PARLIAMENT on Thursday night unanimously passed a bill on the establishment and control of the state hydrocarbons company KRETYK.
The bill stipulates that the company’s budget must be submitted to Parliament but would s not require approval.
Under the new law, the House will however have the right to approve the criteria for the appointment of board members.
The state hydrocarbons’ company will be controlled by the Republic’s Auditor-General.
Commerce minister Neoclis Sylikiotis announced in October that the government had established the Cyprus Hydrocarbons Company (KRETYK) with the submission of the company’s statute to the Department of Company Registrar.
The company will, inter alia, engage in the production-sharing contract with Houston-based Noble Energy with regard to the extraction and exploitation of natural gas from Block 12 of Cyprus` Exclusive Economic Zone and engage in consultations with prospective investors concerning the construction of a terminal in Cyprus to liquefy natural gas.
The state will own the majority capital in KRETYK, which will be a private and not a public company and therefore the House will not have to approve its budget as it would have to do in the case of semi-government body.
Under the preliminary bailout deal with the troika, Cyprus asked to prepare and adopt legal steps enabling the establishment of a resource fund, which should receive and manage the public revenues of offshore gas exploitation. As a first step, Cyprus should submit its draft legal framework for review by the programme partners taking into account international best practices, as well as a detailed action plan by the second quarter of 2013, the troika memorandum says.
It also said Cyprus must  undertake a study on the financial aspects of the transition towards the exploitation, use and export of natural gas, as a first step in the formulation of a comprehensive development plan for the rearrangement of the Cypriot energy sector.
This plan should include a projection for the roll-out of the infrastructure, details on the financing and ownership of the related physical assets; an assessment of any major planning and financing bottlenecks and risks; an estimate of the revenue stream over time, and the establishment of appropriate governance structures.
The plan should also take into account the current uncertainty over the actual size of domestic, offshore, commercially-viable natural gas fields and possible changes in international gas prices and demand, and should be based on alternative world energy scenarios from an internationally reputed organisation. A first outline of this development plan would also be submitted in the second quarter of 2012, according to the memo.
The troika also wants Cyprus to provide an outline of the regulatory regime (CERA) and market organisation, which would be conducive to the introduction and proper functioning of open, transparent, competitive energy markets, taking into account the size of the Cypriot economy, the integration of Cyprus’ energy system into regional markets.
The outline should include the potential to set-up wholesale markets for gas and electricity, of which the latter should be open to non-producing traders; the freedom for customers to make an effective choice of supplier; full unbundling of gas suppliers and customers, in particular electricity companies; and a single sales organisation for the off-shore gas supply

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