THE GOVERNMENT is pushing ahead with its attempts to source liquefied natural gas (LNG) without a full public tender process, Solon Kasinis, the head of the Commerce Ministry’s Energy Department, told the Cyprus Mail yesterday.
Cyprus Energy Regulatory Authority Vice Chairman Stelios Petridis had told deputies in February 2009 that the Cabinet had decided to pursue direct negotiations with Russia, Algeria and Egypt, in a bid to save time and find a company to supply the island with LNG as soon as possible.
When this decision came to light six weeks ago, opposition party DISY strongly criticised the government for lack of transparency, calling its actions “un-European”. In fact, under EU rules, a member state government has the right to opt for specific procedures in strategically sensitive policy areas such as energy.
Kasinis said yesterday that after initial discussions with the Russian authorities and a potential supplier, the matter did not go any further. On the other hand, the government is considering an expression of interest by Algeria.
During a visit to Cyprus on March 18 by representatives of state-owned oil and gas giant SONATRACH, the Algerians confirmed their interest in supplying Cyprus with LNG and investing in the planned onshore LNG terminal at Vasiliko. Meanwhile, President Demetris Christofias is expected to head a mission to Egypt next week to further explore the third option.
In the past, Cyprus was twice offered a deal by Egypt for the supply of compressed natural gas (CNG), which requires far less investment than LNG. The first offer was made in 2005 and was rejected by the Papadopoulos government. The second was made in December 2007 but not taken up by the current government, which has since decided to pursue the LNG option.
Next week’s mission to Egypt will be the second in less than two months. The outcome of the last visit was inconclusive, but appeared to hinge on Egyptian supplies of LNG becoming available some time in 2012.
There were reports this week that the government had received an expression of interest from Greece’s Public Gas Corporation S.A. (DEPA) for both supplying LNG and investing in the onshore LNG terminal. In this case, the gas supplied by DEPA to Cyprus would actually be part of its own supply under a long-term contract with SONATRACH.
Commenting on these reports, Kasinis said that, in his personal opinion, “Cyprus needs to fully explore the advantages of a government-level agreement before considering other commercial options”.
Any decision on the Cypriot side would need to be approved by the Public Natural Gas Company (DEFA), the only company legally entitled to buy LNG for the island’s needs. DEFA, set up in late 2007 and owned jointly by the state and the Electricity Authority of Cyprus (EAC), is still lacking a Board of Directors.
The nine members of DEFA’s Board – five from the state and four from EAC – are to be appointed by the Council of Ministers.
Following a meeting last Friday of the three-man ministerial committee for natural gas (comprising the Ministers of Commerce, Interior and Finance), an announcement regarding the appointment of the DEFA board members is expected today.
Friday’s meeting also considered the draft text for the final decision on the LNG matter. The text is expected to be tabled for approval at the June meeting of the Council of Ministers.
Meanwhile, EAC was given the green light two months ago to find strategic partners for building and operating the planned onshore LNG terminal at Vasiliko, and is said to be ready to formally invite expressions of interest.
