidiary of the EAC for the running of the LNG terminal.

Conventional estimates for the cost of the terminal range at €700 million.

Meanwhile yesterday the Commerce Minister met with the new leadership of the Cyprus Energy Regulatory Authority (CERA) to exchange views on “the new challenges facing CERA in light of the arrival of natural gas, the restructuring of the Electricity Authority and other energy matters...”

Tue, February 9th 2010 at 23:42

journo comments:

Qatar is the largest producer and exporter of LNG in the world and with its Super Trains coming on stream is further increasing production to 77mtpa per year.
The country has also invested in the construction of receiving and regasification terminals in the UK, Italy and the USA.
Perhaps Cyprus should be looking there for both supply and investment.
However, Cyprus will be a very small consumer of LNG compared to other countries. And would not appear to have the potential for onward sales to other countries unless massive storage facilities were built here.
Yes, the production of LNG produces greenhouse gases but from the point of view of the end users, LNG is a cleaner energy resource - with the lowest carbon emissions of all fossil fuels.