EC Energy Union Supremo Sefcovic visits Cyprus

The European Commission’s vice-president for energy union  Maros Sefcovic visited Cyprus January 11-12. He said “My energy union tour in Cyprus will provide an excellent opportunity to present and discuss EU funding possibilities and its contribution to the economic recovery of Cyprus and to achieve the Europe 2020 strategy targets for growth and jobs, in particular as regards renewable energy and energy efficiency. Cyprus might be an island, but it doesn’t have to be an energy island”.

Sefcovic met the president, Nicos Anastasiades; energy minister Yiorgos Lakkotrypis; foreign minister Ioannis Kasoulides; president of the house of representatives; and the chairman and members of the standing Committee on energy, and stakeholders from the energy sector such as the Cyprus Oil & Gas Association, energy producers, network operators, academics and think-tanks. He also held a citizens’ dialogue on Energy Union at the University of Cyprus.

The tour was covered extensively in the media but often with optimism and exaggeration. The following is an attempt to present objectively the outcome of this tour in terms of energy and potential implications for the development of energy in Cyprus.

The main purpose of the visit was to present EU’s Energy Union and related security of supply package and the new LNG strategy policies and to drum up support from member states. He specifically said: “We need to have better energy security, we need finally to complete the work of the internal energy market where energy could flow freely among the member states, proceed with de-carbonization of our economies, achieve much more in energy efficiency and put much more focused impetus on research and innovation… this year for the energy union is a year of delivery”.

With regards to LNG, he said: “Europe is going to develop its own LNG strategy and we see the Mediterranean as a gateway for possible new supply routes to come from this region to Europe.”

Importance of Cyprus to EU

Sefcovic stressed the importance of Cyprus to EU’s energy union strategy and said that gas discoveries in Egypt, Israel and Cyprus are very promising. The needs in the region, including Cyprus, are substantial and should be given priority, but it seems that there will be a potential for export and possibly the development a regional, eastern Mediterranean gas hub.

He supported the cooperation Cyprus has developed with Egypt, Israel and Jordan, and said that “we are now looking at the possibilities of a joint approach for the development of this newly found natural wealth in this part of the Mediterranean.” He also said that “it`s quite obvious that these new discoveries… could change to a great extent geo-economics and geopolitics of this region”. Priority should be given to the needs and benefits of the region.

Sefcovic also discussed renewables, emphasizing Cyprus enormous potential, and the need to achieve the targets for 2020. He said: “we also need to adjust the European systems to be able to integrate the renewable energy better, because the same challenges Cyprus is facing are faced by many European member states and therefore we want to present by the end of the next year a landmark legislation and this will be the proposal on how to redesign the European electricity market”.

He was assured by Lakkotrypis that all targets would be met with regards to renewable energy, energy efficiency and reduction of greenhouse gas emissions.

A key topic during his discussions was EU’s Projects of Common Interest (PCI) and the need to link Cyprus to the rest of Europe in terms of energy. He said he was “very glad” that the EC managed to bring some Cyprus projects into the list of PCI.

These projects are:

• the Euro Asia Interconnector, a subsea cable linking up the electricity grids of Cyprus, Israel and Greece
• the eastern Mediterranean pipeline, to link the gas-fields of Israel and Cyprus with Greece and Europe
• infrastructure, storage and the removing of the internal barriers with a view to ending Cyprus’ energy isolation.

However, he made it clear that the EC is funding PCI studies, but once feasibility is demonstrated projects can move to the next stage only if they attract investment from industry and financial institutions.

If investors take the lead, he said, there could be possible support financing from structural funds allocated to Cyprus by the Juncker investment fund, with loans coming from European Investment Bank or European Bank for Reconstruction & Development. He said: “It is very clear that these funds will focus on energy efficiency and transport infrastructure, so I am sure that in Cyprus there will be quite a few projects that will be eligible for financing from these funds.”

He pointed out that Cyprus through its good relationships with its neighbours can become the centre through which Europe can link to the region and contribute to its development. “I think we need to work very closely with Cyprus to do everything possible to develop it in the most intelligent and smart way to the benefit of the region but also for the improvement of the energy security of Europe,” he said.

Dr Charles Ellinas

Nonresident Senior Fellow – Eurasian Energy Futures Initiative - Atlantic Council