By Stefanos Evripidou

CYPRUS MUST do everything possible to secure use of Israeli gas at a planned LNG terminal on the island, or else risk jeopardising the whole project, said national gas company head Charles Ellinas on Saturday.

The executive director of the Cyprus National Hydrocarbons Company made the comments on the sidelines of a natural gas workshop in Nicosia organised by the Massachusetts Institute of Technology and the Cyprus Institute.

Speaking to the Cyprus News Agency, Ellinas argued that the estimated 5 trillion cubic feet (tcf) sitting in Noble Energy’s Aphrodite field in its Block 12 concession in Cyprus exclusive economic zone (EEZ) was simply not enough to justify the construction of a costly liquefaction plant at Vassilikos.

Ellinas, who reports say is in the process of negotiating the termination of his contract, said that by the time either Noble finds more gas in Block 12, or Total or ENI-KOGAS, who also have offshore concessions, carry out exploratory and then appraisal drilling, it will be too late to access the attractive Asian market.

Cyprus hopes to start work on the LNG terminal in 2016 and start exporting its own natural gas in 2020.

To proceed with the terminal, argued Ellinas, Cyprus would need Israel’s proven reserves in its Leviathan gas field. But Israel is currently mulling a number of options and is not expected to decide on one until the end of next year.

“We must do everything we can to convince Israel, which has many options, to come to Cyprus. It can send natural gas to Turkey, to Egypt, here, or export it using offshore units,” he said, noting that the offshore unit option is gaining ground as time passes.

“We need to be able to convince them to come here. If they don’t come here, then we will have difficulty.”

Ellinas explained that the longer Cyprus waits, the more technologies change, as do markets, prices and risks. At present the Far Eastern markets are the most attractive in terms of price. But Australia, Mozambique, America, Canada and Russia are all planning to export gas to the Far East from 2018-2020.

If Cyprus delays, it could lose these markets or have to sell its gas at cheaper prices, reducing profit.

It will be left with the European market, whose prices are much lower.

“To make good profits and benefit Cyprus, we need to go to the Far East and if there are delays, there are also risks the prices of this market will be lost,” he said.

Published by: www.cyprus-mail.com