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Panorama Internazionale

06 NOVEMBRE 2017

15:23 - Cipro


(ICE) - ROMA, 06 NOV -



The new energy gate of Europe was the title of the 5th Energy Symposium organized by Institute of Energy for South-East Europe  (IENE) and Financial Media Way (FMW), held in Nicosia on  November 1. Cyprus has the potential to play a key role in Europe’s energy and that energy could also be key to the solution of the Cyprus problem.

The Symposium was addressed by President Anastasiades, Demetris Syllouris, Nicos Kouyalis, Giorgos Lakkotrypis and Fidias Pilides. Greek energy minister Giorgos Stathakis also sent a message. The key highlights from these presentations were: a)     The government is giving priority to the exploration and exploitation of hydrocarbons and the development of energy, including renewable energy sources (RES) and energy efficiency. b)     The government is also supporting the EuroAsia interconnector and now the EuroAfrica interconnector between Egypt-Cyprus-Greece. c)     Minister Lakkotrypis said that the government’s hydrocarbons strategy is based on four pillars: Geopolitical alignment, exploration, exploitation and implementation. d)     Cyprus needs to harmonize and align its regulatory system to that of the EU. Energy regulator RAEK has set-up a timetable to achieve this. It is introducing a new regulatory system and a new market model, and hopes to have these in place by July 2019.

RAEK has also prepared a report on the development of an internal natural gas market and is in the process of preparing a gas regulatory system.

In Cyprus much hangs on the more optimistic indications that block 10 may hold significant amounts of natural gas. However, there is still a long-way between discoveries and successful exploitation, through international gas sales, due to low global gas prices. Ultimately, collaboration will be key to keeping development costs down. In a low-price environment, only integrated projects which minimize costs from well-to-export will stand a chance to become financially viable and secure export markets. And even then, it will be challenging.

This can be achieved if all Cyprus gas discoveries by the end of 2018 are pooled together into a single joint-venture. They can then be developed as an integrated project, with no doubling on interfaces and risks. Pipelines can then take the gas to Egypt to be liquefied through new trains and exported. But even then, it will be challenging commercially.

The greatest challenge for gas is that low RES prices are for the longer-term and are undermining upstream investments. The global gas market will be quite different in the years to come. This is driven by increasing use of LNG, particularly spot LNG, and increasing trading through gas hubs. Cheaper LNG, use of FSRUs and liberalized contractual arrangements are attracting new buyers.

Cyprus and Greece have the potential to become the new route for East Med gas entering Europe. In this respect Cyprus should learn from and replicate Singapore’s drive to become an LNG hub. The proposition that all gas from the region should go to Europe through Turkey is risky. Cyprus and Greece provide a more reliable and dependable route.

The new LNG import project is based on tendering two, separate, parts: a) Infrastructure, including a jetty, port facilities and an FSRU. b) LNG imports

In the run up to 2050, natural gas and electricity storage will contribute to the progressive penetration of RES into the grid, making electricity the energy form of the future. The transition to the new era is rapid due to the very low cost of RES and requires a new business model and many new services for consumers. What is needed is a strategic plan with clear targets, timely modernization of the electricity system, and inter-connection with Europe. Cyprus should give this high priority.

In Cyprus 91% of electricity generation is still oil-based, there are no inter-connections to other countries and there is uncertainty about when natural gas may become available. EAC Electricity Authority of Cyprus,  has a strategy to adapt to the new era of clean energy. It is looking at including RES in its power generation mix so that it can reduce dependence on oil and gas and reduce electricity costs to consumers.