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Study to determine overlap between DEFA and KRETYK

Admin — Tue, 30 Apr 2013 10:02:08 +0000

A STUDY is underway to assess the respective roles of the Natural Gas Public Company (DEFA) and the Cyprus National Hydrocarbons Company(KRETYK) and ensure there is no overlap, the energy and trade minister said yesterday.
Giorgos Lakkotrypis was speaking to newsmen shortly after meeting with the President. The minister confirmed they discussed the “future” of the two entities.
Quizzed on whether the government was thinking about merging the two entities – as widely rumoured in the local media – Lakkotrypis said the Attorney-general’s office, assisted by Norwegian legal consultants, has initiated a study into “the institutional framework and jurisdictions of each organisation, which ought to be distinct.”
Asked to comment on remarks by DISY leader Averof Neophytou for the need of a moratorium on appointments to the civil service over the next three months, the minister said he agreed in principle.
“There needs to take place a rationalisation within all the organisations, of all the executive directors not only at DEFA but in other organisations as well,” he said.
The government is said to be wary of disbanding or reshuffling DEFA as that might create legal complications due to the fact the organisation is in the midst of assessing tenders for short-term purchases of natural gas.
It’s not clear what other motives, if any, lie behind the mooted restructuring of DEFA and KRETYK. Sources speculated the move may hide a political power play: DISY had always expressed reservations about the set-up of the two entities, particularly DEFA, thought to be dominated by personalities affiliated to the DIKO party.
The same sources wondered also why the energy regulatory authority (CERA) has so far been kept in the dark about the government’s intentions toward the two organisations.
Earlier this month the government decided to sack DEFA chairman Costas Ioannou over actions he took in his previous role as head of CERA.
DEFA is a public utility tasked with distributing natural gas to the local market, while KRETYK is a state-controlled oil and gas company responsible for developing, managing, exporting and operating gas.

Published by: www.cyprus-mail.com

Cyprus natgas earnings at 4 bln euro a year, says KRETYK

Admin — Tue, 16 Apr 2013 10:07:44 +0000

Revenue share starting at 900 mln euros in 2020, then rising

Earnings from the sale of natural gas export contracts could reach as high as 4 bln euros a year, once upstream production has started from offshore gasfields that are currently being explored, according to a senior government official has said.
“Cyprus has estimated reserves of about 40 trln cubic feet (tcf), that corresponds to a value of approximately 400 bln euros over a period of 20-25 years,” said Charles Ellinas, executive chairman of the state oil and gas company KRETYK.
“If the state can only collect about 25% of these profits, based on revenue sharing agreements, then state earnings would be about 4 bln a year,” Ellinas told CyBC radio.
However, former Trade and Energy minister Neoclis Sylikiotis said that earnings would start at about 900 mln euros in the first year, from about 2020, with the revenue rising gradually to the 4 bln target.
No matter how fast Noble Energy or other license operators start drilling, gas flow from Cyprus offshore fields is not expected any time sooner than 2018, Ellinas said, adding that “we cannot sign a memorandum of understanding (MoU) with Noble in July, as initially planned, as there have been too many and unnecessary delays,” to conclude the revenue sharing agreements.
Saying that KRETYK is currently undermanned, Ellinas had a glimmer of hope for the economy, adding that the Vassiliko area, where the gas liquefaction plant will be established, “will become an energy hub for Europe by 2020-2025”.
He added that state gas importer and distributor DEFA needs 500 mln euros to build an islandwide natural gas network to reach all households and that this venture alone will create “hundreds of jobs” for skilled and semi-skilled workers who “will have enough work over the next decade” to connect homes to the national gas supply grid. Ellinas added that this need calls for the introduction of more vocational courses for mechanical engineers in local colleges to satisfy the drastic need that will follow.

Published by: www.financialmirror.com