Energy expert Ciars Ellinas has said he believes it is very likely that a pipeline will be built to transport natural gas from Israel to Cyprus for liquefaction, should the additional gas volumes Energean expects to discover be discovered.
The Senior Associate at the Atlantic Council's Global Energy Centre was asked by Cypriots to comment on yesterday's announcement by Greek energy company Energean that it had discovered a commercially exploitable natural gas field with the Athena exploratory drilling. Greek said that the 8 billion cubic meters discovered is a very small amount, as the company was expecting more than 20. In comparison, he said that the Cypriot "Aphrodite" field has 116 billion cubic meters of natural gas. This, he said, does not help Energean to proceed immediately with projects, but it also needs to make new discoveries. However, he noted that the company said that in the "Olympus Area" in which the "Athena" field was discovered, based on their calculations which have now been further confirmed, there may be more than 50 billion cubic meters of gas. What Energean is saying is that they will continue drilling and that they believe they will be able to move forward with new projects, including the possibility of exports to Cyprus," adding, however, that new discoveries are needed for this to happen.
"What Energean is saying is that they will continue drilling and that they believe they will be able to move forward with new projects, including the possibility of exports to Cyprus," adding, however, that new discoveries are needed for this to happen.
At the trilateral meeting of the Energy Ministers of Greece, Cyprus and Israel held last April, Energean had proposed to bring to Cyprus from 2026 a mobile liquefaction plant, Hilli Episeyo FLNG, owned by Norwegian company Golar LNG, currently located in Cameroon. In 2026 the unit will be free and Energean proposes to come to the Vasilikos area, where it will liquefy and export gas volumes that will come to Cyprus by pipeline from Israel.
"The reason why I think it is a very likely project is that apart from the fact that it has Golar as a partner, Vitol, which owns VTTI's tanks in Vasilikos, is also in the group," Ellinas said. He added that Vitol is the largest oil and gas trader in the world and is interested in buying all the LNG that Hilli Episeyo FLNG may produce.
Cyprus, he said, will be able to get gas if it wishes directly from the pipeline that will be built which will cost around $6-7 per thousand cubic feet as opposed to the $25 that the gas it will import is expected to cost next year. He added that Energean said that if Cyprus is interested in getting gas from the pipeline, it can be built in two years and is expected to cost up to $1.5 billion and be financed by the companies that will be part of the consortium.
Ellinas expressed the view that if the quantities required by Energean are discovered, the project is a sure thing as the quantities, the liquefaction plant and the buyers will be there.
Regarding the development of the Cyprus "Aphrodite" deposit, Mr. Ellinas said that the chances of its development are lower, since the negotiations with Chervron have not yet been concluded, while in the first quarter results issued by the company there is no mention of investments in Cyprus, only in Israel.
Chevron, which has stakes in Israel's Tamar and Leviathan blocks, is seen as more likely to increase exports from Israel, where the infrastructure is already in place, to Egypt where liquefaction is taking place, while gas exports from Egypt to Europe are expected to triple this year.
Regarding the Vasilikos gas terminal project, Ellinas said that although the amended contract between the Chinese developer and the Republic of Cyprus is being brought before the Central Committee for Changes and Claims (CCC) for approval, he believes that the signing of the 25m agreement may not be the end of the problems.
Source: CNA
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