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Cyprus Europe’s new energy hub?

Published on: 14/11/2017

The 5th Energy Symposium was organized jointly by the Institute of Energy for South-East Europe (IENE) and FMW Financial Media Way with a special theme ‘Cyprus Europe’s new energy gate’ on the 1st of November in Nicosia.

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Cyprus was praised by Costis Stambolis, excutive director of IENE on the achievements of its exploration programme, and he further added that Cyprus has the potential to play a key role in Europe’s energy market.

The event was addressed by more than 25 speakers among them the President of the Republic of Cyprus, Nicos Anastasiades, Demetris Syllouris, Nicos Kouyalis, Giorgos Lakkotrypis, Fidias Pilides and the Greek Minister of Energy, Giorgos Stathakis, and attended by 130 delegates.

The Cypriot government is giving priority to the exploration and exploitation of hydrocarbons, energy development and for energy efficiency. It also supports the EuroAsia interconnector between Greece-Cyprus-Israel and the EuroAfrica interconnector between Egypt-Cyprus-Greece.

Greece, Cyprus and Israel will have a meeting in December to sign an agreement to take the EastMed gas pipeline further.

President of the Cyprus Energy Regulating Authority, Dr. Andreas Poullkas talked about energy supply and prices. He said that a properly regulated internal energy market and transitions to renewable energy systems is crucial to EU. Europe’s electricity market is transformed by this transition to RES, by the new technologies and interconnections. However, a lot more needs to be done in south-east Europe. Also, Cyprus needs to align its regulatory system to the EU system. RAEK has introduced a new regularity system and market model in order to be in line with the EU standards and is preparing a gas regulatory system for the natural gas market as well.

There are optimistic indications that Cyprus’ block 10 my hold significant amounts of natural gas. However, there is still a long way between discoveries and successful exploitation and international gas sales due to the low global prices. Eventually the development costs shall be kept low as well, which can be achieved only through collaboration and integrated projects. This is the only way to become financially stable and a secure export market. This can be achieved only if all Cyprus gas discoveries are pooled together into a single-joint venture project by the end of 2018 and to be developed as a single integrated project, thus avoiding doubling interfaces and risks. The gas can be delivered to Egypt through the pipelines and to be liquified through new trains and to be exported. But even this way is still challenging.

Finance Ministry representative, Panayiotis Tylliros talked about the link between the economy and natural resource development. He said that much can be learned from the experience of resource-rich countries and the challenges they faced. He highlighted the importance to deal against corruption and suggested to set up a sovereign wealth fund, which could provide security against it.

Further issues discussed at the event:

Cyprus Natural Gas exploration

Dimitris Fessas, CEO of CHC (Cyprus Hydrocarbons Company) the National Oil and Gas Company of Cyprus talked about the new round of exploration and drilling and said that the negotiations with Egypt on the sale of Aphrodite gas have deepened in the past weeks. They are investigating all possible gas export options.

The use of natural gas in Cyprus

Dr. Solon Kassinis Director of the Ministry of Energy, Commerce, Industry and Toursim made a presentation on how natural gas can be used to develop a petrochemical industry in Cyprus. He suggested to set up a methanol production plant which feasibility was proved.

Energy and gas storage in Cyprus

George Papanastasiou, CEO of VVTI energy storage provider talked about the geopolitics and risks involved in the development of trading of natural gas. He highlighted the importance of cooperation of Cyprus and all neighbouring counties in the region to avoid such problems and to ensure security. He mentioned that Cyprus was chosen by Vitol (global energy and commodity trading company) as the best location to base oil-product storage and trading facilities.

Cyprus as an LNG hub

Managing Director of MEDGAS, Spyros Paleogiannis spoke about the natural gas markets and the increasing penetration of the renewable energy systems, which is changing the energy environment of the EU.

Currently the biggest challenge of gas is the low RES prices, but this will change in the following years due to the increasing use of liquefied natural gas (LNG) and the increasing trading through gas hubs.

Cyprus and Greece have a great potential to become the new route for East Med gas entering to Europe. But there are many other countries in the region wanting to became a gas hub and the EU is supportive with all of them. Cyprus needs a grand plan (which present is lacking). Dr Constantinos Papalucas from the University of Cyprus suggested that Cyprus should learn from and follow the Singapore example in order to become a gas hub.

LNG import

Dr Michalis Andreou member of the board of DEFA, The Natural Gas Public Company presented a new LNG import project which is based on two separate parts:

  1. Infrastructure, including a jetty, port facilities and FSRU
  2. LNG imports

An additional domestic gas pipeline network will be needed between Vasilikos and Dhekelia. Proposals are being submitted to the EU for financial support. Public tenders will be announced during the first half of 2018.

Renewable energy market in Cyprus

The use of renewable energy systems is spreading rapidly all around the world, not only because of environmental reasons by also due to its low cost. RES is cheaper than gas-fired power generation. Many countries are implementing energy road-maps with targets for 2050.

Andreas Marangos, Chairman of the Electricity Authority of Cyprus spoke about the need to implement RES and energy efficiency to cut emissions in line with the EU targets. 91% of electricity generation is still-oil based in Cyprus. EAC has a new energy strategy in place, including RES in its power generation mix to adapt to the clean energy era.

Opening of the RES market can help Cyprus become an energy gate to Europe not only for natural gas nut also for renewable electricity.

 

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Source: Dr Charles Ellinas, Nonresident Senior Fellow Global Energy Centre Atlantic Council, Cyprus Mail