BAD NEWS - Cyprus-Greece pipeline "not viable"

pipeline (Photo credit: LizMarie_AK)

Piping gas from Cyprus to Greece and then onto European markers would not be commercially viable, the consensus seemed to be this past week among businesspeople, financiers and analysts at the 2nd Cyprus Energy Forum in Nicosia. Anthony Livanios, CEO of Energy Stream CMG Gmb, an international advisory firm based in Frankfurt and Athens, argued that the cons of such a pipeline far outweighed the pros. In addition to the actual cost of construction being prohibitive, he said, the pipeline option would require long-term supply contracts with the price formula linked to oil. It would also limit the export markets.

By contrast, trading LNG by ship is more flexible, since the gas could be exported to a variety of markets (Europe as well as Asia), and selling on the spot market would yield more competitive prices. Livanios said land-based LNG was the best way forward for Cyprus, whether the island chose to go it alone or were it to partner up with Israel. And Solon Kassinis, head of the Energy Service, said the government was simply covering all the bases when exploring the Cyprus-Greece pipeline option, in order to discover to what extent such a project could be funded by the EU. He seemed to hint that this idea has since been all but abandoned.

A joint Cypriot-Israeli LNG project was another key theme during the forum. Kassinis said he and other officials have been talking with their Israeli counterparts about the possibility of an LNG facility on the island to export gas from Cyprus’ reserves and from Israel’s Leviathan field.

Leviathan is expected to come online in 2016.

With that in mind, said Kassinis, authorities here are planning to allocate land that would host an LNG facility with up to three trains, with a total capacity of up to 15 million tones a year.
A typical LNG train – a plant's liquefaction and purification facilities – has a capacity of some 5 million tonnes a year. “We envisage having more than 60 trillion cubic feet,” Kassinis said of the estimated total gas reserves in Cyprus’ Exclusive Economic Zone.

Speaking to reporters on the sidelines of the event, the energy chief was asked to comment on recent news that Australia’s Woodside Petroleum would be buying a 30 per cent stake in the Leviathan project for around $1.5 billion (€1.1 billion). With the island facing a massive debt following an expected EU bailout, Kassinis was asked whether the government could "sell" its stake in offshore Block 12.

The official said that was hypothetically possible, but stressed that it was more important to bring in a strategic investor with experience (such as Woodside) rather than – for the sake of a fast cash injection – selling the rights to a ‘sleeping partner’ who would then have no participation in exploiting the field.

Cyprus-Mail