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It is with great pleasure that I welcome today's workshop of the Energy Committee of the Cyprus Academy of Sciences, Letters and Arts on Natural Gas and Renewable Energy Sources (RES) and I warmly congratulate its organizers and contributors for their commendable initiative.
Let me begin my greeting by welcoming to Cyprus the President of the Academy of Athens Professor Michael - Konstantinos Stathopoulos, the Secretary General Professor Christos Zerefos, the Chairman of the Energy Committee of the Academy of Athens Professor Loukas Christoforou, as well as the Member of the Energy Committee Mr. Ilias Konofagos.
The conditions that have developed over the last 18 months in the oil and gas sector, which have led to an increase in energy prices to unprecedented levels, especially in Europe, create a favourable environment for the development of the natural gas fields discovered in the Cyprus Exclusive Economic Zone (EEZ).
The window of opportunity that has presented itself will not be open for long and, for this reason, we must, in cooperation with the companies operating within our EEZ, move quickly and decisively with the implementation of our exploration programme and the development of existing and future gas discoveries.
After approximately two years of stagnation in 2020 - 2021 due to the impact of the COVID-19 pandemic, in 2022 our exploration program slowly and steadily restarted, and in 2023 it is expected to be fully back to normal in 2023. Specifically, in late 2021, early 2022, the ExxonMobil and QatarEnergy consortium drilled an appraisal well on the Glaukos discovery in Block 10, which included a drill stem test. This well confirmed the existence of an excellent quality reservoir.
The same consortium also undertook a specialized 3D seismic survey in Blocks 5 and 10 to identify new potential targets and/or to mature existing targets. The evaluation and interpretation of this data is ongoing and we await the results both for the "Glaucus" discovery and its development and for subsequent drilling in these Blocks.
In Block 6, the Eni and TotalEnergies consortium drilled two exploration wells in 2022, which led to the "Kronos" and "Zeus" discoveries. Combined with the "Calypso" discovery in the same Block in 2018, a cluster of discoveries has been created in the area, which is expected to help accelerate their development. At this stage, the companies are working to evaluate the three discoveries, with the aim, precisely, of developing them as soon as possible. In this context, they intend to drill an appraisal well on the Saturn discovery in late 2023, early 2024.
Ladies and gentlemen,
Just last Wednesday, May 31, 2023, the consortium of Chevron, Shell and NewMed Energy submitted the revised Development and Production Plan for the Aphrodite field to the Ministry of Energy. According to the consortium, the purpose of the revision, which was initiated following Chevron's acquisition of Noble Energy, is to optimize the Development Plan by leveraging synergies with other infrastructure located in Egypt.
The Ministry of Energy will carefully study the consortium's proposal for comment and consultation with the aim of arriving at a final and mutually acceptable document. In any case, final approval will come from the Republic of Cyprus.
In the meantime, the Consortium has started drilling the A3 appraisal well at the Aphrodite field, which will be completed during the summer. The drilling is expected to provide important information about the field that will, among other things, assist in the formulation of the Development and Production Plan. Undoubtedly, 2023 is a milestone year for the Aphrodite field, as the Licensee will have to make important development decisions in accordance with its contractual obligations.
In the remaining licensed blocks, our Licensees are proceeding with their exploration program, which is expected to culminate in the next 2-3 years with the drilling of new exploratory wells that we hope will lead to new discoveries, increasing the energy potential of our country.
Dear participants,
Regarding the internal gas market, our efforts are focused, apart from the implementation as soon as possible of the LNG import terminal at Vasilikos, on the import of natural gas to Cyprus for power generation purposes, via pipeline. The gas will come from Eastern Mediterranean fields - maybe even from Cypriot fields - we will secure it at the prices sold in our region and it will be used both for power generation and for liquefaction and export to Europe and elsewhere.
The first objective is, of course, to reduce the cost of electricity in Cyprus and, secondly, the security of the country's energy supply.
