Cyprus pursues LNG import and export options
In early 2020, the Cypriot government will award LNG supply contracts, while revisiting LNG export plans
Cyprus still lacks a workable plan to bring ashore significant gas discoveries in its offshore waters to replace diesel and fuel oil supply to its power stations. But a ‘dash for gas’ looks set to make progress.
The Cyprus government, with financial support from the EU, is pressing ahead with plans to import LNG to meet European environmental targets. In August, the state-owned Natural Gas Public Company of Cyprus (Defa) chose a consortium led by Chinese engineering firm China Petroleum Pipeline Engineering to construct a floating storage and regasification unit (FSRU) and related infrastructure at Vasilikos port on the south coast.
The following month, Defa published a list of 25 international firms that had expressed interest in supplying LNG “with both spot freight and basic quantities of gas”. Three of the companies—Italy’s Eni, Shell and Total—are involved in upstream operations off Cyprus.
The Cypriot government’s decision to opt for imported LNG does not mean that long-considered plans to export liquefied gas from Cyprus’ offshore have been scrapped. In 2013, a study for the construction of a liquefaction plant on the island was carried out, and a site prepared at Vasilikos next to a power station. But the planned scheme was put on hold because it was not considered commercially viable.
More discoveries have since been made to complement the 2011 find at the Aphrodite field in Block 12, which has an estimated 4.5tn ft3 of gas in place— the 3-5tn ft³ Calypso in Block 6 in 2018 and the 5-8tn ft³ Glaucus in Block 10 in February. US independent Noble Energy and its partners, Israel’s Delek and Shell, are working on a plan to build a pipeline to carry Aphrodite gas to Egypt, potentially for liquefaction and export.
More discoveries have since been made to complement the 2011 find at the Aphrodite field in Block 12
But other operators in Cyprus’ offshore are waiting to see what future exploration reveals before choosing monetisation options, as the idea of a Cypriot LNG export facility is being considered once more. “We are doing the preparation work now in anticipation of a day when sufficient volumes are found to make LNG an option,” says Demetris Fassas, general manager of the state-owned Cyprus Hydrocarbons Company (CHC), on the sidelines of an Institute of Energy for Southeast Europe conference in London. “We do not want to be only starting preparations when the moment comes.”
CHC’s role, says Fessas, “is to facilitate the process and be able to show international companies what is available in Cyprus to enable an LNG project to proceed”. As a start, the state firm is “reviewing the good work done in 2013 because there have been lots of advancements since then in terms of some of the technologies and methods by which LNG facilities are being put together—like [London headquartered engineering firm] Technip FMC’s modular approach at Yamal”.
“An individual resource of 12-14tn ft³ in place might be enough to make a two-train facility viable,” says Fessas on the requisite volumes for a commercially attractive Cyprus LNG project. “In terms of pockets of resources, let us say you have three in a 30km² (19 sq mile) range, so that you could have one shared offshore processing facility, then you are looking at 14-16tn ft³ in place.”
ExxonMobil, operator in Block 10, has indicated that it would consider a Cyprus-based LNG project if circumstances were right. At present, if all the offshore discoveries were pooled, Cyprus would come close to the figures required to make a scheme workable. Israeli discoveries close to the maritime border with Cyprus could take the reserves well into the range required.
But if Aphrodite gas heads to Egypt (potentially later to be liquefied and shipped back to Cyprus, at significant extra costs) and a majority of production from the Tamar and Leviathan finds in Israel is also piped into the Egyptian grid, Cyprus’ addition to the ranks of LNG exporters could remain a long way in the future.