Solon Kassinis, Executive VP of the Cyprus National Hydrocarbons Company
Natural Gas Europe was pleased to have the opportunity to interview Solon Kassinis on Cyprus' natural gas sector developments and the ongoing plans to explore and exploit the offshore gas reserves.
“The gas sector has already started contributing in the country as of now”
Cyprus is on its way to become a natural gas producer by 2018 according to all estimations; what can be expected in terms of export strategy for Cypriot gas?
It is true Cyprus has already decided to make a long-term plan in that sector which we view as a national goal. We have designated an appropriate location for the LNG installation and what is needed now to conclude this process is the the preliminary political decision has been set to be sealed in the coming period.
We look forward for the Noble Company to undertake such venture and also look into the safeguarding of the finances of such project. Cyprus has an ideal location for the East Mediterranean natural gas, it is an EU state and I believe that the gas from that region will also be of priority for the rest of the EU. Moreover we have corporate players that are also committed such as Kogas, ENI which have formed a consortium and Total and are all in their way of exploring the blocks which have been awarded to them recently. Moreover we are totally committed into collaborating with the Israeli side which will soon take its political decision regarding the export of its gas to the markets.
I should also mention that the Lebanese potential gas reserves are also promising and companies which are already activated in Cyprus like ENI are also bidding there are well, thus synergies are to be found all the way. By the end of this decade gas will start to flow to Cyprus and thereafter in Europe, LNG terminal is certainly an option that is being seriously examined and can be said to be of a priority.
In your view how can the Cyprus-Israeli natural gas partnership be accommodated if we take into consideration Turkish obstructions?
The cooperation with Israel is based in synergies created by the fact that both countries share significant amounts of gas in neighboring offshore regions. Of course within Israel there are opinions that differ when examining an export route. Nevertheless the most recent further findings of natural gas of that country will ease the pressure exercised by voices that are against exports, I am pretty sure that Tamar and Leviathan along with smaller fields could spur an export corridor and boost Cyprus-Israel common stance in that sector.
The Cypriot gas along with leviathan for instance can use the same infrastructure and can bring it into Cyprus for export. I don’t think that eventually the Turkey will obstruct the process. Ankara should view things holistically since all neighboring countries are to gain by the opening of a new gas market and potential aggressiveness will not be positive for any party involved.
What is the best and worst case scenario regarding the overall gas reserves offshore Cyprus in terms of volume and investment cost?
Based on the seismic survey that did we did and my analysis we have in the Exclusive Economic Zone of Cyprus I estimate that at least 60 tcf that can especially serve the European Union’s needs for the coming years, since Europe will need at least 100 cbm additionally by 2035 according to estimations. Thus Cyprus and the East Mediterranean can really boost energy supply to Europe and secure its needs for the long-run.
Regarding costs, an LNG terminal plus the additional and supplementary installations and costs associated with creating a fully-fledged infrastructure could top at around 9 billion Dollars
I would like to ask you how important in financial terms can the natural gas sector be for Cyprus, especially since the Island's economy was battered by the recent "haircut" on deposits?
The gas sector has already started contributing in the country as of now. For example in Block 12 for the well a 120 million Dollars cost has been budgeted, out of which 20% will be a net gain for the Cypriot gain. Next year we are going to have an additional five wells in various offshore locations to the companies that have been awarded the contracts, for which of course they also paid in order to get awarded.
When the LNG terminal will be commissioned, a huge boost for the local economy is expected, since at least 6,000 jobs will be created in an island of 750,000 people, plus billions worth of investments.
In a broader scale I could tell you that the natural gas sector will become an integral and vital part of the local economy based on three pillars.
One pillar is the capital that is going to be infused in the state budget for year to come.
The second pillar is the development of the Island’s private economy through massive investments and thirdly it is going to be the creation of reserve fund for future generations. So in order to sum up, yes in financial terms natural gas is a great business for Cyprus and will certainly be of great importance for the economy.
If it’s possible it would be interesting to lay down the timetable concerning the exploration and exploitation process both for the Block 12, as well as, the rest of the offshore concessions?
The block 12 we are running now for 3-Dimensional surveys which will be finalized shortly during the year. Another sizeable field maybe also located in Block 12 and Noble energy is optimist about it. Moreover, ENI and Kogas have also an ambitious investment program that will commence by autumn 2013 and by next year I am certain we are going to have more positive findings.
Lastly I would like to ask you to pin-point the pros and cons regarding the East. Mediterranean pipeline and how does exactly Nicosia plans to accommodate such a project both in technical terms but also in political ones?
The main option to be looked upon so far for that issue is the establishment of an LNG terminal, although we do look upon the prospect of a joint Israeli-Cyprus-Greece pipeline all the way up to Italy. Certainly in that case they are going to be technical challenges, the waters are deep and there is also the need to use cutting-edge technology which will increase costs. It has to be noted that the Cypriot reserves are to be found in ultra-deep locations and to give you a comparison a pipeline aiming to supply the Italian market would certainly be much more expensive by plans such as those of the Trans-Adriatic pipeline (TAP) from Azerbaijan up to Italy.
There are also other plans which fit with the gas sector and I can tell you about the EurAsia electricity interconnector between Israeli-Cyprus and Greece, a 2,000 MW cable that will be used for the export of gas – powered energy towards the EU markets, a project which moves on and has many advantages for all parties involved.
Solon Kassinis is the Executive Vice President of the Cyprus National Hydrocarbons Company Ltd. (CNHC).
Prior to this position he has held positions with: Sasol Ltd., Cyprus Petroleum Refinery and the Cyprus Ministry of Commerce, Industry and Tourism, where he was Director of Energy Service before undertaking his current position.