A report released last week by UBS’s research arm noted: “We believe the Leviathan partnership is looking closely at the possibility of establishing an LNG facility in Cyprus, given that Leviathan [gas find] is located halfway between Israel and Cyprus.”
The report explained that “since Tamar can fulfill Israel's gas requirements for the foreseeable future, the Leviathan output will be directed at the export market. The two main alternatives are deploying a pipeline to Europe via Turkey or Greece, or setting up an LNG plant in Israel or Cyprus and shipping the liquefied gas to Asia or Europe.”
The UBS report coincided with an item in the latest edition of the Sunday Times which likewise anticipated an Israeli terminal to be built in Vasilikos, outside Limassol.
Meanwhile Commerce Minister Antonis Paschalides will likely today be holding discussions with representatives of oil giant Royal Dutch Shell, although details of the talks are sketchy.
It would appear that recent developments have put on ice the government’s energy plans. The administration had been considering a 20-year natural gas supply contract with Shell and selecting a strategic partner for a liquefied natural gas terminal for its state-owned power producer Electricity Authority of Cyprus (EAC). The government may also opt to exploit its own natural gas reserves, estimated at 10 trillion cubic metres, in its offshore territory. Cyprus is also mulling a proposal by Israel’s Delek Group to supply natural gas to the island.
Stelios Stylianou, general manager of the EAC, said they were waiting for “guidance” from the government on how next to proceed.
“Perhaps - and this would make sense - we need to re-negotiate a more flexible contract with Shell, say for a 7-10 year period,” he told the Mail.
Alternatively, Stylianou said, Cyprus could still go for a 20-year deal, but with a get-out clause in the event that in the meantime natural gas is discovered off the southern shores.