Page 6 - GLNG Week 34

GLNG COMMENTARY GLNG
Cypriot LNG project moves forward
Cyprus has selected a Chinese-led consortium as the preferred choice for building an FSRU after delaying the tender several times
PROJECTS & COMPANIES
WHAT:
A Chinese-led consortium has been named the preferred choice for building an FSRU for Cyprus.
WHY:
The country is making a fourth attempt to advance an LNG import project.
WHAT NEXT:
It is unlikely that imports will start on schedule in 2021 after several delays to the tender.
CYPRUS’ long search for a supplier for a oat- ing storage and regasification unit (FSRU) for importing LNG appears to be near its end, following the selection of a Chinese-led consortium.
A tender for the construction, installation and operation of the unit held this summer by Cyprus’ state-owned Natural Gas Public Co. (DEFA) attracted bids from three consortia backed by Chinese, South Korean and Japanese engineering heavyweights. DEFA revealed last week that a group consisting of China Petro- leum Pipeline Engineering (CPPE), Greek rms Aktor and Metron and Norway’s Wilhelmsen Ship Management had been selected as the pre- ferred choice.
ese companies have been invited to Nic- osia to enter contract talks as soon as possible.
“We are pleased to see the successful outcome of the process,” DEFA chairman Symeon Kass- ianides commented. “Here at DEFA we believe that the future of the country is aligned with natural gas and we expect it to play a major role in the economic development of the country in years to come.”
is is no less than Cyprus’ fourth attempt at advancing an LNG import project, with the plan rst mooted more than a decade ago. e proposed plant at Vassiliko will have an FSRU capable of storing 125,000 cubic metres of gas and unloading tankers ranging from 120,000 to 217,000 metres in size. It will also consist of a jetty for mooring the unit, a jetty-borne gas pipe- line and related infrastructure.
That the project has got this far is largely thanks to a €101mn ($112mn) grant it received from the EU, covering a good share of its total cost of €250mn. Cyprus had to extend the o er deadline repeatedly for supplying the FSRU, ostensibly so interested bidders had more time to draw up their proposals. DEFA now plans to select a supplier in October, making it unlikely that LNG imports will start on schedule in 2021.
is delay will cost Croatia, which will start receiving nes at the end of 2020 from the EU for failing to meet its carbon emissions targets. It needs LNG to replace fuel oil-based power generation.
Cyprus chose to stick with its plan to import LNG despite an o er from Greek rm Energean Oil & Gas to pump gas to the island from its o - shore elds in Israel starting in early 2021. Nico- sia has rebu ed this o er, citing the need to keep its imports diversi ed.
Israeli shipments would reach Cyprus under
the rst stage of the EastMed gas pipeline pro- ject involving Cyprus, Greece, Italy and Israel. e countries signed a memorandum of under- standing (MoU) in December 2017 on the $7bn project, which would position Israel as a gas supplier to south-east Europe. EastMed would become fully operational in 2025, with a 10bn cubic metre per year capacity. Energean insists this is the best option for providing Cyprus with cheap gas.
Even so, EastMed is still considered a long- term and ambitious plan, given the level of regional co-operation it will require. Europe’s LNG terminals are currently only a third utilised, while its largest gas supplier Russia has spare capacity in its pipelines, raising doubts about whether development of a new import pipeline is logical. On the supply side, Israel might bene t more from focusing on LNG, which will allow it to tap a greater number of markets rather than chaining its supply to European demand.
Meanwhile, Cyprus itself is poised to emerge as an eventual gas exporter, following a string of giant o shore discoveries. Discussions were revived following a new gas nd by US major ExxonMobil and Qatar Petroleum (QP) in February, estimated at 114-226 bcm. Politically speaking, an onshore LNG liquefaction plant would be far simpler to develop, with Exxon- Mobil estimating that resources of between 283-425 bcm would be needed to support its construction.
ExxonMobil and QP’s discovery was the third to be made o shore Cyprus to date, sit- uated not far from the Calypso nd made by Italy’s Eni and France’s Total, assessed at 129 bcm. Meanwhile a consortium of Royal Dutch Shell, Texas-based Noble Energy and Israel’s Delek Drilling entered into a production-shar- ing agreement (PSA) in June to develop Cyprus’ Aphrodite gas eld. e group is expected to le a development and production plan imminently for the eld, which contains 116 bcm of gas and is slated to start up in 2025.™
DEFA now plans to select a supplier in October, making it unlikely that LNG imports will start on schedule in 2021.
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w w w . N E W S B A S E . c o m Week 34 29•August•2019