Paschalides: 13 is a lucky number for Cyprus in LNG stakes

THE PUBLIC Company for Natural Gas (DEFA) has received expressions of interest for the supply of liquefied natural gas from 13 companies, including “giants” of the industry, Commerce Minister Antonis Paschalides said yesterday.
Owned jointly by the government and the Electricity Authority of Cyprus, DEFA’s remit is to secure supplies of liquefied natural gas (LNG) to power the electricity grid. It is the only company legally entitled to buy LNG for the island’s needs.
Speaking to newsmen, Paschalides said the expression of interest was “very satisfactory”, adding: “13 is the lucky number for Cyprus.”
He said the selected company should be ready to supply the island with LNG by 2014. That’s also the unofficial ETA for the completion of a land-based LNG terminal.
Next up is a screening process through which DEFA will eliminate some of the companies and end up with a short list.
Costas Ioannou, head of DEFA, said the pre-selection process should be completed by the end of January. There follows a period of negotiations with the remaining candidates, who will submit detailed and more specific proposals, and by April DEFA hopes to have ended up with one or two preferred suppliers, he said.
Ioannou refused to be drawn on the identity of the candidates, due to a confidentiality agreement between DEFA and the interested companies.
“All the big names are there,” he offered.
Earlier, Ioannou had said the selection would be based on financial criteria, but also on the companies’ track record and reputation.
The contract for the supply of LNG is 20 years. Ioannou said the sooner an agreement was concluded the better, since LNG prices at the moment were relatively low.
“It’s a buyers’ market now,” he said.
Previous exploratory contacts conducted by the Ministry of Commerce and the Electricity Authority of Cyprus (EAC) had reportedly revealed an interest from the natural gas state corporations of Egypt, Algeria and Qatar, but also from Libya, Greece and Russia.
DEFA will also be hiring the services of experts to consult during the negotiations with the short-listed companies and their evaluations.
In a separate process, the construction and operation of the LNG terminal has fallen to the EAC. The Electricity Authority is currently seeking strategic partners for the development, financing, operation and management of the re-gasification terminal. Eight companies have pre-qualified as potential partners. The process is open to firms and “voluntarily formed consortia,” and should also be wrapped up by next summer.
Conventional estimates for the cost of the re-gasification terminal range at €700 million.
The EAC has a 44 per cent stake in DEFA, with the majority share owned by the state.
Ioannou confirmed reports of an overlap between the EAC’s prospective strategic partners and the companies expressing an interest in supplying LNG.
“It’s true, some of the companies have expressed an interest in both ventures. But I see no conflict of interest, such as these companies gaining an unfair advantage. If anything, such a situation might lead to synergies.”
Politis reported yesterday that, until DEFA selects its own consultants, in the interim period it will be using the services of Simons & Simons and ECC, a consortium that is currently advising the EAC. However, DEFA has said there is nothing untoward with this arrangement, since the consortium in question would not delve into the substance of the negotiations for the supply of LNG.