Royal Dutch Shell had made Cyprus the best competitive offer for a 20-year supply line of liquid natural gas, Cypriot energy minister Antonis Paschalides said on Thursday.
It was the first public admission by a Cypriot official that Cyprus was close to concluding a deal with Shell, after the state-run natural gas company (Defa), wrapped up consultations with a short list of potential suppliers last week.
"The amount in the best offer, according to Defa, is that by Shell and it is worth 4.5 billion euros," Paschalides, who is responsible for the commerce, industry and tourism portfolio, told reporters.
It had already been widely reported that Defa had opted for Shell, though the amounts cited for the contract, which Paschalides said were inaccurate, were in the region of 7.0 billion euros.
On Wednesday a Cypriot government spokesman said the island's cabinet would take a decision soon on the supply contract. Defa had made its recommendations to the government last week, and authorities on Wednesday wrapped up consultations on the matter with the island's political parties.
"A political decision has not yet been taken," Paschalides said.
Most parties had expressed misgivings at the way negotiations were handled and about its potential cost. The selection process itself is meant to define a preferred supplier, with further more detailed talks to follow.
Defa, which invited expressions of interest for a supplier in November 2009, is seeking a supply line for 20 years starting from 2014. According to its projections, Cyprus will need 0.77 million tonnes of LNG initially, rising to 1.37 million tonnes per annum by 2035.
The energy network of Cyprus is now powered by heavy fuel oil, which costs between 500 million and 600 million euros annually, Paschalides said.