Energean in updated offer to sell natural gas to Cyprus

Greek oil and gas company Energean has submitted to Cypriot authorities an updated proposal to sell natural gas to the island from one of its Israeli offshore leases.

In a press release, the company said it has drafted and submitted to the Cyprus Energy Regulatory Authority (Cera) a preliminary pipeline development plan, to pipe gas from the Karish reservoir to Cypriot shores “at a highly competitive price”.

The outfit said it can deliver the gas by March 2021.

Under their pitch, natural gas would be transported through pipelines from the Karish block to Energean’s Floating Production, Storage and Offloading (Fpso) unit, and from there through a pipeline to Vasilikos, Cyprus, where it will emerge onshore.

In addition, Energean said, it has signed a Letter of Intent for the supply of natural gas to private power generation licence holders in Cyprus.

Mathios Rigas, CEO of Energean, stated: “We have submitted a comprehensive plan to supply the Republic of Cyprus with natural gas through the infrastructure that Energean is constructing and will be operating in Israel.

“We are at the disposal of the Cypriot government and the Cypriot authorities to discuss how this plan could be implemented so that Cyprus will be able to start using affordable natural gas in March 2021, provided there are no delays in permitting procedures.”

The company stressed it has already initiated procedures for obtaining the necessary natural gas export and pipeline construction licences from its Fpso in the Israeli EEZ to Vasilikos.

Energean believes their plan offers Cyprus the opportunity to import gas at a very competitive price, with no upfront infrastructure costs.

Further, their proposal “enhances the planning of the Republic of Cyprus and the security of supply, as our plan is supplementary to the LNG import procedures launched by the Cypriot government.”

The Cypriot tender calls for the construction of a floating storage and regasification unit (Fsru) and other infrastructures at Vassilikos, with a completion deadline of November 30, 2020. Tankers will bring LNG to the Fsru, converting the fuel into its gaseous form and connecting it via a short on-land pipeline to the nearby power station.

Energean had approached the government last year, but at the time energy minister Giorgos Lakkotrypis dismissed their offer as “unsolicited” in that it was submitted outside the LNG tender.

The minister had also questioned whether the company had an export licence from Israeli authorities.

But energy analyst Charles Ellinas had explained to the Cyprus Mail that the reason Energean did not submit its offer as part of the tender, was because the company is proposing to sell natural gas to Cyprus, whereas the government tender is confined to LNG.

Based on his own calculations, Ellinas stressed that under Energean’s offer Cypriot consumers will pay half compared to what electricity bills will look like if the island imports LNG per the tender.

He estimates that Energean can deliver the gas at less than $6.50 per million btu. Whereas under the government tender (LNG imports), the price tag could be anywhere from $13 to $14 per million btu.

Further, under the tender Cyprus would be locked into a 10-year contract.

Cera could not be reached for comment.