THE GOVERNMENT will review all its options regarding liquid natural gas (LNG), including any proposals for cooperation with companies in the area, and the island’s own reserves, Trade and Industry Minister Antonis Paschalides said yesterday.
At the same time the Electricity Authority (EAC) reiterated its readiness to go the distance on its own and import natural gas from the cheapest supplier.
Speaking after a broad meeting at the ministry with the participation of the EAC, the public natural gas company DEFA, and the energy service, Paschalides repeated for the umpteenth time that no final decision has been made.
“The decisions will only be taken when the government has before it all the relevant facts, DEFA’s findings, any recent developments in the region, potential suggestions, cooperation proposals from any companies in the area and the issue of our reserves,” Paschalides said.
The government’s aim is for the advent of natural gas as soon as possible at a lower cost for the EAC and consequently, consumers, the minister said.
DEFA, which was tasked to negotiate the supply of natural gas, decided some three weeks ago that a proposal from Royal Dutch Shell was the most competitive at some €4.5 billion for 20 years.
The decision sparked reaction from various circles questioning the wisdom of such an endeavour.
Critics said the offer was too steep and the duration of the contract too long, while DEFA had ignored lower bids because they were submitted too late.
The opposition even claimed the whole procedure had been shady.
Meanwhile Israeli company Delek has proposed to set up a multi-purpose facility that would receive and process gas into LNG, at a site proposed by the Cypriot authorities.
The Israeli company is a partner of US energy firm Noble, which has a concession to drill for hydrocarbons in a field in Cypriot waters, close to significant Israeli finds.
“There was a letter addressed to the President of the Republic from Delek showing interest … asking for time to present a cooperation proposal,” Paschalides said.
He said President Demetris Christofias has not responded yet but “I am sure the President will reply.”
Foreign Minister Marcos Kyprianou said there was ground for cooperation with Israel “but everything should be taken into consideration – all factors – and of course time is a major factor in this case.”
He added: “Let us not forget that we are at the initial stages regarding potential reserves in the Cypriot (economic) zone.”
The review of the new factors in the matter could mean more delays in the advent of natural gas on the island with the EAC blaming the government for this and voicing its readiness to disengage and go it alone.
“At the moment the EAC has invested in €500 million generators, which can operate with natural gas and they are forced to work on diesel, which is much more expensive,” EAC chairman Harris Thrassou said.
He said DEFA had been tasked with negotiating the advent of natural gas but if that changed “the hands of the EAC will be freed to find fuel on its own and buy from the cheapest supplier.”
On Monday, the EAC said it had repeatedly asked the government in the first years of this decade to be allowed to import its own natural gas but the state rejected the request.
Before that the EAC had asked the state to allow it to burn coal – a cheaper fuel — something which was also rejected.
The state’s handling of the matter resulted in the EAC paying today some €500 million per year in fuel – representing over 70 per cent of the organisation’s total expenditure, the authority said.
