Emerging natural gas market a mistake, energy expert says

The natural gas market should never have been labelled as emerging, as Cyprus could have already had 40 per cent cheaper energy if the market was open to competition, energy expert George Chrysochos said, dampening any expectations that the interconnector would make a difference to people’s pockets.

CEO of Power Energy Cyprus and Cyfield executive director George Chrysochos told CyBC that “we have been saying since 2018 that the natural gas market should never have been declared emerging but should be left in the hands of competition.”

He said natural gas was much cheaper than oil or crude oil and much more efficient and less polluting.

Chrysochos said that by opening the competitive market, one could expect a “30 to 40 per cent drop in the current price of electricity.”

“The economy as a whole would have a benefit of €300-€400 million,” he added.

The fastest way for the prices of electricity to drop would be to bring natural gas, Chrysochos said, adding that the interconnector would not bring cheaper energy to the island.

“At this moment there is mediation for Promitheas. We say that any amicable settlement or any painful solution would be much better than no solution at all,”

If efforts to bring Promitheas fail, “then we could rent a ship temporarily and import natural gas until the problem is solved.”

“The ship could be rented on behalf of the state or privately. If it is to be done privately, the market must cease being an emerging one.”

Chrysochos presented two scenarios.

One was to complete the Vasiliko project, bring the ship and private parties import natural gas by paying a fee to the state installations, thus maintaining the monopoly of installations and opening the natural gas market.

The other was to make a concession, with the unfinished project being given through the BOT method to a private party to complete, operate and maintain it and pay a fee to the state.

Chrysochos said that if things got moving today, it would take about a year to complete the Vasiliko terminal.

He also said that the energy market would be split into three parts – natural gas, renewable energy and conventional production – which made the emerging market obsolete.

Chairman of the EAC board George Petrou said the authority had been having thoughts about abolishing the emerging market and it was up to the Cyprus Energy Regulatory Authority (Cera) to accept it.

He added that “the infrastructure is something that we have been supporting for years because we need security of supply.”

“The state cannot depend solely on what a private party is doing. Anything can happen,” he explained.

Petrou said “what we want is security, whatever happens we want to be connected to the terminal and then anyone can import anything they want, pass it through the terminal and pay the cost of gasification.”

He also said there had been a few suggestions over the years, such as a companies using their own flexible pipes to unload natural gas.

“All this has to be examined. Now that we are given the chance, we will discuss it at the EAC to see what solutions we can come up with. If we had taken a decision two or three years ago, we would have had it today. Unfortunately, there are laws,” he said.

Petrou said there had been delays and that solutions and offers made in the past had been “dismissed”.

“There were ships ready that we could have rented temporarily. It would have been a good solution. We did not proceed. We said we would create our own terminal and have our own ship. We spent a lot of money,” he added.

Petrou said the terminal was at a standstill and that it would take months before it was completed.

Regarding Promitheas, he said the trial started next week and called for patience as public statements had been prohibited.

Chairman of the House energy committee Kyriakos Hadjiyiannis told CyBC said the proposal for scrapping the emerging market was to find a way out of the current deadlock.

He said the market should be opened and a “special law” be passed to speed up the completion of the Vasiliko project.

“We must move as soon as possible” to ensure Cyprus’ energy adequacy, Hadjiyiannis said.

He added that “we cannot remain hostage to the blackmailing of the contractors of any others.”