The crisis in Ukraine is a reminder of how fragile the situation remains in vital services and goods, such as the uninterrupted and affordable supply of energy, which has a catalytic effect on all sectors of the economy and certainly on the daily lives of citizens. In which areas are you concerned that the events in Ukraine will have an impact?
What I feel first of all is the need to express my full support for Ukraine and its people who are experiencing the maelstrom of this senseless invasion and destructive war in their own country. I admire their strength and courage to resist and defend their state sovereignty. But above all, to defend on behalf of all of us the universal human values of freedom, and the right to life. It is with anguish that I watch these events and I hope that there will be a de-escalation as soon as possible. However, there will be repercussions in all sectors of the economy due to the increase in inflation, the continuing rise in the cost of energy, but also of basic goods such as cereals, as well as raw materials in industry. There will undoubtedly also be a negative impact on the tourism sector and, depending on the sanctions, possibly also on the shipping sector. We are coordinating both at government level and with our European colleagues in order to deal with the new data in the most effective way. As we did during the pandemic, our effort as a Government is to mitigate the effects with measures that, you can be sure, we will take to ensure that our fellow citizens are affected as little as possible by the side effects of this crisis. The President of the Republic has already chaired a relevant meeting last Friday and there we put the problems on the table, possible recommendations, while the first compensatory measures were taken by the Council of Ministers to reduce the VAT on electricity for another two months and to reduce the excise tax on fuel.
Decoupling from fossil fuels is one of Cyprus' objectives, which is particularly relevant at the moment. How is this objective being achieved?
Fuel decarbonisation is not only one of our objectives, but is the cornerstone of our multi-dimensional strategy for the transition to a green economy. Our strategy, funded until 2027 with more than €500 million from the Recovery and Resilience Mechanism, the European Structural Funds, the Fair Transition Fund and, of course, the national budget, is based on six pillars, the first of which is to strengthen the security of energy supply and remove Cyprus' energy isolation. Already, as you know, Europe has approved the financing of the electricity interconnection project between Cyprus, Greece and Israel with €657 million. I should note that last March, Cyprus, Greece and Israel signed a Memorandum of Understanding for this interconnection, while last autumn we signed a trilateral agreement between Cyprus, Greece and Egypt for the electricity interconnection project between the three countries. The second pillar of our multifaceted policy is the operation of the competitive internal electricity market in the autumn of 2022, following the historic adoption of the relevant law in September 2021, and the operation of the internal gas market. The third axis is to strengthen the role of consumers in the energy market and reduce energy costs for households and businesses, and the fourth is to provide incentives to encourage private initiative for investments to be made by households and businesses towards a green and circular economy, and to promote energy efficiency and renewable energy projects in the public and wider public sector. In 2021 we launched sponsorship projects for energy upgrading and renewables beyond €40 million; in 2022 we are launching sponsorship projects for energy upgrading and renewables beyond €90 million, incentivising citizens, businesses, public service, NGOs, to move forward with investments that will bring direct significant benefits to their monthly electricity bill. The other two pillars of our strategy are investment in research and new technologies, such as energy storage systems, the digitalisation of the energy sector and the use of hydrogen, as well as important reforms and new legislation. Among these reforms, institutional changes to improve the functioning of the RES and EE Fund, which is already in Parliament, as well as a bill that will simplify the licensing procedures for RES projects and create the conditions for the establishment and operation of a one stop centre for the licensing of large-scale RES investments.
Cyprus' energy plan provides for the fastest and most advantageous exploitation of the Aphrodite deposit and the decoupling from conventional fossil fuels. As far as Aphrodite is concerned, there are several outstanding issues, the main one being the finalisation of the revised Development and Production Plan by the consortium of Chevron, Shell and Delek.
Chevron, one of the world's largest gas exploration and production companies with a 140-year history, acquired Noble Energy, Inc. in October 2020. Chevron, building on its very extensive experience, decided to re-evaluate the Development and Production Plan for the Aphrodite field in order to optimize it. To this end, the company is examining, among other things, possible synergies with other infrastructures in the area. We are in continuous communication with the licensee on this issue and expect the completion of the process and an update on its results shortly.
There is a statutory procedure on this issue which has been agreed between the two Energy Ministers of Cyprus and Israel. In this context, the licensees in Cyprus and Israel have appointed specialised technical teams to agree on how to resolve the issue on the basis of the guidelines given by the two states. We are in constant communication with the Aphrodite licensees on the progress of these discussions and hope that they will soon reach an agreement. I had the opportunity to discuss the latest developments on this issue with my Israeli counterpart during her recent visit to Egypt. It is important that both states are in agreement on the process of resolving the issue, and it has been decided that Ministers will be directly involved in this process. It is the firm position of the Republic of Cyprus that the development of the Aphrodite field is proceeding without the precondition of reaching an agreement on this issue. At the same time, I would like to mention that, for their part, the two states are in discussions for an agreement on the inter-state agreement for the development and exploitation of deposits extending on both sides of the median line.
The method of transporting the PA from Aphrodite, i.e. whether it will end up at the Egyptian terminals or will be processed at source, remains outstanding.
How the gas from the Aphrodite field will be transported to Egypt, and where it will be processed, depends on the results of the licensee's assessment of the approved Development and Production Plan and whether or not it will be revised. According to the approved Development and Production Plan, the gas will be processed in a floating plant located above the deposit and transported to Egypt via an undersea pipeline. As I mentioned before, of course, the company is considering, among other things, possible synergies with other infrastructure in the region. At the same time, the work of the Joint Commission set up to implement the intergovernmental agreement on the construction of an undersea pipeline to transport natural gas from the Aphrodite field in the Cypriot EEZ to Egypt is progressing. The Commission is examining various scenarios regarding the capacity, technical specifications, economic aspects and the route of the pipeline.
When are the results of drilling at the Glafkos target in block 10 expected? Also, do you have any information from the ENI/TotalEnergies consortium whether it will proceed with drilling in Block 6?
The ExxonMobil Qatar Energy consortium, as you know, is proceeding with the confirmation drilling in the Glaucus field, which started around the end of December 2021. The drilling is in the final stages and work is expected to be completed in March 2022. Upon completion of the drilling, the consortium will report its results to the Ministry and proceed with the evaluation of the data collected, as well as various geological and geophysical studies, a complex and time-consuming process designed to better understand the reservoir and the geological model in Block 10. As far as the Eni TotalEnergies Consortium is concerned, the information we have is that it will proceed with drilling in the near future.
Read the second part of the interview tomorrow: EastMed complex and difficult project. The Vasilikos project goes ahead
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