But Nicosia needs to act swiftly in coming months to convince stakeholders – including the Israeli government – that it’s serious about the LNG project. Woodside Petroleum, a partner in Leviathan with Noble Energy and Delek, has earmarked Cyprus as a potential option for pipeline exports, Platts reports. Approximately 500,000 Mcf/day (500 million cubic feet of gas per day) could be diverted to Cyprus, Woodside’s CEO Peter Coleman said in a briefing in Sydney, Australia.

The other pipeline options were 300,000-400,000 Mcf/day of domestic gas demand in Jordan, 2.1 Bcf/day of demand for LNG facilities in Egypt, 60,000-100,000 Mcf/d of domestic demand, and up to 1 Bcf/d of demand in Turkey. “On the pipeline options, there’s been a number of opportunities the joint venture is discussing with other parties… it’s all moving in parallel,” Platts quoted Coleman as saying.

The Woodside CEO also confirmed that floating LNG, rather than on onshore plant, was being pursued as an export development option for Israel’s massive Leviathan gas field. He said the final investment decision for the first of the export projects would potentially come late next year. And recently, Noble Energy, announced a $500m contract that will see gas exported from Israel’s Tamar field to customers in neighbouring Jordan.Noble’s announcement coincides with development plans for their East Med gas finds, unveiled by the Texas-based company late last year. The first phase of development would see Noble and their partners supply Israel, the Palestinian Authority and Jordan. The second phase is floating LNG, and the third phase is regional supply agreements (with Turkey, Egypt and Cyprus being potential destinations). In Cyprus, the mooted LNG facility at Vasilikos will have an initial export capacity of 5 million tonnes of LNG per annum (one liquefaction train).

So far discovered gas reserves offshore Cyprus are insufficient to justify construction of the facility. But the 500 million cubic feet of gas per day to Cyprus, cited by Woodside, works out roughly to 3.8 million tonnes of LNG per annum. This amount, if combined with discovered reserves in Cyprus’ Aphrodite field, would make a single-train LNG plant viable plus leave surplus gas for Cypriot domestic electricity needs.

At the same time, future gas finds in other offshore licenses (ENI, Total) could raise reserves in Cypriot waters, reaching that critical mass needed for the LNG plant. But exploratory drilling, appraisal drilling, feasibility studies and a final investment decision from these companies, could take two to three years. Ideally, Cyprus should have been ready to export LNG by 2020, when LNG prices are expected to start falling. That target is slipping, and it’s now a question of timing as much as anything else.

Cyprus is keen to turn the island into a regional energy hub with an onshore LNG terminal acting as the transit point for East Med gas. But the government here must move fast to underscore that it is committed to the project. Talks with Noble and Delek for an LNG project agreement have been stalled since November. It appears the main hitch has to do with the government’s dithering as to what stake the Cypriot state should retain in the corporation that will export LNG. Right now the effectively bankrupt state appears unable to raise that kind of capital.

In a related development, parliament approved legislation amending the structure of the national hydrocarbons company. The company will now comprise a board of seven non-executive members (likely political appointees) working pro bono. The qualifications for the board members will be spelled out in the company’s charter. Candidates must have 'relevant experience' with hydrocarbons. The company’s finances will be monitored by the auditor-general.

Also the Cyprus National Hydrocarbons Company (CNHC) announced that Charles Ellinas has stepped down as its executive chairman. Though Ellinas had four more years on his contract with the CNHC, it’s understood that his severance package provides for compensation for one year. With over 30 years experience in the sector, Ellinas had left his job as managing director of Mott MacDonald’s Oil, Gas & Petrochemical business worldwide, to join the CNHC in January 2013.

Source: Cyprus Mail