ISRAEL’S Delek Group has proposed to Cyprus the creation of a liquefied natural gas (LNG) facility on the island to process reserves Israel has discovered offshore and Cyprus hopes to find nearby, the Middle East Economic Survey (MEES) said yesterday.
Delek has written to the Cypriot government proposing cooperation to set up a multi-purpose facility that would receive and process gas into LNG, at a site proposed by the Cypriot authorities, MEES said, citing informed sources.
A spokesman for DeleK Energy, a subsidiary of Delek Group declined to comment on the report.
The Israeli company is a partner of US energy firm Noble, which has reported large reserves of natural gas in two offshore fields close to Israel since 2009.
Noble also has a concession to drill for hydrocarbons in a field in Cypriot waters, close to the Israeli finds.
An Israeli gas industry source said the report “made sense”.
Delek has been looking at options for exporting gas, which included building an LNG facility in Israel or Cyprus or exporting it through a pipeline to Greece.
Delek would supply gas from the offshore fields, Leviathan and Tamar, and suggested that any gas discoveries made offshore Cyprus could also be processed at the facility, MEES reported.
Noble and Delek have described the Leviathan find as the world’s biggest in the past decade, with an estimated 16 trillion cubic feet (tcf) of gas, while Tamar was the largest gas find in the world in 2009, at 8.4 tcf.
Cypriot officials estimate that there are reserves in the region of 10 tcf in their block, about 65 km from Tamar.
MEES said a multi-purpose gas facility in Cyprus would probably include production of natural gas liquids, including liquid petroleum gas (LPG), in substantial quantities.
The state run electricity authority of Cyprus recently concluded a consultation process to find a strategic partner to build a €600 million LNG regasification facility at Vassilikos in southern Cyprus.
The results of the consultation were not disclosed, pending government selection of a company to supply gas to Cyprus over a 20-year period. The island’s energy minister has said Shell made the most competitive offer with a bid of around €4.5 billion.
In Nicosia, Israeli Ambassador Michael Harari said his country would know in the next three months Israel will know when it would start extracting natural gas.
”I suppose we are going in the coming few weeks or months to finalize what kind of bargain, the government and the private sector companies will achieve” he said.
”In the next two or three months we will know much better when it will take place. It will take years. How many years, three or ten will be more clear in the coming few weeks”, he added.
”It is very important to keep a realistic and balanced support towards this issue. It seems that the potential for Israel and for Cyprus is quite promising”, the Israeli ambassador said.
He said it would take a lot of time and money “before we are going to see real potential coming through”.
Last month, Cyprus and Israel signed an agreement delineating their maritime borders and paving the way for hydrocarbon exploration.
Asked if there is interest from Israeli companies for the extraction of natural gas in Cyprus, Harari said that ”you can imagine the interest from many Israeli energy companies”.
”We have to keep in mind that this kind of contracts or interests take time to explore as to what possibilities there are, what kind of investment is needed etc,” he said.
