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Cyprus’ Natural Gas Public Company (DEFA) will launch two separate tenders for the import of liquefied natural gas (LNG) this year to facilitate the use of LNG for electricity generation by January 1 2020, DEFA executive Chairman Symeon Kassianides told a parliamentary committee on Tuesday.

The LNG import is promoted in a bid to enable Cyprus to meet the January 1, 2020 deadline and to avoid penalties on emissions by the EU.

The first tender concerning LNG supply will be launched in the following month, while the second tender regarding the infrastructure will be launched in June, he said.

“The timeframes are tight but after discussing with potential suppliers, the timeframes are achievable,” he said.

Several efforts made by Cyprus in the past to import LNG for electricity generation were unsuccessful due to steep prices.

“There will be two separate contracts, one for LNG supply and the other for the infrastructure. The fact that both projects were coupled together is one of the reasons our efforts so far (to import LNG) were unsuccessful,” Kassianides told the parliamentary committee on Energy, Trade, Industry and Tourism.

The infrastructure, he added, includes a Floating Storage and Regasification Unit, a jetty borne gas pipeline, that would transfer natural gas to the electricity production units of the Electricity Authority of Cyprus in Vasilicos.

He added the estimated cost is €250 million, of which 40% or €101 million will provided by the EU, while the EAC will participate in the joint venture with an up to 30% stake. Kassianides added that the European Investment Bank has expressed interest to finance part of the project, while contacts will me made with domestic banks to participate in the financing.

DEFA Chairman said the Company cannot rely on Cypriot natural reserves which are not expected to be extracted by January 2020. Aphrodite, located in block 12 of the Cypriot EEZ, holds 4.5 trillion cubic feet of natural gas believed to be sufficient to cover Cyprus’ electricity generation for many decades, while a new exploratory well carried out by Italian ENI in block six revealed a “promising” natural gas discovery.

“We spoke with the operators (of the blocks) and they need more time,” he added.

Kassianides said he cannot elaborate on the price or the duration of the contract for LNG supply, as these issues will be discussed in due time.

On his part, Andreas Marangos, Chairman of the EAC, the main user of the LNG, said following a ministerial decision the EAC will participate with a 30% stake in the infrastructure project.

He added that the authority is also preparing for the event Cyprus will not use LNG for electricity generation by January 1 2020.

The EAC is preparing to instal technology to remove sulphur oxides from its electricity generation units in bid to avoid EU penalties on emissions, which will cost in the region of €30 to €40 million.

Angelos Votsis the Committee chairman said the Committee will monitor the issue.

The import of LNG for electricity generation will lead to reduced costs and the avoidance of emissions penalties, he said.

Source: Stockwatch