Negotiations are continuing between the Cyprus Port Authority (CPA) and Energy 8 over the British company’s application to use Larnaca port as a container transhipment and reshipment hub, which may generate up to 450 new jobs and as much as €13 million per year in port fees.
Communication & Works Ministry Permanent Secretary Makis Constantinides said yesterday that “at this stage, there is effectively a Memorandum of Understanding (MoU), but there is not yet a formal and binding agreement.”
If an agreement is reached with the Cyprus government, the company intends to ship up to 260,000 containers per year (5,000 per week) via Turkish ports, mainly to Iran. Energy has assured the Cypriot authorities that it has already obtained a licence from the Turkish authorities to do so. This would represent a major challenge to the current Turkish embargo on Cyprus-registered ships or any vessel sailing from Cypriot ports.
The Foreign Ministry has also previously been involved in the talks, to address the Turkish embargo, the trade sanctions imposed by the US and UN on Iran, and the transfer of Energy’s operations to Cyprus from Malta. Notwithstanding the trade sanctions, the EU has an established trading relationship with Iran.
The London-based company – with offices also in Hong Kong, Singapore and Switzerland – has been in talks with both the CPA and the Communication & Works Ministry since September 2008. At that time, it applied through its then newly-created subsidiary, Energy 8 (Cyprus) Ltd, for permission to use 4,000 square metres of closed storage area at the port for the import, storage, maintenance and reassembly of electricity and gas turbines made by companies such as Rolls Royce, Siemens and GE, for onward shipment to clients in the region.
That application was turned down, and a new application was made in April 2009 to use more than half of the available storage space at Larnaca port as a container transhipment and reshipment hub, to be operated by the newly-registered Cypriot company Energy 8 Shipping Ltd, as agent for Iran’s Bonyad Shipping Company (known worldwide as BOSCO).
This would involve the emptying of containers, relabeling the shipped goods and reshipping them to Iran and other Islamic countries in the region. No indication has been given so far as to what kind of goods will pass through Larnaca. However, Energy 8 specialises as an intermediate broker in a number of wholesale markets, including natural gas, oil, coal, metals, fertilizers and petroleum products, and it is a known fact that Iran faces a chronic domestic shortage of petrol and other refined oil products – despite being one of the world’s biggest producers of crude oil.
Under the current MoU, Energy will issue a €10 million guarantee to CPA to cover the cost of the port facilities and the projected annual revenues. Also, the CPA will bear no responsibility for costs or potential losses should Energy cease operations at Larnaca, and it has agreed to try to offer similar terms for the company to also use Limassol port.
According to a written response in August by Communication & Works Minister Nicos Nicolaides to an enquiry by Larnaca’s DISY MP Tasos Mitsopoulos, Energy thinks it will be in a position to start operations at Larnaca port in around 18 months.
