Cyprus to Enter the Natural Gas Era

09/07/2020

Following President Nicos Anastasiades laying the foundation stone for the construction of the Cyprus LNG import terminal project in Vasilikos Cyprus will enter the natural gas era, Natural Gas Public Company chairman Symeon Kassianides commented on Wednesday.

The €289 million project is considered to be the largest energy project in Cyprus. It features an LNG floating storage and regasification unit (FSRU), a jetty, mooring facilities, a pipeline on the jetty and other onshore and offshore related infrastructure. Construction is expected to be concluded in 2022.

“As of tomorrow, we mark Cyprus’ entry into the natural gas era,” Kassianides told a meeting with journalists, adding that the project will pave the way for the opening of the electricity generation market.

“The project will pave the way for the electricity market, as without natural gas the market cannot open,” he added.

Kassianides said that studies conducted by DEFA and the EAC have shown that natural gas will lead to a reduction of 15-25 per cent in electricity prices.

A €101 million grant has already been secured by the Natural Gas Infrastructure Company and a DEFA subsidiary via the EU’s Connecting Europe Facility, €43 million in equity funding from the EAC which acquired 30 per cent of ETYFA’s capital, as well as €150m loan from the European Investment Bank and an additional €80m from the European Reconstruction and Development Bank.

The contract for the construction project was awarded to the international consortium China Petroleum Pipeline Engineering CO LTD, Hudong-Zhonghua Shipbuilding, Metron SA and Wilhelmsen Ship Management.

Michalis Komodromos, EAC chairman and ETYFA vice chairman said the electricity authority supports the introduction of natural gas in Cyprus.

“We stand by to this effort so that the aim (for the introduction of natural gas) will become a reality, he added.

Komodromos also said the EAC’s five electricity generation units will be ready to use natural gas, while the sixth unit will become operational and ready in 2023.

Cyprus has previously made numerous failed attempts to introduce natural gas for electricity generation due to high prices. However, the project came into fruition when DEFA separated the process into two contracts one for the infrastructure and one for the LNG supply.

25 international companies have already expressed interest following a call for the expression of interest for the supply of liquefied natural gas (LNG).

The supply contracts are expected to have a duration between three to five years.