NICOSIA, June 26 (Reuters) – Aiming for energy hub status and hoping to reboot an economy hobbled by a debt bailout – Cyprus started talks with three energy firms for the development of a liquefied natural gas (LNG) terminal.
The terminal, with an estimated cost of $6 billion, will process the vast natural gas reserves off the east Mediterranean island. Based on its current timeframe, Cyprus hopes to start exports by 2020.
“Completion of this project is an important step towards the realisation of our energy strategy, with the ultimate objective the establishment of Cyprus as a regional energy hub,” Energy Minister Yiorgos Lakkotrypis said at a ceremony on Wednesday where a project memorandum of understanding was signed.
Cyprus discovered an average 7 trillion cubic feet of natural gas in Dec. 2011 in one field offshore, close to where Israel reported major finds within its own maritime boundaries.
U.S. company Noble Energy and Israeli companies Delek Drilling and Avner Oil Exploration, which are the dominant players in both the Cypriot and Israeli projects, will over the next six months discuss the technical and commercial details of any eventual deal on an LNG terminal.
The sides hope to conclude talks by Dec. 31.
Noble launched an appraisal drilling on its Cypriot offshore find last month, while Total and ENI are poised to launch exploratory drills elsewhere off Cyprus by 2015.
Facing an unprecedented austerity-driven recession and record unemployment at 15.6 percent, the island is clinging to the hope gas discoveries will bring in badly needed revenue and create jobs. Cyprus receieved a 10 billion euro ($13 billion) international bailout in March.
Lakkotrypis said there were “multiple ways” to finance the LNG project, including with equity or debt, but declined to go into further detail.
Cyprus is marketing the venture to Israel which has also reported natural gas finds, and to Lebanon. Israel’s government decided on Sunday that it could export about 40 percent of its newly-discovered reserves.
Gideon Tadmor, Avner’s CEO and chairman of Delek, said the idea of using the Cypriot LNG terminal to process Israeli gas should be explored.
“It is a possibility and opportunity we intend to investigate,” he told reporters.
Israel’s government decided on Sunday that it could export about 40 percent of its newly-discovered reserves.
(c) 2013 Thomson Reuters