The first objective is, of course, to reduce the cost of electricity in Cyprus and, secondly, the security of the country's energy supply. To this end, we are redefining our energy strategy, offering as an alternative option, for study by interested companies, the creation of the infrastructure, namely the gas transmission pipeline and the modular or floating liquefaction terminal. We are convinced that this infrastructure will provide an incentive for gas producers in the Eastern Mediterranean to use it to transport gas to Cyprus, where it will be liquefied for export as LNG to Europe and global markets.
To achieve the implementation of this strategy, we are in consultations with Israel to conclude a transnational agreement, and last Monday and Tuesday, we held a workshop in Nicosia, during which we presented to companies operating across the gas and electricity chain the prospect of transporting gas from the Eastern Mediterranean to Cyprus by pipeline. I must say that the initial reaction of the participants was positive and we expect them to come back soon with specific thoughts and proposals, but also with a formal expression of interest to participate in such a project.
In any case, it is clear that natural gas, apart from the aforementioned benefits of electricity price reduction and security of energy supply, will also play an important role in the green transition, as a bridge fuel. With the arrival of natural gas in Cyprus, it is expected that independent electricity producers will become operational and competition in the electricity market will be created. In addition, generators using natural gas will be able to provide the necessary flexibility to conventional generation to cover the intermittent production from Renewable Energy Sources.
The importance we attach to Cyprus' transition to the green and circular economy is clearly demonstrated by the fact that many of our actions are an important part of the national Recovery and Resilience Plan "Cyprus _ Tomorrow", having been costed, together with related actions of other Ministries, at 41% of the total funds budgeted for the country. The Ministry of Energy, Trade and Industry has secured a total of approximately 590 million euros for the 2021 - 2027 programming period, which will be used mainly to provide financial incentives to households, businesses and public bodies to invest in renewable energy and energy efficiency measures.
In addition to the Grant Schemes, reforms are also being promoted concerning the introduction of green taxation, the electrification of transport, the establishment of the One-Stop-Shop for the licensing of RES and the digitalisation of the process of submission, examination and approval of the required permits.
Regarding the Renewable Energy targets, let me point out that Cyprus managed to exceed both the targets set for 2020 and most of the intermediate targets set in the National Energy and Climate Plan for the year 2021. Specifically, the share of energy from RES in the country's gross final consumption reached 18.4%, exceeding the indicative target of 14.8%, while in the heating and cooling sector, the share of RES reached 41.3% from the indicative target of 32.6%. In transport, the share of RES was 7.3%, compared to the indicative target of 6.3%.
In electricity generation, although the share of RES increased by 2.8 percentage points in one year to 14.8%, the intermediate target of 15.8% was not reached. One of the main reasons why the electricity generation target was not met was the 5.6% increase in energy consumption compared to 2020.
The timely penetration of renewables in electricity generation therefore faces particular challenges due to the small size and isolation of the market, the absence of storage systems as well as seasonal demand. To address these challenges, a budget of €100 million has been included to expand, upgrade and digitise our grids through the massive deployment of smart meters. In addition, for the creation of energy storage infrastructure, we have secured a €40 million allocation from the Fair Transition Fund, while in order to remove Cyprus' energy isolation, a €100 million funding of the "EuroAsia Interconnector" project, the electrical interconnection between Cyprus, Greece and Israel, is being promoted.
All the above-mentioned projects can make Cyprus a producer of green energy and a hub for the transfer of hydrogen and/or electricity from renewable energy sources.
All the above-mentioned projects can make Cyprus a producer of green energy and a hub for the transfer of hydrogen and/or electricity from renewable energy sources.
Today, I must say, on the basis of the EU "Fit-for-55" legislative package, but also of the major geopolitical developments, we are working intensively to revise our National Energy and Climate Plan until 2030, modernizing, among others, the legislative and regulatory framework of the energy sector, as well as our administrative procedures, in order to be able to meet the new, more ambitious targets that have been set.
Ladies and gentlemen,
In conclusion, I would like to underline that the transition to a green economy and tackling climate change require a team effort. Each of us can contribute to this great change, from the ordinary citizen, public service, local government, businesses and academic and research institutions, by changing habits and practices, adopting energy saving measures, producing energy from renewable sources, adopting circular economy practices.
I wish you every success at your conference and thank you for your attention.
(GA/SX)
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