Nicosia in waiting game for LNG supply and distribution

by George Kakouris

In her speech in Davos on Tuesday in front of an audience of businessmen and political leaders, EC President Ursula von der Leyen appeared to put Cyprus on center stage for the supply of liquefied natural gas (LNG) for the European Union, announcing that "soon" LNG terminals will operate in Greece, Cyprus and Poland.

Ms von der Leyen's reference to Cyprus, probably the first reference made to our country since the participation of Anastasiades and Akinci in 2016, brought Nicosia's interests in its LNG prospects back to the fore after years of stagnation in the east med pipeline issue.

The statement of the President of the Commission may have sounded impressive, but with regard to Cyprus' energy hopes, they do not necessarily pre-empt rapid developments, they are, however, encouraging signs.

According to the information of "K", Cyprus has been included in the EU's plans to diversify its energy sources.  This has resulted from discussions that are currently taking place with Energean on the possible creation of a floating quay for the liquefaction of Israeli natural gas in Vasilikos, without excluding natural gas from Cyprus itself, if and when the new explorations come to fruition. 

These discussions have not been completed, with the Cypriot side still anticipating the company's proposal. 

Meanwhile, Energy Commissioner Kadri Simpson had noted in an interview with "K" last week that she expects that "in Cyprus, the floating storage and regasification dock at Vasilikos will start operating next year", which will potentially have a capacity of 2 bcm per year.

This statement concerned the plans for the construction of a separate LNG regasification terminal (to be imported by ships into Cyprus) which could be implemented faster than the liquefaction platform and will serve the energy needs of the country itself. 

That is why he noted that the project "will contribute to the end of Cyprus' energy isolation and allow the country to move away from the use of oil pollutants".

Creative netting 

Ms von der Leyen's objective in her speech on Tuesday was not to revive the hopes of the Republic of Cyprus but to give the audience an image of a European Union that is rapidly and successfully diversifying its sources of gas supply, ensuring its future growth and its dynamics in the field of energy investments. 

Explaining how Europe is attempting to bring more liquefied natural gas (LNG) from countries other than Russia, Ms von der Leyen referred to the agreements with the US and countries of the Middle East and North Africa and added that "new LNG terminals will soon be operational in Greece, Cyprus and Poland, as well as new links between countries".

Ms von der Leyen's report was, more than anything, a creative offsetting of projects already in the works, i.e. the Alexandroupolis Floating Storage and Gasification Plant (FSRU) in Greece and corresponding infrastructure in Poland, in combination with the plans to transport natural gas through Cyprus to the EU, which, however, have not matured to the same extent as the plans for importing natural gas for consumption in Cyprus. 

Von der Leyen also focused on the goal of creating new links (where Cyprus aspires to play a role through the EuroAsia Interconnector for electricity transmission), recalling that "the foundation of pipeline interconnections will be the core of future hydrogen corridors", the fuel in which the EU invests significantly in order to allow for a green transition.

Israeli LNG

The proposal that Nicosia expects from Energean concerns the creation of a floating unit in Vasilikos, where natural gas will arrive via pipeline from Israel's marine plots (but also Cypriot natural gas in the future), liquefied, and then exported to the rest of the EU by special vessels.

As was announced in the past, Cyprus' LNG needs will be satisfied with the construction of a separate LNG regasification terminal at Vasilikos as well, which is expected to be ready in about a year. 

At the same time, the Cypriot government is closely monitoring the drillings undertaken by Chevron, according to statements by Energy Minister Natasa Pilidou to CyBC last week.

However, whether these new drillings will contribute to further shifting the EU's attention to the Eastern Mediterranean will depend on a number of factors: their results; the bigger picture in relation to the deposits of other countries in the region; possible regional synergies; and, of course, the regional political situation.

Waiting for the EuroAsia link

In the summer, negotiations with the Commission on the practical issues of the construction of the EuroAsia Interconnector linking the countries of Israel, Cyprus and Greece are still expected to be completed, primarily, the link between Cyprus and Greece which is being financed by both the EU, with 657 million euros, and the Republic of Cyprus with 100 million euros from the Recovery Plan. The aim is for the construction of the cable to start in the autumn. 

Finally, the infamous feasibility study for the EastMed pipeline co-funded by the EU is expected to be presented at the year's end. The results of which will determine whether the project to transport gas directly from the Eastern Mediterranean to Greece is viable, as well as how it can be used in the future for the transport of hydrogen.

[This article was translated from its Greek original]