Cyprus is pressing ahead with plans to construct a terminal to liquefy natural gas off its southern coast and could be in a position to export LNG to Europe by 2019, the head of its national hydrocarbons company said.
The island reported its first natural gas discovery in late 2011, with an estimated 7 trillion cubic feet (tcf) of reserves, in an exploration block now under license to U.S. based Noble Energy.
Cyprus recently awarded production sharing contracts to a consortium of Italy's Eni and South Korea's Kogas for two blocks, while is in advanced talks with France's Total for an additional two blocks.
"Based on studies done some time ago, there are probably over 60 tcf (of gas) in Cyprus waters, and the whole of the Levantine Basin is estimated to contain 120 tcf," Charles Ellinas, executive president of the Cyprus National Hydrocarbons Company (CNHC) said in an interview.
Based on anticipated growth in European demand for gas of 100 billion to 150 billion cubic metres (bcm) by 2030, Cyprus should be able to provide over 50 bcm by then, or around half of the additional needs, Ellinas said.
The export volume could possibly be more if gas from finds in Israel and Lebanon also come through the Cyprus LNG plant, he said.
"That would go a long way towards fulfilling Europe's requirements for additional gas."
TRUMP CARD
As Cyprus seeks an international financial bailout as part of Europe's debt crisis, natural gas is its trump card.
The value of the 7 tcf reported by Noble alone amounts to $80 billion at present prices, and the potential profit overall ultimately could dwarf Cyprus's 17.5 billion euro economy.
"With Eni/Kogas and Total following close behind, this is only the beginning," Ellinas said, referring to expectations of finds in those fields.
Negotiations with lenders over a bailout have touched upon the potential of the gas discovery, but Cyprus has been adamant that there can be no interference from outsiders in how it manages its reserves.
"For Cyprus, there is nothing else," said Ellinas. "It is our only hope."
LNG HUB
Ellinas, who took up his post at the newly created CNHC in January after holding senior positions at energy project managers Mott MacDonald, said one of his priorities would be to start planning for the construction of a liquefied natural gas terminal.
"We are in advanced discussions with Noble on jointly developing the LNG terminal," Ellinas said.
Based on the present timeframe, construction should start by early 2016. It will take an estimated four years to complete the LNG export terminal and three years, meanwhile, to build offshore installations and subsea pipelines.
Ellinas said the terminal, which will be located in the Vasilikos area on the island's southern coast, could cost around $6 billion and have a production capacity of 5 million to 6 million tonnes of LNG per year.
"We should be in a position to deliver gas (domestically) by the end of 2018 and start selling LNG (abroad) in 2019," he said.
Cyprus has held talks with neighbouring Israel, which has also reported major gas finds in the past decade, on channelling Levantine gas to the Cypriot terminal.
The basin could probably not sustain more than one LNG hub, Ellinas said.
"I believe we have a highly commercial project. Europe is down the road; there is a need for gas; the partners we have are strong; and all that bodes well."